CENTRAL ASIA AND THE SOUTH CAUCASUS: REORIENTATIONS, INTERNAL TRANSITIONS, AND STRATEGIC DYNAMICS

• Document Type: FOIA
• Collection: FOIA Collection
• Document Number (FOIA) /ESDN (CREST): 01080740
• Release Decision: RIPPUB
• Original Classification: U
• Document Page Count: 81
• Document Creation Date: October 23, 2023
• Document Release Date: August 28, 2023
• Case Number: F-2020-00858
• Publication Date: October 1, 2000

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Central Asia
and the
South Caucasus:
Reorientations,
Internal Transitions,
and Strategic Dynamics
Conference Report
The views expressed are those of individuals and do not represent
official US intelligence or policy positions. The National Intelligence
Council routinely sponsors such unclassified conferences with outside
experts to gain knowledge and insight to sharpen the level of debate on
critical issues.
Additional copies of this conference report can be obtained from the
office of the National Intelligence Officer for Russia and Eurasia, which
can be reached at [phone].
CR 2000-05
October 2000
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Central Asia and the South Caucasus
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Central Asia and the South Caucasus:
Reorientations, Internal Transitions, and
Strategic Dynamics�Conference Report
Executive Summary In April 2000, the National Intelligence Council sponsored a conference
that examined the strategic dynamics of the Central Asian countries of
Kazakhstan, Kyrgyzstan, Tajikistan, Turkmenistan, and Uzbekistan, and the
South Caucasus countries of Armenia, Azerbaijan, and Georgia. The con-
ference brought together approximately 100 government and outside
experts, including officials and scholars from the countries concerned. It
consisted of six panels with presentations from more than 30 academic and
regional experts, followed by question-and-answer sessions. The purpose of
the conference was not to arrive at a consensus but to deepen understanding
of the region. The views expressed are those of the individual partici-
pants and do not represent in any way official US intelligence or policy
positions.
Keynote presenter Gen. Anthony Zinni focused on the 10 key challenges
facing Central Asia, which ranged from creating a national identity and rec-
onciling the role of Islam in society to coping with political, economic, and
military reform. Dr. James Schlesinger made a lunch presentation that cast
doubt on the realization of the Baku-Ceyhan pipeline project, given the
trade-off between means and ends.
Participants and panelists made a number of salient points during the con-
ference that should be considered by those who analyze developments in the
South Caucasus and Central Asia. These observations and judgments, how-
ever, do not necessarily represent the views of the conference participants as
a whole.
Outside Influences and Relationships
� Central Asia and the South Caucasus are important because their orienta-
tion will greatly affect the power and national security planning of large
neighboring or interested states (principally, the United States, Russia,
China, Iran, Turkey, India, and Pakistan). How these states and others
think and act strategically in Central Asia and the South Caucasus will
influence geopolitical alignments in the region. It is also important to
grasp how these states, and others whose interest is acute though less
direct (for example, Israel, Japan, South Korea, some Gulf Arab states),
factor Central Asia and the South Caucasus into their strategic thinking.
� Conversely, the states of Central Asia and the South Caucasus are increas-
ingly dealing with countries other than those we tend to see as having the
most direct interest and natural advantages�Russia, Iran, and Turkey.
The states of Central Asia and the South Caucasus are looking to a
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e7.., �
number of other states�for example, India, Pakistan, Israel, China, South
Korea and Japan�for new trade possibilities and security arrangements.
All of these states are increasingly active in both Central Asia and the
South Caucasus.
� Strategic dynamics now cascade across geographic regions. Develop-
ments in one region can have extensive direct, and second- and third-order
consequences in other regions. Analysts must broaden their focus and not
view the region as a traditionally defined set of states. Central Asia and
the South Caucasus are a strategic crossroads. They must be understood
and analyzed in the larger Eurasian/Asian context if analysts are to cap-
ture all of the cross-regional dynamics that shape these two regions as
well as the broader geopolitical landscape around them.
� Iran is potentially the most influential near-term variable. If a normaliza-
tion of US-Iranian relations takes place, the entire regional picture would
change dramatically by changing the strategic calculations of all the
regional actors and the major external actors in the two region.
� Russia's policy will not necessarily be more coherent or benign under
President Putin. Russia probably will continue to be weak but remain rela-
tively stronger than its neighbors and possess more leverage than other
actors in the Central Asian and South Caucasus regions. Several panelists
suggested considering the implications for Central Asia and the South
Caucasus of a Russia in which power is significantly devolved to its bor-
derlands, or that is even fragmented politically.
� So long as Afghanistan remains in chaos, which it probably will for a
fairly long time, it will be a principal contributor to the most worrisome
threats facing Central Asia: the conjunction of narcotrafficking and mili-
tant Islam, terrorism, and political instability.
Need for Clarification and Differentiation
� Western policy has been, to a large extent, uniform with respect to the
states of the former Soviet Union: encourage political and economic
reform, minimize their dependence on regional powers, and encourage
intraregional cooperation�all with an eye to creating an independent,
generally Western-oriented, belt of stability. A number of conference
speakers argued that this policy may be too general and too optimistic
because the political interests, economic conditions, and security concerns
of these states are diverse and changing. Their destinies conceivably could
differ substantially as well, as their interests pull them in different
directions.
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� Regarding the internal developments of the Central Asian and South
Caucasus states, one participant observed that analysts have had to adjust
expectations on the pace and manner in which these states will move
toward democracy and a market economy. These two regions face a very
unsteady movement at best and great disillusionment with both democ-
racy and markets because of widespread economic hardships.
� A student of Nongovernmental Organizations (NGOs) noted that the
Western tendency to focus on the work of capital-based, English-speaking
NGOs leads to misperceptions ofcivil society in these regions, because
these NGOs are in touch with only a small part of the population. The
Western models for civil society overlook the importance of clan struc-
tures, which are small but extremely influential in these new states. West-
ern-style NGOs also neglect large segments of the population, such as
industrial workers, farmers, and pensioners, who need to be brought into
the political system.
Social Cost of Transition
� A panel of young scholars with recent experience conducting research in
the field gave many illustrations of the socially debilitating and politically
destabilizing impact of economic hardship. For example, one researcher
noted how traders use children as collateral to be left behind until they
return with the promised goods or money. Others argued that pervasive
poverty is eroding traditional social and communication networks.
� The long-term implications of a generation growing up in poverty, lacking
basic education, and increasingly enmeshed in semicriminalized societies
are disturbing and run directly counter to Western goals for the regions.
Uncertain Outlook
� Several participants and panelists noted the uncertain commitment to
political pluralism and market reform of the probable next generation of
leaders in these countries. Other panelists noted that political strongmen
will continue to hold sway for some time.
� Participants from the regions warned that democracy and civil societies
must develop within the existing cultural context, not as some kind of
unnatural foreign imposition.
� Some participants questioned the long-term viability of Central Asia's
current borders, noting that many borders could be redrawn over time.
This conference report consists of the precis of each speaker's on-the-record
presentation, which were provided by the speakers, and a summary of the
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ensuing not-for-attribution discussions. The report is intended to capture the
salient points and original arguments of the proceedings. During the panel
discussions no attempt was made to ascertain the general view of the panel
or audience. Many of the points highlighted in these summaries of the panel
discussions were noted because they were thought provoking or outside of
conventional wisdom. They illustrate the richness of the discussion, but they
do necessarily reflect accepted or prevailing views at the conference.
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Contents
Page
Executive Summary 1
Opening Remarks 7
Keynote Address 9
Panel I
Challenges to State-Building: Internal Fault Lines and Impediments 13
Highlights From the Discussion 21
Panel II
Challenges to State-Building: The Impact of Megatrends on the Regions 23
Highlights From the Discussion 30
Panel III
Regional Dynamics 33
Highlights From the Discussion 45
Panel IV
View From the Periphery 47
Highlights From the Discussion 58
Panel V
Impressions From the Field 61
Highlights From the Discussion 71
Panel VI
Concluding Roundtable: The Outlook of the Larger
Geopolitical Environment and Key Variables
73
Appendixes
A. Conference Agenda 77
B. Participants 83
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Opening Remarks
George Kok,
MO for Russia and
Eurasia, National
Intelligence Council
American engagement with Central Asia and the South Caucasus as regions
in their own right began only a few years ago. Not surprisingly, there is
much we still have to learn. This conference attempts to gain a new and
deeper understanding of changes in the political, economic, and strategic
orientations of each of the states of Central Asia and the South Caucasus
and to explore how these states fit into the larger regional context. The pan-
els were designed to examine the character and extent of these states' inter-
nal transitions, and the effects of these transitions on international
orientation; explore how and in what directions the states of Central Asia
and the South Caucasus could be reorientating both within the region and
beyond; and assess the new strategic dynamics that are unfolding through-
out Eurasia.
In the past we became accustomed to thinking about Central Asia and the
South Caucasus through the prism of Russia. Today, Russia's shadow looms
large in both regions but most states have moved in new directions. This
conference seeks to move beyond the traditional Russia-centric filter, but is
not intended to be anti-Russian in focus. Russia will continue to have a role
to play but it will be one among many actors in these regions. Essentially,
we do want to explore each of these countries and regions in their own right
as well as the connections between them but without equating the two
regions.
Presentations are on-the-record and will be included in a conference report.
Discussions are not for attribution, thus speakers will be identified only as
discussants, panelists, commentators, and so forth. The views expressed by
participants and panelists are strictly their own and not necessarily the
views of the MC or the United States Government.
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Keynote Address
A US Strategic Perspective on Central Asia
Gen. Anthony Zinni;
Commander in Chief
United States Central
Command
US Central Command (CENTCOM) is a newcomer to Central Asia. After
the demise of the Soviet Union, several of the military commands sought to
bring Central Asia into their area of responsibility. Long deliberations
ensued over whether to include the region in the European Command or in
the Atlantic Command, both of which lobbied to take over responsibility for
the region. CENTCOM, which is largely focused on activities in the Middle
East and the Persian Gulf, did not seek out new responsibilities, but the
Department of Defense finally decided to grant CENTCOM responsibility
for the five Central Asian states in October 1998.
My initial impressions were that the new states in Central Asia are "fragile"
but that the region is important as a crossroads for great powers. There are
10 key challenges that must be addressed by the governments in the region.
Fundamentalism and the Role of Islam in Society
The governments must reconcile the role of Islam in society to counter the
new fundamentalism emanating from Afghanistan and Pakistan and to miti-
gate the effects of the turmoil in the North Caucasus. This "new jihadism"
that consists of disparate, radical groups coordinating their activities from
Afghanistan and Pakistan poses the most urgent threat to stability in Central
Asia.
Military Reform
The Central Asian states have inherited Soviet military capabilities�for
example, heavy motorized vehicles�that were designed to fight the United
States and the West. These systems are not compatible with the security
problems that these states face today; the most immediate security concerns
are border security, internal security, and narcotrafficking. To counter these
threats effectively, the governments in the region need to restructure and re-
equip their militaries with light, highly mobile units that can operate in
mountainous terrain. This reengineering process will require support in the
areas of education, training, and leadership development.
Power Plays in the Region
These fragile states are pulled in all directions by China, Russia, the West,
Iran, Pakistan, Turkey, and other actors with an interest in the region. Each
actor is driven by a different combination of interests�economic, political,
strategic, cultural, religious, or social. Energy pipelines represent an
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example of the external dynamics that will fundamentally shape Central
Asia and the South Caucasus. Which direction will the pipeline go�north,
east, south, or west? All the surrounding states seek to secure a stake in
Central Asia's energy riches.
Regional Identity
These states do not view themselves through the same prism that we do. We
think of them as the "stans," which are part of a discrete region that is
defined by various regional organizations, such as GUUAM (Georgia,
Ukraine, Uzbekistan, Azerbaijan, and Moldova) and CIS (Commonwealth
of Independent States). It is clear that each country has its own view of the
security threats in the region. If security cooperation is to be successful, it
cannot be imposed by external actors but rather worked out together by the
external actors and the individual states in the region.
Economic Development
The initial euphoria about the energy riches in the region has led to high
expectations. Until now, those high expectations have only led to disap-
pointment in the region.
Soviet Legacy
The new states in the region struggle with a love-hate relationship with their
Soviet legacy. They seek to discard their Soviet identity, but would like to
retain the social protection that the Soviet system provided. Artifacts, such
as national borders that poorly correspond to ethnic groups, impede the
development of new national identities.
Search for Identity
Each ethnic group is searching for its own identity after years of suppres-
sion. Given the constraints within which they must operate, ethnic groups
are striving to reestablish themselves. The ethnicity map is a recipe for trou-
ble for the governments in the region as this search for identity unfolds.
Speed of Democratization
The United States is committed to democratization in the region, but there
are substantial obstacles.
Environment
The region suffers from the horrific environmental legacy of the Soviet
Union. The Department of Defense (DoD) is focusing on water-related
problems in the region. Water, not energy, probably will be the cause of a
conflict in the region within five years.
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Corruption, Crime, and Drugs
Drug trafficking is tied inextricably to Islamic extremism. Afghanistan, as a
leading producer of opium, is a source of revenue for extremists in Afghan-
istan and Pakistan. Corruption�drug- and non-drug-related�continues to
plague all the governments across the region.
The United States must pay attention to this region because of its centrality
in Asia and its strategic importance. This region will continue to be an area
of great power competition. The challenge for the United States is to under-
stand the threats and interests in Central Asia and assimilate them in a way
that will intersect with US objectives.
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Panel I
Challenges to State-Building:
Internal Fault Lines and
Impediments
This panel examined the internal conditions and chal-
lenges that the governments across the region face as
they modernize their political and economic institu-
tions. The panel also explored how the history of these
countries is shaping their future direction and what
might be expected of the new generation of leaders
who will inevitably be taking control during the next
decade.
Chairman: S. Enders Wimbush
Hicks & Associates, Inc.
Modernizing State Institutions in Central Asia and
the South Caucasus
Gregory Gleason
University of New Mexico
In all of the states of Central Asia and the South
Caucasus, the public sector has undergone significant
redefinition since national independence. How capa-
ble are the new states of the region at promoting their
national interests as they approach the close of the first
decade of national independence? Have the states
accommodated international standards of good gover-
nance and best practice? To what extent have the pub-
lic institutions of these societies redesigned
themselves so as to accommodate the emerging chal-
lenges of the 21st century? What necessary domestic
institutional changes have been avoided or postponed
in this first decade, and what do these facts imply?
Finally, what are the dynamics at work and the bound-
ary conditions at play in public sector redesign in this
part of the world? How can outside actors influence
these?
Central Asia and the South Caucasus are political con-
cepts that refer to clusters of countries tied together by
interdependencies resulting from political, economic,
transport infrastructure, market linkages, and cultural
factors. Central Asia includes Kazakhstan, Kyr-
gyzstan, Tajildstan, Turkmenistan, and Uzbekistan,
and the South Caucasus includes Armenia,
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Azerbaijan, and Georgia. A survey of the region
reveals some strong common tendencies:
� Soviet-era political leadership remains in place in
most countries.
� The public sector continues to dominate the private
sector.
� Social inequality has grown substantially in all
countries.
� Violence and lawlessness have grown substantially
within the societies.
� Gray area transnational violence (terrorism and
extremism) is growing.
� Regional interstate tensions are increasing.
� Environmental problems (water and air quality,
industrial pollution) have not been addressed in any
significant measure during the past decade.
� Narcobusiness is growing.
It should also be noted:
� There are no interstate wars in the two regions.
� There has been no revolutionary upheaval after the
fall of corammism.
� Macroeconomic policies in most countries are stan-
dard or acceptable.
� Many of the countries report nearly balanced
budgets.
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To what extent has reform of the public sector and the
transition of the state been accomplished and contrib-
uted to any of these outcomes?
There is a fundamental paradox in the role of the state
in a globalizing society: A state that is powerful
enough to control the instruments and mechanisms of
public affairs is also powerful enough to abuse those
instruments and mechanisms. In an effort to discour-
age abuse by the state, many critics of the modem
state argue for a public sector that is reduced in size
and scope. They also argue that increased economic
efficiency is correlated with decentralization, local
control, and local responsiveness. The debate regard-
ing the size and scope of the "post-Communist state"
centers around the fact that the state is both the "bro-
ker" and the principal actor in the process of post-
Communist destratification.
In terms of comparative political theory, the role of the
state has undergone substantial reconsideration in
recent decades. Forty years ago, many Keynesian
economists and public managers regarded the state as
the "engine" of development. This view, in conjunc-
tion with the failure of markets to provide public
goods and services, to effectively regulate the use of
public utilities and natural monopolies, and to provide
protection for common resources such as fisheries,
forests, and rivers, provided a rationale for "strong
states" that would be capable of stimulating growth or
intervening in markets to protect the public interest.
In some cases increased state intervention in markets
led to effective, and publicly oriented policies, but in
many cases governments embarked on ill-conceived,
grandiose, and fanciful, schemes that led to overexten-
sion of the public sector while squandering public
resources. Failures of government often led to redou-
bled efforts through coercion to bring about the
desired outcomes. The fusion of government and poli-
tics led to easy opportunities for corruption and con-
flicts of interest.
In a globalized world (that is, post-1990), the pre-
ferred model of the effective state is moving away
from the role of the state as producer and provider of a
wide range of goods and services to a more circum-
scribed role as information manager. This role empha-
sizes the provision of core public goods and the
facilitation and regulation of the production of private
services and goods, toll goods, and common pool
resources.
In societies where corruption, bribery, and abuse of
public office are commonplace, the reduction in the
arena of control of the state may be justified. But at
the same time, disestablishing the state can be
expected first of all to lead to detrimental effects on
the least powerful and least advantaged sectors of the
society. Those closest to the state are apt to circum-
vent the effects of reduced size and influence, trans-
ferring the costs of downsizing or functional redesign
to those less politically influential. Thus, in Central
Asia, reduction in the size of the public sector is not
by itself a formula for establishing a more equitable,
more competent, less avaricious public sector.
There are a variety of approaches to measuring the
public sector vis-a-vis the private sector. The most
common are: 1) GDP comparisons; 2) work force
comparison; 3) analysis of the government regulatory
"footprint"; and 4) public spending ratios. Using these
measures, the public sectors in the Central Asian and
South Caucasus states illustrate transformations not
unlike those of the modem states in other parts of the
non-Communist world. "Post-Communist transition"
may not be significantly different from the globaliza-
tion processes we are witnessing in many parts of the
world.
Legacies of the Past and New Directions in
Leadership: South Caucasus
Audrey L. Altstadt
University of Massachusetts-Amherst
History
History always matters, whether or not individuals are
aware of it. Finding the relevant legacies requires
looking deeper into the past than one gets with a mere
"outline" or "background." Furthermore, "history" is
constructed on the basis of particular questions and
selected documents. Myths and memories may also
play a part. Thus the "use" of history is neither simple
nor straightforward. Sometimes knowing a people's
beliefs about the past is more informative in under-
standing today's motives than in knowing all the
details of documented and verifiable history.
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In the Caucasus, history, even including remote his-
tory, which is difficult to verify, has an immediacy that
surprises most Americans. Present-day territorial
claims and visions of sovereignty can be shaped by
beliefs about events as far back as the sixth or second
centuries.
One powerful short-term legacy is that of Russian rule
under both tsars and commissars. Russian rule influ-
enced not only cultural features of the Caucasus such
as the use of Russian language and the types of
schools, but also determined today's borders (aside
from the de facto change in the Karabakh region),
much of the economic division of labor, and the basic
political culture. On the last issue, an authoritarian
mentality of control is an enduring feature, both inside
and outside governing circles.
Each republic, of course, has its own legacies that are
shaped by its native culture, including religion, lan-
guage, and its history prior to the Russian conquest
early in the 19th century. On that basis, each was
treated differently under Russian and especially Soviet
rule; each today has its own configuration of "friends"
and "enemies."
Salient legacies on which democracy and the rule of
law can be constructed are profoundly lacking. These
include Western traditions seen in the Enlightenment
(though rooted more deeply in Western history) of
individualism and the belief in the ability of human
beings to think and learn rationally, and respect for the
rule of law and legality. Whether these can be
"imported" is an important and fundamental question
for all former Soviet regions.
The New Generation of Leaders
The new generation of leaders in each republic is, of
course, shaped by both native culture and beliefs about
history, and by the Russian-Soviet legacies. They are
also, however, affected by the changing situation of
the late Soviet era and the first decade of indepen-
dence, which thrust these republics into greater
regional and global interaction.
The oldest "new" generation includes those leaders
who led anti-Soviet or pro-independence reform
movements in the Gorbachev era. They were generally
people in their 30s in the late 1980s who are now in
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their 40s. One way to view this younger generation is
to determine whether they were "insiders" or "outsid-
ers" with respect to the old system. "Insiders" were
not merely party members but those who made them-
selves successful within the party and old state struc-
ture. These people tend to behave like authoritarian
Soviet-era leaders. Some "outsiders," however, are
prone also to use strong-arm tactics and intimidation
perhaps because this was the only political culture
they knew�people with power act like people with
power. They have not yet entirely integrated their
democratic ideas with their personal actions.
The political leaders now in their 30s are even further
removed from the Soviet political culture. Conse-
quently, their direction is harder to predict. Some
political figures in their 30s exhibit an authoritarian
streak, and societal instability seems to reinforce this.
Yet the age group is quite mixed, and each individual
must be examined separately.
Directions
The directions they may take the Caucasian states are
rooted firmly in their own attitudinal and behavioral
tendencies, but will most likely be responsive or
"reactive." It would be hard for a new generation to
initiate innovative policy; it will be forced simply to
react to domestic and regional (as well as broader
international) pressures.
It would be hard to imagine, to take one example, a
scenario in which Armenia came to regard Russia as
an enemy or in which Azerbaijan became hostile to
Turkey. A warmer Armenian response to cautious ini-
tiatives by Turkey (which have already taken place),
however, could open the door to improved Armenian-
Turkish political and even commercial relations.
Armenia would clearly benefit from this, as would
other states of the region. It would, however, disrupt
the current balances of political influence in the region
to Russia's (and Iran's) detriment. Russia might
respond aggressively (likely under any ruler, but per-
haps more so under Putin) to keep the region from
moving too far away from Russian influence. Russia
remains a check on such significant realignments of
any one state in the region or of all three.
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Subtle internal moves could be more effective: market
reform, tax reform, and privatization as one "pack-
age," and greater political pluralism, institution of the
rule of law (and an independent judiciary), and safe-
guarding of civil rights as a second "package." These
packages would slowly "restructure" the Caucasian
states individually and move them, de facto, further
from Russian influence. Most younger leaders seem
inclined to move in this direction but could be derailed
by unrest that seems to require authoritarian measures.
Dynamics of Succession
The dynamics of succession have been and are likely
to remain stormy. Armenia has had several elections
with varying degrees of falsification and coercion. The
events of last October show that violence can lurk just
beneath the surface. Several parties contend for
dominance.
Azerbaijan and Georgia present especially thorny
cases because in each, an authoritarian "grand old
man" of Soviet and national politics will, within the
decade and perhaps in the next year or two, be ending
his rule. Each controls a single dominant political
party as others strive to gain strength. The instabilities
and unrest in each republic in the past show that the
loss of the "strongman" can plunge a republic into
chaos. A Russian role in such a transition cannot be
ruled out. This political puzzle, more even than oil and
gas production and pipelines, should be a focal point
of analysis of this region.
Legacies of the Past and New Directions in
Leadership in Central Asia
Martha Brill Olcott
Carnegie Endowment for
International Peace
In many ways the Central Asian states are frozen in
time. In every state but Tajikistan, the old Soviet-era
nomenklatura is still in control. This is the sense in
which history counts the most�those who were on
top at the time of the collapse of Soviet rule intend to
stay on top.
This history of the past is being rewritten to make this
more possible. In Uzbekistan, Timur the Lame has
become the central historical figure, helping to justify
Islam Karimov's strong rule. In Kazakhstan, the role
of the Great Horde is being emphasized, as this is the
group that long dominated the Communist Party.
Turkmenistan is creating a synthetic blend of medieval
Central Asian and modern Turkish history around the
person of Niyazov. The Kyrgyz trumpet the demo-
cratic nature of nomadic society.
With the exception of Kyrgyzstan, none of these mod-
els provides any basis for transfer of authority from
leader to leader or generation to generation. The Kyr-
gyz model facilitated it, which is one reason why the
Kyrgyz seem to have abandoned it. President Akayev
sees that his position is threatened by these democratic
principles.
In general, the authoritarian and semiauthoritarian
nature of political rule in the region has led these soci-
eties to be more static than in some of the other Newly
Independent States. One of the serious consequences
of heavyhanded politics is that a class of independent
entrepreneurs has been slow to develop. This is espe-
cially true in Turkmenistan and Uzbekistan, where
there has been great resistance to radical economic
reform. The lack of an economic elite with an inde-
pendent power base creates pent-up demand in each of
these countries and makes it difficult to predict how
the inevitable succession struggles will unfold. This
makes it very difficult to predict who will come to
power, when, and how.
None of the region's leaders are likely to give up
power willingly. Yet each country will become vulner-
able to interelite struggles as he physically weakens.
Tajikistan has already experienced one such struggle,
which resulted in a lengthy civil war. The elite struc-
ture in Uzbekistan is still complex enough, even after
more than a decade of Karimov's rule, to permit seri-
ous behind-the-scenes power struggles. The process of
coalition-building could lead to the empowerment of a
radical alternative elite.
Kazakhstan also has a highly complex pattern of elite
relations. There is less a risk of upheaval here, in part
because the country is further along in its economic
transformation. The size of the country and the tradi-
tion of relative isolation of regional (and sector-
specific) elites makes it unlikely that there would ever
be a coup against President Nazarbayev. Should he try
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Country Data
1994
1995
1996
1997
1998
1999*
Armenia
GDP
Percent growth
5.4
6.9
5.8
3.0
7.2
4.9
Industrial output
Percent growth
-10.3
5.3
1.5
1.2
0.9
-2.5
Average annual inflation
Percent
5,273.4
176.9
18.8
13.8
8.7
3.1
Exchange rate, end-year
Dram per US $
405.5
402.0
435.1
495.0
522.0
548.6
Consolidated budget balance
Percent of GDP
-16.9
-8.9
-8.6
-5.9
-5.9
-6.1
Current account balance
Percent of GDP
-16.0
-17.4
-18.2
-18.8
-20.7
-20.4
Georgia
GDP
Percent growth
-10.4
2.6
8.6
11.3
2.9
2.4
Industrial output
Percent growth
-39.7
-9.8
7.7
8.1
-2.7
1.9
Average annual inflation
Percent
15,605.5
162.7
39.4
7.1
3.6
20.1
Exchange rate, end-year
Lari per US $
1.4
1.2
1.3
1.3
1.8
1.9
Consolidated budget balance
Percent of GDP
-16.5
-4.7
-5.2
-3.5
-3.6
-4.1
Current account balance
Percent of GDP
-20.9
-12.7
-7.0
-10.1
-11.0
-7.2
Azerbaijan
GDP
Percent growth
-19.7
-11.8
1.3
5.8
10.0
6.5
Industrial output
Percent growth
-24.8
-21.4
-6.7
0.3
2.2
4.1
Average annual inflation
Percent
1,663.5
411.8
19.9
3.7
-0.8
-5.9
Exchange rate, end-year
Manat per US $
4,182
4,440
4,098
3,888
3,890
4,410
Consolidated budget balance
Percent of GDP
-10.3
-5.2
-2.9
-2.6
-2.0
-4.5
Current account balance
Percent of GDP
-6.5
-16.6
-29.3
-23.8
-33.1
-34.5
* Projected.
to pass power to the younger generation, however, the
"heir" would most likely face a considerable challenge
in consolidating power. It is still too early to know
how pro-Western or pro-Russian (or pro-Chinese) the
next generation of Kazakh leaders will be. Much
depends upon the success of economic reform and the
speed with which Kazakhstan develops its natural
resources.
The pattern of elite relations is less complex in Kyr-
gyzstan and seemingly so in Turkmenistan as well. In
both cases, the ruling family seems to be successfully
consolidating economic control, but is doing sob dif-
ferent ways. The different economic patterns in the
two states make it difficult to generalize across the
two. In a decade or so the Kyrgyz ruling family may
decide that conditions in Kyrgyzstan are so bleak that
it prefers to move its assets abroad, rather than risk a
difficult succession struggle. The "prize" in 'Turkmen-
istan is definitely worth the struggle. The shape of the
17
struggle, though, is more difficult to predict as tradi-
tional Turkmen society is relatively opaque to the out-
side observer.
Economic Change and Modernization:
South Caucasus
Ben Slay
PlanEcon, Inc.
Despite some common legacies in terms of history,
geography, and Soviet rule, the economies of the
South Caucasus present as many contrasts as com-
monalties.
Commonalties
First, the region is at low levels of economic develop-
ment. When measured at market exchange rates in
1998, Georgia had the highest level of per capita
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income at $900, followed by Azerbaijan at $540, and
Armenia at $500.' When measured via purchasing
power parity (ppp) exchange rates, 1998 per capita
income was greatest in Armenia ($2,700), followed by
Georgia and Azerbaijan ($1,900).
Second, all three countries went through a transition
shock during the early 1990s, when steep declines in
output and high inflation rates were recorded. The out-
put shock reflected a number of factors, including: (1)
disruptions in economic activity that accompanied the
dissolution of the USSR; (2) inflationary conse-
quences of price liberalization in the context of the
ruble zone; (3) weaknesses of nascent economic pol-
icy institutions; and (4) military conflicts over
Nagorno-Karabakh, Abkhazia, and South Ossetia. The
introduction of national currencies in 1993-1994, and
the conclusion of agreements with the International
Monetary Fund (IMF) and World Bank allowed these
countries to sharply reduce inflation rates. But despite
the rapid growth recorded by Georgia in 1996-1997
and by Armenia and Azerbaijan in 1998-1999, living
standards for much of the population in all three coun-
tries probably remain well below pre-1992 levels.
Third, Russia remains all three countries' most impor-
tant economic partner. In 1998, Georgia's exports to
other members of the Commonwealth of Independent
States (CIS) was 54 percent, for Azerbaijan this ratio
was 38 percent, and for Armenia 37 percent. Azer-
baijan had the highest import share (38 percent), fol-
lowed by Georgia (35 percent), and Armenia (25
percent). When compared with data from 1992, these
shares reflect a sharp fall from 80 to 100 percent of
both exports and imports.
Differences
Perhaps the largest difference among these three coun-
tries lies in the fact that Azerbaijan is endowed with
significant hydrocarbon resources while Georgia and
Armenia are not. Although much of its potential
remains unexploited, Azerbaijan's oil sector accounts
for more than 50 percent of industrial production and
10 percent of Gross Domestic Product (GDP). Oil-
related investment, trade, and service activities
' All data in this paper come from the relevant countries statisti-
cal offices and national banks, as well as from the IMF, World
Bank, Tacis, and other multilateral agencies.
account for additional large contributions to GDP. The
approximately $1 billion in foreign investment that
Azerbaijan is now attracting annually translates into
33 percent of 1998 GDP. On the other hand, the Azer-
baijani economy is potentially quite vulnerable to
swings in world energy prices.
By contrast, the nonhydrocarbon economies rely more
extensively on agriculture and the service sector. In
Armenia, agriculture produces about 40 percent of
GDP. In Georgia, agriculture accounts for 26 percent
of GDP, and industry and trade account for 12 percent
each. Armenia and Georgia are also quintessential
small open economies with large current account defi-
cits that are financed by transfers and concessional
lending from abroad.
Economic trends during 1998-1999 are a third major
difference. Azerbaijan and Armenia were the only two
CIS countries to report strong GDP growth in 1998
and 1999. Oil production and oil-related construction
projects picked up in Azerbaijan, while a bumper crop
in Armenia boosted the all-important agricultural sec-
tor. Georgia's GDP growth decelerated sharply from
11 percent in 1997 to 3 percent in 1998, and to about 2
percent last year.
Economic Change and Modernization:
Central Asia
Boris Rumer
Harvard University
As one examines the post-Soviet economies of Central
Asia, most exhibit the following characteristics:
� Ossification of the ruling regimes.
� "Primitivization" of the economy.
� Overreliance upon natural resources as the main
source of economic growth.
� A lack of rational improvements in the industrial
structure.
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� The incapacity of domestic investments in the indus-
trial structure.
� The increasing limitations on the ability to attract
foreign investment.
� The worsening of the balance of payments.
� The growth of foreign indebtedness.
� Incompleteness of reform in the agrarian sector.
� The use of agriculture as a "donor" to support other
sectors of the economy.
� An excessive reliance upon import-substitution�
which is by no means always justified.
All these negative dynamics threaten to doom the
economies of Central Asia to protracted stagnation, at
least in the foreseeable future.
In assessing the current state of affairs in these coun-
tries, it is essential to acknowledge the paucity and
unreliability of much of the statistical information
emanating from the region. Particularly important is
the lack of accurate data about the scale of the shadow
economy, which some experts estimate to be as high
as 40 percent of the GDP. Much is also written about
the enormous magnitude of the drug business; in the
apt phrase of some, the medieval "silk route" has
turned into the "narcoroute." Despite the importance
of illicit activities, it is impossible to determine the
actual scale of production and trafficking.
During the 1990s, the countries of post�Soviet Central
Asia have had to traverse a tortuous, twisted path�
one that has led them for a euphoria of unbounded
hopes to a mood of profound despair and disenchant-
ment. The exhilaration that accompanied the sudden
(and unexpected) realization of independence at the
start of the decade has given way to intense public
frustration and a pervasive economic crisis. From
1991 to 1998, the level of economic activity plunged
catastrophically�by 39 percent in Kazakhstan and
Kyrgyzstan, 45 percent in Turkmenistan, and 66 per-
cent in Tajikistan. The exception to this pattern was
Uzbekistan, where GDP decreased by less than 10
19
percent during this period. Although that country
exhibited some signs of modest economic growth (at
least according to official statistics) those gains are
highly misleading: Uzbekistan has actually been
rebuilding the Soviet economic model, a policy that
will most likely lead only to stagnation and perhaps
even a crash.
This economic crisis has been unfolding against a
background of continuous demographic growth. The
impoverishment of the broader population in the
region has reached truly menacing proportions; the
gulf between the fragile stratum of super-rich ruling
elite and the majority living below the poverty line has
reached dangerous levels.
The main factors contributing to economic growth in
Central Asian countries have been foreign trade, for-
eign investment, and foreign loans and credits. The
economies of the countries of the region are critically
dependent on foreign trade. The foreign trade turnover
in these countries represents 60 to 70 percent of the
GDP. In all countries, imports exceed exports. So, the
dynamics of the Central Asian economies are totally
determined by the conditions prevailing on world raw
material markets. The sharp upturn in world prices of
oil, metals, and cotton brought about an improvement
in the economic situation in Central Asia in 2000 from
the previous two years. If one disregards the low start-
ing point, the growth can appear quite impressive. One
should not rush to any conclusions, however, about the
stability of this raw material model: at any moment, a
sudden decline in world prices could burst this fragile
bubble of prosperity.
It became increasingly apparent that the model of
development chosen by Central Asian governments is
in need of serious correction. To judge from the avail-
able evidence, the opportunities for extensive expan-
sion of exports are diminishing. The exception is
Kazakhstan's oil: despite some delays, the Caspian
Pipeline Consortium is making progress in its project
to enable the shipping of oil through the Russian port
of Novorossiisk. Once complete, this pipeline will
permit Kazakhstan to increase its export of crude oil
to a profitable market.
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Macroeconomic stabilization, together with political
stability, make it possible to begin large-scale struc-
tural changes and to give greater attention to the
domestic market. The agrarian sector should become
the main priority of development, at least in Uzbeki-
stan and Kyrgyzstan. In both countries, agriculture
provides employment for about 45 percent of the total
labor force, produces between one-third and one-half
of the GDP, and accounts for a significant part of
exports that earn hard currency. In both countries, eco-
nomic policy actually discriminates against the agrar-
ian sector, which has been transformed into a source
of reserves for import-substitution in industry
(Uzbekistan), or which is used in the interest of com-
mercial intermediaries (Kyrgyzstan). The proportion
of budgetary, credit, and investment resources for the
agrarian sector does not correspond to its role and sig-
nificance in the economies of the Central Asian states.
By functioning as a "donor" for the other sectors of
the economy, the potential is rapidly increasing for a
crisis to beset the agriculture sector itself. To a signifi-
cant degree, this discrimination against the agrarian
sector explains the depressing social and economic
situation in these countries. The eradication of poverty
and indigence is not possible without a change in eco-
nomic policy addressing the needs of the agrarian
sector.
Top priority in the policy of development must also be
given to the expansion of light industry and the pro-
cessing of agricultural commodities. It is precisely
these branches of industry that have been subjected to
the greatest destruction during the processes of trans-
formation and that are now situated on the periphery
of attention in official economic policy. Without a
reorientation of investment resources to these
branches, the Central Asian states are doomed to
remain exporters of agricultural commodities and
products with a low level of processing�as is to be
seen at the current time.
At the dawn of the post-Soviet era, the union of the
Newly Independent States of Central Asia at first
appeared to be entirely natural and realistic. Indeed,
many regarded this unity as an important precondition
for political stability and economic development in the
region. By the end of the 1990s, however, the hopes
for any kind of unity have receded into oblivion. As
ethnic elites built their states and consolidated the
authority of their leaders, each head of state began to
play his own game and pursue his own interests. The
breakup of the Soviet Union actually served to accel-
erate this regional disintegration. The post-Soviet era
has allowed differences in the economic potential of
individual Central Asian countries to become clearly
apparent. The states of Central Asia follow economic
strategies, which are to a large degree, incompatible.
Whereas Kazakhstan and Kyrgyzstan carried out a
policy of reducing the state's regulatory role in the
economy, Uzbekistan and Turkmenistan pursued a
contrary course. It should be painfully evident that this
institutional discordance can hardly contribute to the
process of drawing these five states closer together in
the economic sphere. In this sense, 1999 became a
year of unprecedented economic confrontation among
the states of Central Asia. The disputes erupted in
those spheres where economic interests of the differ-
ent states intersected: trade, energy, transportation,
and water.
In early 1999, the states of Central Asia began to
impose severe restrictions and customs duties on
imports inside the region. Kazakhstan, Uzbekistan,
and Kyrgyzstan established trade barriers against each
other. It reached the point where President Akayev of
Kyrgyzstan accused his neighbors of organizing a
trade blockade against his state. Simultaneously, a
"transportation war" erupted between Kazakhstan on
one side and Uzbekistan and Kyrgyzstan on the other.
Uzbekistan regularly cuts off the delivery of natural
gas to southern Kazakhstan and Kyrgyzstan. In addi-
tion, Kyrgyzstan, as an upstream country for all the
major rivers in the region, shuts off the delivery of irri-
gation water to southern Kazakhstan in spring of
1999. It did so after Kazakhstan failed to deliver coal,
as stipulated in an agreement between the two coun-
tries. Kazakhstan has its own grievances.
This suggests that economic relations among the
countries of the region have been increasingly tense.
Antagonism is mounting and could lead to more
severe confrontations if these trends continue.
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Highlights From the Discussion
Economic Development
Regional economic statistics are important but unreli-
able. In addressing the presenter's point about the
unreliability of data, discussants focused on two likely
reasons for this problem. 1) Data collection by local
governments is underfunded, and as a result, it tends
to be spotty and erratic; and 2) even if data are col-
lected professionally, they do not accurately reflect the
economic transactions in the informal economy (for
example, the black market and drug trade), nor do they
reflect real income levels. One panelist noted, how-
ever, that available data do reflect trends and suggest
where the country is headed in the future.
Economic challenges lie ahead in Central Asia and
the South Caucasus. One panelist argued that the
social and economic data on the region suggest perva-
sive economic stagnation in the future unless drastic
measures are taken. Even if specific sectors flourish,
their success will fail to translate into a trajectory of
growth. The discussion reemphasized a number of
economic challenges that were outlined by the
panelists. These issues include:
� Optimism over Caspian oil and gas is waning
because of the uncertainty about the size of reserves;
political, economic, and technical problems that
complicate exploration and extraction; and the con-
flicting political and strategic interests of outside
states with interests in the region.
� Narcotraffickers are establishing growing stakes in
the economies across the region and are attracting an
increasing number of people into the lucrative drug
trade.
� The economies of Central Asia will be unable to
deal with demographic realities in the future. Unem-
ployment will be exacerbated by the high population
growth rates. Moreover, production in the agricul-
ture sector, where most economic activity takes
place, has stagnated, and the capital-intensive infra-
structure is unable to meet the social needs of the
population.
21
Foreign direct investment and external assistance are
the most important drivers for economic growth in the
region. Panelists agreed that foreign direct investment
(FDI) is essential for growth in the region, but the
regional governments must attract FIN to a range of
sectors, not just the energy sector. One panelist argued
that economic globalization could assist the region in
two ways: 1) FDI and foreign assistance could provide
alternative sources of economic opportunity to the
drug trade; and 2) globalization could mitigate prob-
lems associated with the regions' ethnically and politi-
cally irrational borders. Attracting international
capital, however, requires politically sensitive eco-
nomic reform.
To boost the economic prospects in the region,
Western assistance should be focused on three areas:
� Transportation infrastructure.
� Communication infrastructure.
� Education infrastructure.
A contrarian view of Tajikistan. Conventional wis-
dom holds that Tajikistan, a state plagued by regional
divisions and violence, is the most dramatic failure
among Central Asian states. Several discussants, how-
ever, noted bright spots, including the recovering
economy and the growing political pluralism in the
country. Some panelists also expressed surprise at how
quickly economic growth started, once the civil war
ended.
Political Reform
Democratization is problematic. Participants who
expressed their views generally agreed that democracy
was not about to bloom in Central Asia and that cur-
rent leadership will not willingly transfer power. Even
if successions occur peacefully during the next several
years, new authoritarian leaders probably will replace
the current ones. It was noted that the Russian model,
where elections of local officials have limited the
power of central authorities, may apply in some states,
but each country is likely to follow a distinctive path.
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� Kazakhstan. One panelist argued that Kazakhstan is
the most pluralist of the Central Asian states and
could be quasi-democratic within a generation. The
country has highly developed state institutions, a rel-
atively diverse economy, and an elite group that will
contest for power over Kazakhstan's resources. Par-
liament once was the training ground for political
leadership, but its power has been stripped back so
many times that the economy will be the place that
creates political contenders for power. The panelist
opined that we could see economic power brokers�
Kazalchstani oligarchs�competing for political
power. Kazakhstan probably will not emulate the
Russian center-region power-sharing model. One
panelist worried about the danger of a "Suharto-
type" democracy emerging in Kazakhstan in which
all power is concentrated in a family.
� Tajikistan. Some argued that a pluralist society is
developing. Despite continued regional divisions
and weak state institutions, panelists pointed to the
nascent political civil society and the emerging net-
work of informal political groups who are engaging
in dialogue about their problems. One discussant
observed that only the Tajiks have gone through the
process of defending a national identity, which
strengthens the legitimacy of the state. There was lit-
tle discussion of these arguments.
� Kyrgyzstan. Panelists fear Kyrgyzstan is moving
backwards. Initially it went furthest toward democ-
racy, with contested elections and general press free-
dom. But President Akayev realized that this
threatened his hold on power and has systematically
clamped down on the opposition and the indepen-
dent media in the last four to five months.
� Uzbekistan and Turkmenistan. Panelists and discus-
sants were most pessimist about democracy in
Uzbekistan and Turkmenistan, where strongmen
have a firm grip on power. One panelist predicted
that neither country would develop into anything
similar to a Western democracy during the next 20
years, although she has observed pockets of plural-
ism developing in Uzbekistan.
States face common political problems. Despite the
different political and economic situations in each
country, discussants raised a number of internal and
external issues that impede the development of
democracy in the region. They include the following:
� Lack of national identity. One discussant argued that
none of the states in the region has earned the right
to be called a nation-state, having been thrown into
independence by the breakup of the Soviet Union,
and the elites�who are most interested in power,
money, and personal benefit�in these countries
have failed to communicate "national" visions that
forge a national identity. Consequently, the states are
going through a deep identity crisis. How do people
define themselves�state, ethnicity, religion, or
clan? Another discussant suggested that the ethni-
cally inconsistent borders also contribute to the
identity problem. Globalizing these states could
diminish the importance of borders.
� Lack of genuine opposition parties. Often, the oppo-
sition in these regions is simply a rival ethnic, reli-
gious, or family clique, not a broad-based
democratic opposition.
� Western legal traditions not easily transferable.
Imposing a Western legal approach creates a diver-
gence between the official system and the real
authority structure. A decentralization of power cou-
pled with order could be a more effective approach.
One panelist argued that the region needed the "rule
of law" not "rule of lawyers."
� Lack of capable leaders to change the system. The
discussion showed that both "insiders" of the previ-
ous system and "outsiders" would have difficulty
implementing political reform. "Insiders," who have
been vetted by the Soviet system, do not necessarily
possess the skills to transform a country. Alterna-
tively, "outsiders"�leaders without prior experi- �
ence holding power, such as dissidents or
academics�often become the most autocratic and
corrupt and are usually not accustomed to working
in the system. One panelist opined that entrenched
bureaucrats may be the largest obstacle to change
and that there is often a glass ceiling for Western-
trained, young leaders who enter the government.
Younger leaders who are more educable offer the
West an opportunity to exert more influence.
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Panel II
Challenges to State-Building:
The Impact of Megatrends
on the Regions
This panel examined the impact of global and regional
trends that are shaping the region and beyond, and
explored how the states are dealing with these chal-
lenges and opportunities.
Chairman: S. Enders Wimbush
Hicks & Associates, Inc.
Globalization, Economics, and Communications
Rajan Menon
Lehigh University
There are, of course, significant variations between
and within Central Asia and the South Caucasus no
matter what the topic of comparison. That said, if one
focuses on the contours of the forest, and not the pecu-
liarities of the trees, it is possible and appropriate to
make generalizations that highlight broad trends.
In virtually all eight states in these two regions, the
economic collapse reflected by plummeting Gross
National Product (GNP) values has been arrested and
recovery has begun, albeit from a very low level.
While this is good news, it is clear that it was bound to
happen: economies bit rock bottom eventually; output
does not descend to zero. In the meantime, however,
the toll taken on public welfare has been immense,
and the implications for the developmental trajectories
of these countries are staggering�and worrisome.
Inflation and budget deficits have likewise been
brought under control, due in no small measure to the
tutelage and discipline of global economic institutions
such as the IMF and World Bank. However necessary
this stabilization may be�and conceding that it has
created a better climate for growth and investment�
the hardships imposed on citizens by cuts in expendi-
tures for health, education, and welfare, have wors-
ened life for the average person. Unless improvements
are carried out, the support for reform could dry up
inasmuch as it will become identified with penury. A
backlash in the form of instability, radical movements,
and anti-Western sentiments cannot be ruled out.
23
Trade patterns show that while the activities of Turkey,
Iran, and the West have reduced the role of Russia in
some post-Soviet states, the commonplace view that
Russia is an economic disaster is false. Russia retains
a significant position in the trade profiles of the coun-
tries in Central Asia and the Caucasus. It leads the
West as a whole in trade with Azerbaijan, Kazakhstan,
Kyrgyzstan, and Tajikistan, and holds a position that is
not significantly inferior in the other four. The reasons
are easily understandable. The outside world is still
relatively unfamiliar with these two regions. Many of
them have not made it easy for Western firms to forge
ties. The ruling elite (regardless of the rhetoric) is a
Russified stratum forged by the Soviet system. Estab-
lished markets and communications routes lead north,
not east, south, or west. With time, Russia may yet be
displaced, but any notion that it is no longer a player is
a case of wishful thinking.
Nor is there much evidence that a flood of foreign
direct investment (given the near absence of viable
capital markets, there is no portfolio investment to
speak of) will render Russia irrelevant. As compared
to other parts of the world that qualify for the designa-
tion "emerging markets"�say, East Asia or Central
Europe, or even South Asia, the amount of foreign
investment is pitifully small�and smaller still if one
excludes the energy sector. Because hydrocarbons
account for the bulk of investment from abroad, Azer-
baijan, Kazakhstan, and Turkmenistan dominate the
picture. Outside the oil and gas sector, it is other raw
materials, not manufacturing, which attract invest-
ment. This makes for a pattern with potentially perni-
cious consequences that are well known to
development economists: given that the prices of raw
materials and energy tend to be volatile, there are sig-
nificant risks to banking on growth spurred by foreign
direct investment that is so sector specific.
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Perhaps the most disturbing part of the economic story
has to do with popular welfare as indicated by the data
on unemployment, income inequality, corruption
(which primary benefits the wealthy and powerful),
and public services. As is true in most (but not all) of
the post-Soviet region, the situation is bleak. People
are poorer and less apt to be employed, and income
equality is much larger than in 1991. To make matters
worse, this reality exists alongside severe cuts in pub-
lic spending and the social safety net, exacerbating the
vulnerability of the poor. The public health systems in
these eight countries are a shambles, the educational
systems suffer from everything ranging from unsani-
tary and unsafe schools to a lack of textbooks. The
bottom line is that the human and physical capital
needed for recovery and robust growth in the new cen-
tury is not being created. This does not augur well for
the prospects for democracy (which is not particularly
good, in any event, outside Georgia and Armenia, and
perhaps Kazakhstan and Kyrgyzstan) and civil peace.
Globalization is not an option (even for North Korea),
it is the reality, if by globalization one means the rapid
and multiple ways in which what is familiar is shaped
by what is beyond and unfamiliar. Having been
opened up to the world following the Soviet Union's
collapse, Central Asia and the South Caucasus will
experience these potentially dramatic effects of glo-
balization�and with little prior experience. Some of
the consequent effects will be benign (greater access
to information and assistance); others will or could be
malign �disruptive challenges to tradition, expecta-
tions that are raised by external influences but that
cannot be fulfilled by internal authorities.
Central Asia and the South Caucasus are in a worse
position relative to much of the rest of the world to
adjust to the shocks of globalization while taking
advantage of its opportunities. They have weak poli-
ties that are, albeit to different degrees, "overpersonal-
ized" and "underinstitutionalized." Moreover, the
post-Soviet transformation has already forced them to
take on a great deal without their having to contend
with the social mobilization and dislocations that glo-
balization could bring. Worst of all, they may be
unable to harness the many benefits of globalization.
What will be the net effect? As Thou Enlai said once
when asked about the effect of the French Revolution:
"It is too early to say."
Civil Society: Grassroots Organizations
in the South Caucasus
Stephen Jones
Mt. Holyoke College
An essential function of any democratic state is the
creation of a legal and economic framework for civil
society. Democracy is meaningless without the capac-
ity of citizens to participate in policymaking. In the
South Caucasus states, the elements of an effective
civic community�enlightened self-interest, mutual
trust, horizontal links between groups, economic inde-
pendence, and respect for the rules�are weak or in
many areas outside the capitals, nonexistent. In Geor-
gia, Armenia and Azerbaijan, as in other post-Com-
munist societies, the obstacles to interest and
associational group development are related to multi-
ple factors�an absence of clear social cleavages, a
limited consciousness of common interests, organiza-
tional inexperience, the existence of more traditional
loyalties to kin and patrons, and ignorance of new
laws.
But the Soviet legacy is only part of the problem. The
new governments have, on the whole, legislated the
formal framework for the existence of associational
and interest groups, but they cannot or will not meet
other important requirements for the establishment of
a democratic civil society. I would list those in
approximate order of importance to be: an economic
environment that serves the population's basic needs;
an effective state capable of implementing, monitor-
ing, and correcting mismanaged policies; a relatively
clean government, or a govenunent that attempts to
control corruption; and the public accountability of
executive and legislative structures.
Civil society is a partnership between state and soci-
ety, but in the Caucasus, the states are no longer part-
ners. The states' withdrawal from their responsibilities
in major sectors of economic life has undermined the
capacity of the majority of the population to partici-
pate in policymaking, permitted vastly unequal access
to political power, increased the scope for corruption
and the growth of powerful unaccountable private
interests, widened the gap between state and society,
and reinforced popular cynicism. J. K. Galbraith's
remark that "nothing.. . sets a stronger limit on the
24
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liberty of the citizen than a total absence of money" is
particularly appropriate in South Caucasus societies.
Michael Mann has pointed out that the active involve-
ment of the state in society�what he calls "infrastruc-
tural power "or the state's ability to centrally
coordinate and regulate civil society�is perfectly
compatible and necessary even to effective democ-
racy. Such regulatory involvement with society is not
the same as "despotic power" or the state's ability to
arbitrarily exercise power over society. Maintaining
infrastructural state activity in society rather than
emphasizing its separation from society is the best
means to democracy and a functioning civil society.
This is true particularly in the conditions of systemic
collapse and political transformation when the state
has to create the authority, consensus, and rules that
sustain liberalism. A weak state in terms of an absence
of infrastructural support for its population, which is
the situation in all three South Caucasus states, will
produce the very elements that undermine liberal
ideals�economic decline, gross inequalities, and
public cynicism.
In this context, civil society exists at three distinct lev-
els in the South Caucasus. The tendency to focus on
one level, neglecting the other two levels, which com-
pose a large segment of the populations in the South
Caucasus states, leads to a misunderstanding of the
level of development of civil society in the region and
to counterproductive policies intended to foster civil
society. The three levels of civil society are:
� Level one represents the local nongovernmental
organizations (NGOs) that operate mainly in the
capital cities which receive support and financial
assistance from the United States and international
organizations. Their operating language is English,
and their activities promote democracy in the region.
They represent a fragile network in the region that
focuses on issues such as improving access to infor-
mation, promoting human rights, and increasing and
sustaining public confidence in the government.
Their activities are highly visible to the international
community, but often these NGOs run amateurish
operations that have little local support and probably
will not survive without external funding.
25
� Level two embodies the average worker in South
Caucasus societies, such as the government clerks,
farmers, and factory workers, who are disconnected
from public life. This group represents a vacuum in
the middle of society that is unorganized and cynical
about the political and economic changes, and that
has no incentive to participate in civil society. The
focus of external NGOs should be to bring these
people into the political process.
� Level three includes the traditional clan, kin, and cli-
ent/patron relationships that keep the country run-
ning. These networks tend to be corrupt and exist
outside of the government. But they are the mecha-
nisms that support people's daily lives in the region.
These organizations can erode the power of states,
but are necessarily inimical to the state and civil
society. These networks that affect the daily lives of
all citizens must also be accepted as an integral part
of civil society.
Civil Society: Grassroots Organizations
in Central Asia
Fiona Hill
The Eurasia Foundation
At the end of the 1990s, the common view of the
states of Central Asia is that they have been effectively
transformed into oligarchies rather than representative
democracies and that there are few opportunities for
citizen participation in government or civic and eco-
nomic affairs. Although this view is not inaccurate, it
is certainly incomplete. During the last decade, there
also have been some significant positive achievements
in the new states of Central Asia. Perhaps the most
important development is that as state institutions
have collapsed, small and medium-sized enterprises,
business incubators, professional associations, new
and innovative educational institutions, independent
media outlets, and NGOs all have appeared.
A decade after independence, these grassroots efforts
are in fact beginning to make their presence felt, to
engage with governments and certainly to shape the
civic and economic landscape, even if they have not
yet become a major factor in domestic politics. They
offer both opportunities and challenges to regimes�
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,
opportunities where they provide crucial social ser-
vices that governments cannot afford on a mass scale,
thus helping to alleviate social pressures; and chal-
lenges where they question government policies or
call for new laws or major change. Internal and exter-
nal NGO programs to strengthen the independent
media have perhaps been the most challenging to local
governments, although programs by groups such as
Internews to offer broader access to information for
mass media outlets.
The paths taken by the five Central Asian states since
independence have been very different, ranging from
relative openness and attempts at reform in Kyr-
gyzstan to the maintenance of a semiclosed society
with the trappings of a command economy in Turk-
menistan. Given the growing political and economic
differences among the states, it is difficult to make
general statements about grassroots organizations in
the region, and the NGO sector and its relationship
with the state is different in each country.
In Uzbekistan, most NGOs are really what one might
call GONGOs (government-organized NGOs). They
have full government support and do not openly chal-
lenge the government on issues. The government also
makes it very difficult to register an NGO, especially
if it has a mandate or name that might appear poten-
tially troublesome by mentioning the word "reform."
Many NGOs listed in Uzbekistan, therefore, are not
registered by the government. The lines between a
more conventional NGO, government, and private
enterprise are often blurred, with many self-pro-
claimed NGOs operating on a fee basis. Indigenous,
traditional models of civil society have been actively
promoted by the government, including Makhallas or
grassroots neighborhood associations that existed in
pre-Soviet times as a self-organizing body for groups
of buildings and streets. Makhallas are now seen
increasingly as a source of local leadership and a
mechanism for small-scale assistance, such as loans
and microcredit as well as welfare payments, and
external NGOs, such as the Eurasia Foundation, have
begun to work with them directly. Within Uzbekistan,
at the subregional level, there are differences in rela-
tions between government and NGOs.
In contrast to Uzbekistan, in Tajikistan, many NGOs
are truly grassroots organizations. Here the chaotic
state and fragility of the central government in the
wake of the 1992-1997 Tajik civil war, a daunting
array of social and economic problems, and poor
interregional communications, have distracted the
government and loosened controls. NGOs have
sprouted throughout the country and often joined
forces to discuss key issues of reform. Public debates
have taken place openly and regularly in Tajikistan
that would be rare elsewhere in Central Asia. The
Association of Political Scientists in Dushanbe, for
example, has become the premier organization target-
ing the problems of establishing and developing a
multiparty system in Tajikistan and in discussing the
role of parties in the government.
Grassroots organizations have also stepped in to take
direct action to address the country's problems. The
Tajik Center for Entrepreneurship and Management in
Khudjand in northern Tajikistan, for example, and
other organizations like it, have created training pro-
grams in accounting, finance, management, marketing
and basic business skills for farmers and would-be
entrepreneurs.
In Turlanenistan, grassroots organizations are few and
far between, and the number of registered NGOs can
be counted on one hand. Those that are officially
licensed all managed to slip their registration docu-
ments past some less than attentive government offi-
cial a few years ago. Most focus on environmental
issues, although there are also a number that offer spe-
cific resources and social services. The Turkmen Gov-
ernment deals with grassroots organizations primarily
as challenges and/or threats to its authority.
In Kazakhstan and Kyrgyzstan, the growth of grass-
roots organizations is slow but definitely moving for-
ward. In Kazakhstan, private enterprise NGOs, such as
business and professional associations, probably have
had the most success. The local government is becom-
ing increasingly flexible (rather than obstructionist) in
this area and open to innovation, especially at the
microlevel. For example, in Almaty, the independent
"IUS" Law Center, which is affiliated with the Adilet
Higher School of Law, has created an arbitration cen-
ter that offers an alternative mechanism for resolving
economic and commercial disputes to the still unre-
formed court system. The center also offers assistance
to NGOs, small businesses, and other professional
associations in addressing financial and legal prob-
lems and is lobbying for the passage of a law on arbi-
tration with the government.
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In Kyrgyz,stan, independent financial institutions,
NGOs, and other grassroots organizations are already
part of the political and economic landscape. The
NGO movement also seems to be finding a voice with
the government. It is not uncommon for NGOs to
advocate through the courts, parliament, or legislature.
In the Ferghana Valley, for example, the Osh-based
Fund for Legal and Economic Reforms offers legal
support for NGOs, is creating a traveling legal clinic
to address land disputes throughout the Kyrgyz por-
tion of the Valley, and is lobbying the government for
court reform and new legislation. This program is a
testament to the people's growing belief in their ability
to influence domestic politics.
In spite of the differences, regional NGOs share com-
mon problems, not least of which are difficulties in
obtaining funding. Moreover, and the activities of
external NGOs are hindered by legislation and diffi-
culties in registration. One major problem with NGOs
across Central Asia is a lack of a constituency base or
membership. An additional problem in Central Asia is
the growing "technology divide"�not only with the
West, but also with Russia, and between the regional
capitals and provincial cities and rural areas. A sense
of information deprivation prevails across the region,
which is particularly acute in the more remote areas of
Central Asia, and critical regions like the Ferghana
Valley. Grassroots organizations have serious diffi-
culty in establishing contacts with similar organi7a-
tions to share experiences and best practices. NGOs
and citizens in Central Asia are reaching out to each
other at the same time that regional governments are
moving further apart, focusing on state-building and
consolidation, and carving out spheres of influence.
In sum, in spite of the obstacles, there are numerous
new and potentially significant developments at the
grassroots level in Central Asia. Although these are
still in their infancy and it is difficult to project just
how these efforts will shape the region, clearly author-
itarian presidents, oligarchs, and corrupt business and
government elites are not the "only show in town". In
Central Asia, the states are authoritarian, not totalitar-
ian. This means that there are cracks in the political
facade that civil society is able to push through. With
patience and funding, indigenous grassroots organiza-
tions and external NGOs can work there in the larger
interests of the people of the region.
27
Islam and Other Ideologies
Olivier Roy
French National Center for Scientific Research
Political Islamic movements of the 1970s and 1980s
have moved in two different and contradictory direc-
tions. On one hand, the mainstream movements
became more moderate and integrated in national pol-
itics. On the other hand, a more conservative Islam is
emerging that is not revolutionary, but is more mili-
tant, supranationalist, and anti-Western/anti-United
States in its orientation.
� Islamic nationalism. This movement represents the
integration of Islam into the political state as seen
with the Islamic Republic in Iran, Refah in Turkey,
Hezbollah in Lebanon, the Islamic Salvation Front
(FIS) in Algeria, and the Tajik Islamic Movement in
Tajikistan. For example, in Tajikistan the Tajik
Islamic Movement recognizes the role of the state
and now promotes an Islamic identity, not against
secularism, but against Uzbekistan. These Islamic
parties focus on political integration and nationalist
foreign policy. Shariat is less and less a reference
point for them, although they push for a conservative
social order.
� Salafi-jihadist. This movement is attracting either
rootless (Ramzi) or committed internationalist (Bin
Laden) militants. They discard state borders, fight
for the jihad, and seek to re-create the Muslim
ummah and shariat as the axis to build an Islamic
community. They are both conservatives and radi-
cals and are connected to a global network that
attracts Muslims from all over the world to fight
"peripheric" jihad in Kashmir, Bosnia, Chechnya,
Afghanistan, and the Philippines.
Islamic fundamentalism in Central Asia and the Cau-
casus refers to the salafi-jihadist model, except in
Tajikistan. But, despite its internationalist claim, the
salafi-jihadist movement in Central Asia and the Cau-
casus tends to be more localized�an expression of
local identity in areas such as Ferghana, villages in
Daghestan, and upper Gharm valley�rather than
national or even supranational movements. Generally
speaking, Islamic radicalism tends to reenforce
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national, ethnic and regional divides. Sometimes the
ethnic and national fauldines match, but more often
they do not. Consequently, in Central Asia these
salafi-jihadist movements are a divisive factor and not
a unifying one.
The Central Asian states are secular. Islam shapes
society, but does not influence the politics. The gov-
ernments in the region give lipservice to traditional
Islam as a factor of social conservatism. The govern-
ments in the region seek to control the official clergy,
which have power over the great mosques in the
region. But at the same time, we see conservative cul-
tural trends where Islam is blended with tradition.
Polygamy in Turkmenistan is an example of the social
influences of Islam in the region. But it does not lead
to political mobilization. In most of Central Asia radi-
cal Islam is not a threat to the state. In Tajikistan,
Islamic nationalism has been a critical driver of state
consolidation. This has also been the case in Iran.
Uzbekistan, however, represents the only country
where political Islam may challenge the ruling order.
Islam does not play a role in the foreign policy of
these states, except when the governments perceive a
threat, such as the salafi-jihadist threats emanating
from Afghanistan, Pakistan that is fomenting localized
instability.
Narcotrafficking and the Rise of
Independent Militias
S. Fredrick Starr
Central Asia-Caucasus Institute
In Central Asia, the traditional Western definitions for
drug dealers, mafias, and militias blur. All three cate-
gories have become so inextricably linked that one
cannot distinguish one from the other. The activities
and support of all three categories are far more inter-
national than ever before, particularly in terms of
funding.
Narcotrafficking
No development in Central Asia has greater geopoliti-
cal significance than the worldwide shift of heroin
production from Burma and the Golden Triangle to
Afghanistan between 1995 and the present. Whereas
the wholesale value per kilogram of cocaine in any
major world capital is between $10,000 and $40,000
dollars, the corresponding value for heroin is between
$150,000 and $250,000. Afghanistan (and, increas-
ingly, adjacent areas of Pakistan, Tajikistan,
Kyrgyzstan and Xinjiang) produces and/or processes
85 percent of heroin consumed in Europe and also
meets a rapidly growing percentage of Asian (mainly
Chinese) demand. Ninety percent of the raw product
derives from Taliban-held areas of Afghanistan.
Central Asia is now by far the largest of four main
export routes (Iran, Pakistan-China, Pakistan-India).
The traffic is dominated by international cartels based
increasingly in Moscow but also in Nigeria, Colum-
bia, the Caucasus, and the Balkans. Powerful local
traders are responsible for their own territories and are
paid by the cartels "in kind." This is leading to the
rapid growth of consumption across Central Asia.
The value of drug trafficking in Central Asia is not
known but it probably now constitutes the largest
national income stream in Tajikistan and close to that
in Kyrgyzstan. Both opposition and official branches
of the Tajilc Government receive money from this
source, as do some law enforcement officers, customs
officials, and military officers in the other countries,
according to local informants.
Where is the focus of activity? It is found not in the
urban areas but principally in the mountainous rural
areas, where other economic alternatives are scarce.
The drug trade is fueled by the poverty in the most
neglected regions. The Ferghana Valley has been a
center of activity. Despite the efforts of Uzbek author-
ities, interdiction hovers at about 5 percent.
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Independent Militias
Like the drug traders, militias are almost always inter-
national in character, formed at bases outside the
former Soviet space, and supported by Middle Eastern
and Pakistani patrons and drug dealers. Militias feed
on unemployment rather than political repression.
Interviews with dozens of former Tajik militia mem-
bers now in the Tajik army indicate that the promise of
financial rewards, often extending to their entire fami-
lies, rather than reaction against repression or the pres-
ence of an attractive ideology, is the main motivation
for participating.
The international community can take steps to cut
back the drug traffic and militias and reduce demand
for drugs. Drug production is demand-driven and the
main consumers are in the West.
� Stanch the flow of international funding to militias.
Support for militias not deriving from drugs comes
from several of America's closest allies, including
29
Saudi Arabia and the United Arab Emirates.
Address the chaos in Afghanistan. Were some form
of stability to be established in Afghanistan, both
militias and the drug trade would be denied their
essential feeding ground.
� Provide economic alternatives to poor, mountainous
regions in Central Asia.
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Highlights From the Discussion
The Impact of Islam
Commentators should be mindful of how they talk
about Islam. How we define Muslim states and refer
to Islamic groups or movements is constrained and
distorted by terms, which are inaccurate or is misun-
derstood by the West. Several examples were raised
during the conference:
� Islamic and Muslim States. The difference between
Islamic and Muslim states has blurred during the
past several years, particularly as Islamic parties
emerge in traditionally secular Muslim states, such
as Egypt and Turkey.
� Fundamentalists versus Extremists. One discussant
cautioned the panelists that the term "fundamental-
ists" carries significant derogatory baggage. Funda-
mentalists in any religion hold strong views, but
they are not necessarily violent or antistate.
"Extremist" Islam may be more appropriate to
describe the dangerous Islamic movements in the
region.
� Wahabis. In Central Asia, Wahabis refer to funda-
mentalists who come from Pakistan or Afghanistan,
but they are not necessarily a political movement.
For example, Wahabis in Tajilcistan do not recognize
themselves as a political alignment. However, most
Central Asian regimes use the term Wahabi more
broadly to describe Islamic religious movements
outside the states' control.
Divided views over the role of Islam in Central Asia
emerged. There was some disagreement over whether
Islam plays a role in fomenting conflict and instability
in the region. Several panelists argued that Islam is a
moderate force in Central Asia. Others observed that
Islam strengthens national and ethnic identities and
fuels internal tensions.
There was concern that Central Asian leaders may
exaggerate the threat from Islamic extremists to attract
sympathy and aid from the West and that in reality
some of these governments are creating their own
internal stability problems by repressing even moder-
ate expression of Islam. One discussant, on the basis
of his time in the region interviewing captive Uzbek
and Kyrgyz Islamic militants in Afghanistan, argued
that the growing number of Islamic militants are
largely "pushed" out of their countries to escape eth-
nic discrimination, police abuse, and a lack of eco-
nomic opportunity, rather than "pulled" by the appeal
of extremist Islam.
Afghanistan
Stability and prosperity will only follow a solution of
the Afghanistan conflict. Afghanistan is the nexus for
training and staging of Islamic militants and the nar-
cotrafficking that sweeps across the continent from
Burma to Turkey. Instability at the core of the region
inhibits energy transportation. Russia will continue to
use instability in Afghanistan to justify its presence in
Central Asia.
Pakistan feeds the Afghanistan problem. One discus-
sant highlighted the inextricable link between the
Afghanistan problem and Pakistan by detailing the
involvement of the Pakistani military in the training
and funding of the Taliban and other Islamic militants.
He witnessed the shipments of weapons and food
from Pakistan to training grounds in Afghanistan.
Therefore, policy directed at solving the Afghanistan
problem will have to contend with Pakistan's contrib-
utory influence.
A stable Afghanistan is no panacea. While these pan-
elists agreed that the Afghanistan conflict must be
resolved to bring stability to Central Asia, a multi-
pronged approach is required to address the drug traf-
ficking problem. First, the demand side of the cocaine
and heroin problem must be addressed to effectively
stymie drug trafficking. Second, international aid and
development programs must focus on creating alterna-
tive economic opportunities for populations that are
forced to live off the drug trade, particularly in rural
areas. A stable Afghanistan will reduce the inunediate
Islamic threat in Central Asia but will not eliminate
Islamic militant movements, which are international
and enjoy a vast network of supporters across Asia,
from the Philippines to North Africa.
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Problems and Opportunities in the Development of
Civil Society
Central Asia and the South Caucasus may be faced
with a "lost generation. "The flight of human capital,
combined with declining resources available for edu-
cation, is a critical problem in both regions. Education
infrastructure is rapidly deteriorating, leaving the
young generation to grow up with little or no formal
education. One panelist enumerated a number of fac-
tors contributing to the education problem.
� The dire poverty of many communities in the region
inhibits the schooling of children. Many are required
to stay at home to help on farms or are put to work to
earn money. Many children lack schoolbooks or
even shoes to wear to school.
� The dilapidated school infrastructure is unsanitary
and lacks sufficient heating facilities, which keep
children away in the winter months.
� Textbooks are scarce, and those available tend to be
poor and unbalanced.
� Because of the regimes' inability to pay teacher sal-
aries, many of these countries face a teacher short-
age, particularly those qualified to teach languages.
For example, Georgia is experiencing a shortage of
instructors to teach Georgian to non-Georgians,
which exacerbates the integration problem.
Some panelists noted that these education problems
could pose insurmountable obstacles for the economic
development in these regions and that these countries
could be left behind in the era of globalization. Sev-
eral panelists commented that private institutions
funded by a variety of international organizations have
begun to fill the vacuum created by the collapsed pub-
lic education infrastructure. But for the most part only
the elites have access to these private institutions. One
panelist disagreed, however, with this assessment in
the case of Uzbekistan, where public education insti-
tutions have shown great resourcefulness in managing
scarce resources and in instituting fee-paying
programs under the auspices of the public organiza-
tions. He also noted that entreprenurialism in the edu-
cation sector is fueling the establishment of a myriad
of educational institutes�for secondary and higher
education�across Uzbekistan, which are not only
available to the country's elite.
31
Civil society projects should focus on the microlevel.
Several panelists and discussants agreed that large-
scale change is difficult to initiate, but that significant
progress is being made at the local and microlevels
through targeted assistance and the work of NGOs�
termed the "thousand points of light" approach by one
panelist. Microlevel change can only be achieved by
working on the ground with the local people, particu-
larly in the rural areas. Numerous small enterprise
associations are developing in Central Asia. However,
more microcredit is needed for such enterprises to
make a larger contribution to growth and employment
in these societies. One discussant, who is a native of
the Central Asian region, lauded the Eurasia Founda-
tion for its dedication to sustainable projects. Several
discussants observed that women in Central Asia are
taking leadership and decisionmaking into their own
hands to improve their situation, especially in Uzbeki-
stan and Kyrgyzstan.
NGOs are shaping civil society but must focus on sus-
tainability. To be successful, the organizers of external
assistance programs must make an effort to under-
stand state and civil society relationships in these
regions. Much of the civil society activity in these
countries takes place among labor groups, farmers,
and pensioners that live outside the capitals and there-
fore, are currently neglected by Western NGOs. One
panelist argued that international NGOs must focus on
developing local, self-sustaining NGOs. Currently,
active, international NGOs in theses regions tend to
generate resentment among the locals because they
often fail to foster a sense of equality or partnership
with domestic organizations. This results in a growing
dependency on the NGO and little preparation for a
"post-NGO" environment. Consequently, when the
advisers leave, the communities are ill equipped to
carry on by themselves, making many civil society�
building projects unsustainable.
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Panel ill
Regional Dynamics
This panel examined how each new state views its
relationships with surrounding states, including both
other Newly Independent States and those outside the
boundaries of the former Soviet Union, taking a
regional approach, not an intraregional approach. This
new regional context has many new features that also
involve outside states. Speakers from the South Cau-
casus and Central Asian regions were asked to outline
how each of their respective countries is thinking
about its strategic universe.
Chairman: Tom Zamostny
Office of Russian & European Analysis
Strategic Universe of the States in the South
Caucasus
Paul Henze
RAND Corporation
Russia's shadow hangs heavily over the entire South
Caucasus region. All the states of the South Cauca-
sus�Armenia, Azerbaijan, and Georgia�suffer from
the effects of two centuries of Russo-Soviet domina-
tion, a form of colonialism more pernicious than that
experienced by most Third World countries. Seen in
broad historical perspective, Russian imperial domi-
nation enforced peace in the region and generated eco-
nomic momentum. These were positive gains, but 70
years of Soviet rule badly distorted Caucasian coun-
tries' evolution, subordinating economic development
to Moscow's priorities, creating a sense of political
powerlessness and irresponsibility among the citi-
zenry, and laying the basis for intensified ethnic ten-
sions once KGB controls were relaxed.
To compound matters, Russians (with and without
varying degrees of governmental support) engaged in
irresponsible political maneuvers during and after the
collapse of Soviet power which have left a legacy of
unsettled conflicts in each of these countries. In addi-
tion, instability in Caucasian regions that remain
within Russia�the entire North Caucasus�continues
to affect the countries on the southern side of the
mountains. Russia has been unable to develop a coher-
ent Caucasus policy or to rein in military adventurers,
33
old Communists, and neo-imperialist nationalists.
Thus it has stumbled from one brutal intervention to
another in both North and South Caucasian affairs. It
has generated fear and distrust in Georgia and Azer-
baijan. It has exacerbated political, economic, and
social problems in its North Caucasian republics.
Strategic Universe
Georgia and Azerbafjan share deep distrust of Russian
neo-imperialist tendencies. Both blame Russia for
exacerbating internal ethnic strains. Both suspect Rus-
sia of abetting assassination attempts against their
leaders. Both wish to reduce residual dependence on
Russia and reorient all their relationships in a West-
East, rather than North-South direction. Both give
high priority to good relations with Turkey. Both
desire closer relations with NATO. Both aspire to
becoming part of an economic corridor extending
from Eastern Europe through Central Asia all the way
to China.
The fact that the population of Georgia is overwhelm-
ingly Orthodox Christian while that of Azerbaijan is
predominately Shia Muslim has little effect on public
attitudes or on these countries' political orientation.
Both give cooperative relations with each other high
priority. Georgia values close relations with Turkey,
Ukraine, and Europe, especially with Germany. The
United States looms large in Georgia's interests and
expectations. Georgia also aspires to close relations
with the FSU states of Central Asia, particularly
Uzbekistan. It has close relations with Israel and a
fairly close relationship with Iran. Azerbaijan has an
edgier attitude toward Iran stemming from its people's
links with and interests in the much larger Azeri popu-
lation of Iran. Azerbaijan enjoys a good relationship
with Israel. In almost all other respects, Azerbaijan's
attitudes toward other countries and peoples, includ-
ing the United States and Europe, parallel those of
Georgia.
Armenia continues to be led by men who favor Russia
as a protector. Armenia pays lip service to notions of
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regional and, specifically South Caucasian, economic
cooperation but has isolated itself by its aggression
against Azerbaijan. Russia's inability to formulate a
rational, forward-looking Caucasus policy leaves it
locked into its old imperial habit of exploiting Arme-
nia as a base for politicking in the region. For neo-
imperialist Russians, Armenian reconciliation with
Turkey (which would bring the country many eco-
nomic advantages) is undesirable, as an Armenia
enjoying constructive relations with its geopolitical
neighborhood could no longer serve Russia as a pawn.
Armenian leaders, encouraged by diaspora extremists,
have so far been unable to extricate themselves from
this predicament.
Armenians are beset with victimization complexes.
Armenia feels tied to Russia (even though it cannot
always trust it) and distrusts Turkey; as an alternative
it is pursuing close links to Greece. Armenia looks to
Iran as a tactical friend and shares many of the con-
ventional attitudes of Russians toward Arab and Bal-
kan countries, seemingly preferring radicals and
mavericks among them. Among European countries,
Armenia feels warmest toward France, where there is
a large Armenian diaspora. Armenia wishes to be
regarded as a European/Western country, but its close
links to Russia limit the enthusiasm with which it par-
ticipates in European and NATO activities. Armenia
regards the United States as an important friend but
relies on its diaspora in America to press the US Con-
gress, against the desire of the Executive and public
opinion, to maintain punitive measures against
Azerbaijan.
Regional Cooperation
The most constructive alliance for the South Cauca-
sian nations would be one that brought all three
together in a common market with security and politi-
cal dimensions as well as far-reaching economic coop-
eration. It would require a full settlement of
differences between Armenia and Azerbaijan. There is
good reason to believe that Russia, as presently led,
would go to considerable length to discourage and/or
block realization of any South Caucasian alliance, pre-
ferring to deal separately with each South Caucasian
country and retain the option of encouraging rivalry
and strain among them.
What makes these alliances possible? A South Cauca-
sus common market would be logical from an eco-
nomic and energy viewpoint; it also makes geographic
sense, given the importance of expanding all forms of
transport through the region in coordinated fashion.
Security cooperation among the three is another
important dimension that would be mutually benefi-
cial in controlling smuggling, drug traffic, and
terrorism.
Nature and Future of Regional Institutions
Georgia and Azerbaijan give great importance to all
regional organizations, arrangements for cooperation
with NATO, the European Union and the Organization
for Security Cooperation in Europe (OSCE); both
countries are enthusiastic about unilateral and multi-
lateral military training arrangements, East-West
transport schemes, Black Sea cooperation efforts, and
regional economic cooperation initiatives with Middle
Eastern countries to the south. It is too early to foresee
how GUUAM will develop, but Georgia and Azer-
baijan see it as having a significant future with the
potential for developing into a roof over other cooper-
ation and alliance arrangements. None of these
regional cooperation arrangements is yet fully struc-
tured; most are dependent on meetings between presi-
dents and other political leaders which sometimes
entail little followthrough.
All three South Caucasian countries value member-
ship in the United Nations and most of its subordinate
organizations. All recognize that it provides a frame-
work for some degree of mitigation of territorial dis-
putes. All welcome the various kinds of assistance that
UN agencies can provide. None of these countries,
however, has unrealistic expectations about the UN's
ability to deal with major problems and areas of
tension.
As long as Armenia retains close strategic links to
Russia, it is likely lobe primarily a nominal partici-
pant in most of the cooperative arrangements that
Georgia and Azerbaijan value. If the status of
Nagorno-Karabakh were to be regularized and a for-
mal reconciliation between Armenia and Azerbaijan
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achieved, accompanied or followed by the opening of
a normal relationship between Armenia and Turkey, a
whole range of possibilities for Armenia's whole-
hearted participation in regional cooperative arrange-
ments would open up. Russia remains the primary
impediment to cooperation in the region. Stability,
consolidation of democracy, and steady social and
economic progress in the South Caucasus will be pos-
sible only when Russia reconciles itself to the loss of
imperial conquests in the region and adopts a con-
structive concept of the future of the region.
Cascading Effects of the Ongoing
Regional Conflicts
The conflicts between Armenia and Azerbaijan over
Nagorno-Karabakh adversely affect the economic and
political development of both countries. It has created
a festering refugee problem in Azerbaijan that is a
serious social and economic burden. The areas of
Azerbaijan occupied by Armenia are condemned to
stagnation. The same is true of the situation in Abkha-
zia. Costs of rehabilitation of both of these areas will
increase steadily the longer the stalemates persist. The
same is true to a lesser extent of the situation in South
Ossetia.
Continuing ethnic stress, political tension, and relative
economic stagnation have resulted in an ongoing pop-
ulation drain from each South Caucasian country.
Loss of population is most serious in Armenia and
Georgia, and less so in Azerbaijan, the most populous
of the South Caucasian countries. This emigration has
two medium- and long-term negative dimensions: (1)
if and when economic resurgence occurs, a labor
shortage could inhibit development; and (2) a brain-
drain deprives each of these countries of some of their
best educated, talented and motivated men, women,
and youth.
Russia's brutal assault on Chechnya, compounded by
efforts to intimidate Georgia and Azerbaijan for their
sympathy with the Chechens, has reverberated
through the South Caucasus. Stability in the South
Caucasus is inevitably affected by developments
immediately to the north. The Soviet Union was never
able to devise a satisfactory political approach to the
entire Caucasus region and instead fell back on the
Tsarist habit of divide et impera. The problem has
been compounded for the rulers of independent Russia
by the independence of the South Caucasus. So far,
they have failed to meet the challenge.
35
Georgia's Perspective
Ghia Nodia
Caucasian Institute for Peace, Democracy and
Development
Georgia views its fundamental political choices in the
system constituted by two poles: Russia and the West
Although views of Georgian political elites and Geor-
gian public may have become somewhat more com-
plex and sophisticated as compared to the period of
pro-independence euphoria ten years ago, this funda-
mental bipolar view of the political situation in the
region has not changed, and probably will not change
in the foreseeable future.
In this view, Russia mainly represents a threat to the
newly acquired Georgian independence and symbol-
izes the past, while the West represents hope of secu-
rity protection and consolidating independent
statehood, but also hope for future development, that
is democracy and market economy. Georgia thinks
that the Russian threat is mainly realized through sup-
port of internal separatist forces, such as Abkhazian
and Ossetian movements, or semiseparatist forces,
such as Ajarian leader Abashidze. Although these two
reference points may directly concern foreign policy
orientations, whose attitude to them also strongly cor-
relates to stands taken in domestic politics: being pro-
Western usually means supporting democratic and
market reforms at home, while being pro-Russian
more often means nostalgia for strict governmental
control over all aspects of political and economic life.
This means that in almost all political campaigns,
including parliamentary and presidential elections in
1999 and 2000, the difference between "pro-Western"
and "pro-Russian" forces rather than traditional ideo-
logical differences between "left" and "right" continue
to be the most conspicuous dividing line between
political groups.
Pro-Western mood has been prevalent in Georgia both
on the level of political elites (as the analysis of elite
discourse would show) and wide public (as is clear
from public opinion polls). The exception may be the
years 1993-94, when after suffering a humiliating
defeat in a war against Russian-backed Abkhazian
separatist forces, Georgia reconciled itself to the status
of a strategic satellite of Russia. Joining the CIS in
November 1993 was considered the first step in this
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direction, followed by agreements on Russian peace-
keepers in Abkhazia and on the Russian military bases
all over Georgia. Although these decisions were con-
sidered humiliating, they were also widely popular,
because the country felt it had exhausted its resources
in resisting Russian pressure. Georgia later stabilized
and slowly but consistently drifted away from Russia
and toward the West. This meant rapprochement with
individual Western countries (first of all the United
States) and international organizations. Competition
for pipeline routes for transporting Caspian oil to
Western consumers has been the major context in
which these policy changes occurred, but from the
Georgian point of view the geopolitical meaning of
pipeline projects far exceeded their purely economic
aspects. Building the Baku-Supsa pipeline, joining the
Council of Europe and World Trade Organization
(WTO), establishing closer cooperation with NATO
within the Partnership for Peace program, and, on the
other hand, the departure of Russian border troops and
the agreement to close of the Russian bases, represent
the most important achievements of the Georgian
Government in its pro-Western course and represent a
steady shift toward the West. President Shevardnadze
has stated that Georgia will knock on NATO's door in
2005.
While Georgians do consider the Western option as a
generally preferable choice for their country's devel-
opment, however, actual pro-Western orientation of
the Georgian politics cannot be taken for granted. The
Georgian Government and public are not confident
about continuous commitment of Western countries to
the region. There is always a fear that the West will
change its priorities or "return" Georgia to the Russian
sphere of influence as a part of some behind-the-
scenes deal. This is why President Shevardnadze
never openly challenged Russian leadership in the
region, and there were never clear demands for the
Russian military bases to leave Georgia. The country's
political elite may be mainly pro-Western, but it is
also afraid of being left "one on one" with Russia at a
critical moment.
Putin's ascendance to power in Russia revitalized
fears that under a more consolidated and dynamic
leadership, and having put the problem of Chechnya
behind it, Russia may again become more assertive in
the South Caucasus. There is no guarantee of any out-
side protection. On the other hand, President Shevard-
nadze hopes that with more rational and predictable
leadership in Russia, some acceptable deal on security
issues may be reached, which was impossible with
Yeltsin. While Putin seems to be an enigma for the
whole world, the Georgian leadership tries to keep its
options with Russia open.
Relations to all other countries are mainly secondary
to this major dilemma. Turkey is considered a counter-
balance to Russia and a door to NATO, which makes
this country the closest ally in the region. Azerbaijan
is another close ally because it has similar problems as
Georgia vis-a-vis Russia. Among different regional
organizations of which Georgia is a part, GUUAM
may be based on the most genuine interest and prove
to be the most lasting one, although all member-coun-
tries are reluctant to make this group too conspicuous
to avoid irritating Russia too much. Armenia is a spe-
cial case: Tbilisi is suspicious of Yerevan because of
its close security ties to Russia, but good relations
with Armenia are crucial for several reasons: 1) good
relations with all neighbors will allow Georgia to
present itself as a pivotal country in matters of
regional cooperation; 2) Georgia needs stability in its
Armenian-populated regions; and 3) Georgia wants to
take advantage of being Armenia's seagate.
Today's volatile stability in the region is fully based
on a shaky balance of power between Russia, the
United States, Turkey, and local state and substate
actors. This balance has been relatively stable for five
years. Preserving existing trends in the near future
might mean changes in details (Russian military pres-
ence in Georgia may diminish still more, for instance)
but not in the general picture: conflicts in Abkhazia or
Nagorno-Karabakh probably would continue in their
'frozen' or deadlocked stage, the South Caucasus will
be seen as mainly an arena of Russian-American com-
petition, and so forth. Even the passing of such quasi-
eternal leaders, such as Shevardnadze or Aliyev,
would not change much (of course, if these countries
master orderly succession of power), like exchanging
Ter-Petrossian for Kocharian did not bring much
change. Local actors seem to be preoccupied with
internal problems and take a wait-and-see attitude
with regards to the "big guys." There is a vague feel-
ing in the air that something may start to change in the
region, but nobody knows in what direction. Cur-
rently, Georgian politics are stuck. Prodemocratic sup-
port is waning and the direction of the country is no
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longer cleat It needs a new direction. If change does
occur, the initial push probably will not come from
within the region, at least not from an intentional
change in policies.
Azerbaijan's Perspective
Leila Alieva
Nitze School of Advanced International Studies,
Johns Hopkins University
The major challenge for the Caucasus states in the
post-Soviet era has been integrating the region with
the world community, above all with the West, while
at the same time establishing a safe and secure
regional environment for the process of state-building.
However fragmented Russian foreign policy was
toward the Caucasus, the strategic importance of the
region in the post-Soviet period put these countries
under the permanent pressure of the ambitious but
economically weak former Soviet metropole. Russian
foreign policy has been the result of complex relations
among competing institutions, internal political strug-
gles, and international factors. Despite its gradually
shrinking resource base, Russia did not back away
from these pressures in dealing with the Caucasus
states. Instead, Russia remained faithful to its tradi-
tional policies of "divide and rule." Traditionally
strong Russian security agencies supported the objec-
tives of weakening and destabilizing the new states.
Importantly, Russia has not required a substantial
resource base to support these aims
Two major events since 1991 have undermined Rus-
sia's influence in the post-Soviet Caucasus: the
Chechen war of 1994-96 and President Aliyev's sign-
ing the "contract of the century" with the major for-
eign energy companies in 1994.
Since 1994, oil has played quite an important role in
the foreign policy strategies and security of the coun-
try and in the politics of the whole region. For presi-
dent Aliyev, natural resources have been an important
tool in his consolidation of power domestically, as
well as in his foreign policy. As in the other South
Caucasus states, the initial stages of state-building in
Azerbaijan were affected by internal and external
threats. A presidential form of government was
favored over a parliamentary government because of
37
the weak state institutions and Soviet institutional leg-
acies. Revenues from energy resources provided a
strong incentive for the government to maintain con-
trol over them as well as use them as a means of
strengthening power through patronage.
As the external and internal threats diminished, the
new political institutions started to shape foreign pol-
icy decisions. Strong, centralized executive power
tended to make foreign policy dependent on personal
capabilities of a few leaders, on subjective images,
and on strategies largely shaped by the personal back-
grounds of the leaders. At the same time, strong presi-
dential power gave the executive branch extensive
freedom in its foreign policy formulation by protect-
ing it from the influence of different interest groups
and the parliamentary resistance. In this context, for-
eign decision-making also became increasingly
dependent on the consolidation of power and was
driven by the leader's desire to protect his regime.
The post-Soviet leaders of Azerbaijan viewed objec-
tives of foreign policy similarly, but differed in their
understanding of the nature of international relations
and in their strategies for pursuing those objectives. In
spite of the predominantly Muslim population, post-
Soviet Azerbaijan's social and political elites have
formed a consensus with regard to their country's for-
eign policy orientation.
The post-Soviet foreign policies of Azerbaijan have
evolved over the past decade:
� 1992 to 1993. During this initial period, an idealis-
tic/ideological approach to foreign policy prevailed,
particularly among young intellectuals.
� 1994 to 1999. Azeri leaders began to take a more
pragmatic approach to foreign policy. When he
became president, former Communist leader Heydar
Aliyev used Azerbaijan's strategic energy resources
as an asset to attract Western interests and invest-
ment in the region, thereby creating alliances to
counterbalance Russian and Iranian attempts to
expand their influence in the South Caucasus.
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1999 to the Present. The present period is character-
ized by growing Western economic and security
interests in the region, which have resulted in a secu-
rity dialogue with the West and the diminishing of
external threats to Azerbaijan's security. Today,
commercial interests and individual security con-
cerns are becoming more salient in Azerbaijan's for-
eign policy and are contributing to competition
among the Caspian states. The countries in the
region are feeling more secure and confident and
have begun to balance their interests among the
regional powers. Factors affecting these develop-
ments include a change of leadership in Russia,
which appears more amenable to a dialogue with the
West and NATO; the liberalization of the regime in
Iran; and the prospects for an Iranian dialogue with
the United States.
These changes in the regional environment coincided
with the difficulties in lifting the 907 Section of the
Freedom of Support Act and the disrupted Nargorno-
Karabalch peace process. The latter has been a result
of Russia's meddling in the South Caucasus and the
spillover effects of Russia's incursions in Chechnya.
Both the Karabalch conflict and the Section 907
Amendment in the United States remain crucial issues
that influence the foreign policy behavior of the Azer-
baijani leadership. Different outcomes could either
strengthen or weaken Aliyev's regime. Putin's interest
in gaining the support of the South Caucasus states
forced him to recognize, at least verbally, the territo-
rial integrity of Azerbaijan and Georgia and express
his willingness to be a guarantor of the peace agree-
ment between Armenia and Azerbaijan. The "easi-
ness" of President Putin as a negotiating partner,
however, does not guarantee his ability to change Rus-
sia's policies in the South Caucasus. Fear of losing the
South Caucasus and lack of support from his power
base will put serious constraints on the degree to
which he can fulfill his promises to leaders in the
region.
Armenia's Perspective
Gerard J. Libaridian
East-West Institute
During the last decade there have been essentially two
opposing views in Armenia concerning regional
dynamics and future alliances. The first may be called
the ideological. Proponents of this view, Communists
and some nationalists, argue that there are unchanging
and unchangeable circumstances in the country's
interests which compel it to accept a Russian "orienta-
tion," complemented by close cooperation, if not an
alliance, with Iran. This would counter the East-West
axis�potentially anti-Armenia�which is perceived
to be the goal of some countries. This position was
also the dominant conventional view until 1990 and
relied on the premise that Turkey is the eternal enemy.
All other foreign policy and security considerations
flow from an alliance with Russia, including a reflex-
ive anti-Americanism and an "historic" antagonism
with Turkey. It is worth noting, incidentally, that by
the 1980s the basic assumptions of this position were
also shared by most organizations of the Armenian
diaspora in the United States and Europe.
The second view, the pragmatic one, was put forth by
the Armenian National Movement (ANM) and its
leader, the former President Ter-Petrossian. It assigned
no a priori and permanent functions�friend or foe�
to any of the states; it proposed normalization of rela-
tions with all neighbors as the goal of foreign policy
and sought long-term security in resolving problems
with neighbors through diplomacy and regional coop-
eration. This was the dominant view under Ter-
Petrossian. The Kocharian Administration has not, in
principle, changed the basic premises of the policy.
Tactical steps taken recently, however, have under-
mined its substance.
On a practical level, conceptual approaches�espe-
cially as they relate to Baku and Ankara�have been
mitigated, and actual relations have been determined
by the course of the Nagorno-Karabakh war and
resulting economic realities.
There are plenty of reasons for Armenia to develop
strong cooperation with all its neighbors: energy,
transport, creation of and access to larger markets, and
complementarity of economies and resources. The
Nagorno-Karabakh conflict have also made any kind
of serious regional cooperation or security arrange-
ment practically impossible; for Azerbaijan to permit
such a relationship would be tantamount to aiding the
enemy.
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The Nagorno-Karabakh conflict has undermined
Turlcish-Armenian relations upon which the pragmatic
policy rested. The linkage Turkey has made between
the establishment of diplomatic relations and the
opening of the border with Armenia to the resolution
of the conflict has weakened the credibility of the
pragmatic view and de facto compelled Armenia to
seek a closer association with Russia. Instead of
becoming part of the solution, Turkey has remained
part of Armenia's security problem, real and/or per-
ceived. Turkey's full diplomatic support to Azer-
baijan's position in the Nagorno-Karabakh
negotiations and participation in Azerbaijan's block-
ade of Armenia has served only to deepen the historic
mistrust that exists between the two peoples. Further-
more, Turkey's position stands in sharp contrast to
Iran's neutrality regarding the conflict and its full dip-
lomatic and economic relations with both Armenia
and Azerbaijan, despite the theocratic nature of its
regime.
On a practical level, Armenia has not been able to sup-
plant Russia as the country that provides the most
assistance to Armenia: energy, loans, markets for its
goods and exported labor and, of course, arms. In the
absence of visible and concrete progress in relations
with Turkey, Russia will be seen as a natural fallback
country. This reinforces the position of those with a
pro-Russian orientation, despite the clear signs that
Russia does not support Armenia's position in the
Nagomo-ICarabakh conflict and that it has obvious
interests in Azerbaijan. Azerbaijan, in turn, relying on
oil-and-gas diplomacy, has attempted to counterbal-
ance Russia through an apparent rapprochement with
the West, especially the United States. One of the con-
sequences of the conflict has been the emergence of a
neo-Cold War in the region.
Other MS countries outside the region are seen
largely as friendly. Relations are significant from an
economic point of view. In principle, Armenia accepts
and encourages all forms of membership in and coop-
eration with regional and international organizations
and projects. The CIS was originally seen as a neces-
sary mechanism for the devolution of the empire and
is still useful as a mediating institution, certainly from
the point of view of practical gains in the security
dimension. GUUAM is viewed with caution. It could
39
become a vehicle to antagonize Russia, which would
compel Armenia to make tough choices it cannot
afford to make at this time. European structures are
viewed positively, though not yet from the point of
view of security.
Iran is seen as a friendly, though difficult, neighbor.
Geography and Iran's difficulties with the interna-
tional community, as well as Iran's trade policies,
make it difficult to develop these relations to their
potential. Armenia has resisted, nonetheless, sugges-
tions of a bilateral strategic cooperation and is likely
do so in the future. Armenia has taken part in multilat-
eral arrangements that have been proposed by Iran
with Greece, Turkmenistan, and Ukraine. Further-
more, for both administrations since 1990, the concept
of a regional security pact would include Iran as well
as Russia and Turkey.
Much more so than the previous one, the current
administration's view of its relations with Near East-
ern, European and American states includes the over-
rated supranational "Diaspora factor" or "weapon,"
which some view as the equivalent to Azerbaijan's oil.
A balanced foreign and security policy is still a possi-
bility for Armenia. Time is running out, however.
Armenia, like Azerbaijan, may be losing its capacity
to make sovereign decisions, particularly with regard
to the settlement of the Nagorno-Karabakh conflict.
That conflict remains the single-most-important factor
in the future of these two republics and the most effec-
tive lever in Russia's policy with regard to the region.
The increase in the number of proposals for regional
"security pacts" seems to be directly proportional to
the decrease in the ability of leaders to reach and
deliver solutions to local conflicts that would make
regional cooperation on any level possible.
The rise of Putin may change the role of the CIS. The
war in Cliechnya and its spillover effect may compel
reluctant members, such as Georgia and Azerbaijan, to
accept a wider role for that organization. Putin may be
able to dampen the enthusiasm of some for a 'West-
ern" or "NATO" orientation. Finally, the question
regarding Russian policy in the region can no longer
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be whether Russia wants peace and stability in the
region or not. Russia has imposed both in the region in
the past. That, in effect, is the substance of pax Sovie-
tica. The question is whether Russia has enough
strength and influence to impose a new, a pax Russica,
and resist a pax Americana.
There are three likely scenarios for the future of the
South Caucasus:
� Some form of Western accommodation with Russia
and improved US relations with Iran that permit
economic and political competition in the region,
while allowing the three republics to cooperate more
closely and retain much of their sovereignty.
� The region may become the arena wherein a new
Cold War is waged, given the weaknesses of the
three republics and their inability to avoid strong
external alliances. The future of the region would be
uncertain, if not chaotic.
� The three states may gradually slide into the Russian
sphere, without necessarily losing their indepen-
dence. Russia's weaknesses are many and serious;
but these are weaknesses as compared to the United
States and other major states, not to the South Cau-
casus republics. Furthermore, Russia has more tools
of influence. Finally, Russia has the advantages of
patience and proximity, which the West may be
lacking.
Strategic Universe of the States in Central Asia
S. Fredrick Starr
Central Asia�Caucasus Institute
The southern and eastern border of the USSR was for
decades the world's longest and most tightly sealed
international boundary. In that sector of this border,
which fell within Central Asia, however, it was a bar-
rier that severed age-old links and ties that embraced
trade, culture, and security. Following the collapse of
the USSR and the establishment of eight new sover-
eignties adjacent to or near this boundary, the natural
course of events would have led to the reestablishment
of these ties. Because of continued concerns over Iran
and especially to fears regarding Afghanistan, this
opening has not yet occurred. Nonetheless, it is bound
to happen at some point in the coming period. These
remarks seek to characterize the regional dynamics of
Central Asia in the period before and after such a
change.
More than any other state, including Russia and
China, Afghanistan has defined the regional dynamics
of Central Asia to the present. Its internal chaos has
served as justification for Russia's continuing military
presence along the former southern Soviet border and
elsewhere. It has prevented the export of gas, oil, elec-
tricity, minerals, and raw cotton to nearby and poten-
tial lucrative markets in South and Southeast Asia, in
the process increasing the region's dependence on
routes and markets controlled by Moscow. Fears over
radical Islamists, drug traffickers, and terrorists based
in Afghanistan have contributed to the increasingly
authoritarian character of all the regimes and to their
defensive isolation from one another.
An opening to the South could occur under a wide
variety of regimes in Afghanistan. It requires simply
that stability be established there and that the Afghan
Government put an end to the use of its territory for
mounting attacks against its neighbors. How would
such a situation within Afghanistan alter the regional
dynamics of Central Asia? Obviously, any answer
must be highly speculative. It is useful to try to imag-
ine the shape of subsequent developments in three
areas: transport, investment, and security.
The fall of the USSR led to the opening of direct air
routes to many capitals and trading centers beyond
Soviet Central Asia. Three roads have been opened to
China, and broader East-West links are on the drawing
boards. But no significant road or rail links yet exist to
the South. Consequently, China has been able to dom-
inate the Central Asian market for cheap goods,
become a consumer of electricity and, potentially, oil
from the region, create a strong presence throughout
the area, and establish itself at least on a par with
Afghanistan and Russia as a factor in the security
dynamics of Central Asia.
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The opening of transport corridors to Iran, Pakistan,
and India will dramatically shift these dynamics.
Indian and Pakistani businessmen and traders are quite
blunt about their desire to supplant China as a source
of goods for Central Asia. Both countries have
assigned governmental commissions to explore the
development of transport to bring this about.
They see their advantage as deriving from the fact that
they would, at the same time, become markets for
Central Asian gas, oil, and electricity. On the Central
Asian side, all countries see India and, to a lesser
extent, Pakistan, as a less threatening partner than
China (or Russia) and as a means of providing some
counterweight to China's growing presence. Con-
versely, groups of Indian businessmen visiting Central
Asia with this writer have declared their readiness to
invest in the region, once direct transport routes are
opened.
Central Asian leaders share a common sense of weak-
ness�a lack of control over their reality. They all seek
an area that they can control; this need is rooted in a
lack of power, not a sense of power. Surrounded by
great powers, Central Asians tend to pursue a defen-
sive strategy. The West should seek to understand the
intraregional relations and the strategic agendas of
each of the states. Despite their weakness and the
complexities of the environment, the only immediate
threat to their security is Afghanistan.
The reduction of the threat from Afghanistan (and fur-
ther positive changes in Iran) will significantly affect
other aspects of Central Asia's regional dynamics.
� It will undercut the rationale for Russia's attempts to
reassert a security presence in the region and facili-
tate Russia's transformation from a postcolonial
threat to a normal trading partner.
� With the threat from Russia reduced, it will diminish
the sense of urgency with which states in the region
now look to the United States and NATO for
security.
� The opening of South Asian markets for Central
Asian gas and oil will advance the cause of "multi-
ple pipeline routes" and hence reduce Russia's
41
control over the region's exports, even as it compli-
cates (but does not eliminate) prospects for a major
East-West energy corridor.
� The establishment of stable conditions in Afghani-
stan will sharply diminish the causes of tension
among the states of Central Asia, specifically their
concern to close their respective borders against ter-
rorists, Islamic radicals, and narcotraffickers�who
are often the same people.
What are the chances of such a positive turn of events
in Afghanistan? Experience has made fools of most
optimists on this issue. Nonetheless, a number of
recent developments, which will be reviewed in detail
in the oral report, suggest that chances are signifi-
cantly better now than at any time since the end of the
USSR. Let it be noted, in conclusion, that every state
in Central Asia now places this as its number one
security issue and the key to improved regional
dynamics and well-being.
Uzbeldstan's Perspective
Rank Sh. Saifulin
Institute for Strategic and Regional Studies
The growing international attention to the problems of
the Central Asian region shows that the states of Cen-
tral Asia have gained considerably in geostrategic
importance following the USSR's collapse. The future
of Central Asia requires new understanding of the
region's history and an appropriate understanding of
its role and place in formation of the new world order
and both conventional norms and values.
When thinking about "Central Asia tomorrow" it is
necessary to answer the following questions:
� How do we imagine the world tomorrow, and how
will Central Asians represent themselves in this new
world?
� What will the Central Asian region look like in the
future, and what values and systems will prevail in
the states in the region?
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� How will Central Asia be involved in this new
world, and what principles will dominate its
development?
The answers to these questions worry not only people
of the Central Asian region, but also in many respects
are similar to those concerns, which arise in various
parts of the world regarding the future of the global
order.
The Central Asian piece of the new world mosaic has
acquired a qualitatively new character. Central Asia
does not play the main role in formation of a new
world order, but events occurring now in the region
have not only local importance, but to a large degree
are also capable of influencing neighboring regions.
For this reason, the Central Asian states are focused
on both regional and global trends of modern
development.
An essential feature of Central Asia is that it is a mul-
tiethnic and multinational region rich with cultures
and heritage of different civilizations. Central Asia has
a rich positive experience in the maintenance of equal
conditions for all multinational groups living in the
region, and the "Central Asian tomorrow" depends on
the ability of the present and future generations to
keep and to develop this position.
Understanding the Central Asian role in the new mul-
tipolar world is connected with the geopolitical impor-
tance and economic potential of the region. But at the
same time, existing standards, conventional norms,
and Central Asian values form an important base for
the future contribution that the region is capable of
bringing to Eurasia.
In Central Asia, the Islamic culture dominates, but the
region's view of development of economic, political,
legal, and social system tends to be secular in nature.
The future of the its so-called Muslim world in many
respects depends on how this orientation will be suc-
cessfully realized. Uzbekistan does not want to repeat
Russia's mistake in Chechnya, in which Russian sup-
pression of Islam created the conditions for discontent
and extremism in the North Caucasus.
The Republic of Uzbekistan not only plays a dominant
role, but also for many objective reasons it bears
responsibility for how Central Asia will enter the
future world. The Republic of Uzbekistan is a focal
point for centuries-old Islamic values culture and tra-
ditions. The important tasks of the present and future
generations include correctly preserving these values
and adapting existing traditions and heritage to the
global civilized norms and values. Therefore, in many
respects the Uzbek experience of state construction,
the spiritual updating of a society, and the develop-
ment of national identity for a growing new nation are
unique.
The purposes and the principles to which the Republic
of Uzbekistan adheres as it prepares for the future are
simple, clear, and obvious. They include:
� Revival of its centuries-old cultural values and tradi-
tions with its rich spiritual and historical heritage.
� Separation of the historical past from distortions and
tactical interpretation.
� Continuous search of their combination and synthe-
sis of old norms and values with all advanced expe-
rience and new ideas.
� Balance of interests of various national, ethnic, and
regional groups living in the country and mainte-
nance of their real equality.
The revival and strengthening of Uzbekistan will serve
as a pledge for strengthening and developing national
minorities�all citizens of the Republic of Uzbekistan,
irrespective of their nationality, ethnicity, and religion.
Each Central Asian state is unique. Despite this fact,
everyone in Central Asia speaks of regional integra-
tion. It is too early, however, to talk about regional
integration. Each of the Central Asian states is devel-
oping different national strategies and is moving
toward different goals and in different directions. Civil
society and democracy have developed in different
ways and at various levels. Each state has employed a
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different economic strategy that has taken it in diverse
directions. The states endowed with rich energy
resources hoped these resources would be the key to
their success, but the process is slower than expected.
The Central Asian states have been discussing a
regional security architecture, but a number of obsta-
cles have emerged. The obstacles include: 1) the Cen-
tral Asian states view their threats differently and
apply different approaches and levels of attention to
these threats; 2) each state possesses different levels of
readiness and military capability which make a com-
mon security structure unrealistic in the short term
although it has been discussed.
Uzbekistan has no illusions about the internal and
external threats that it faces. The Uzbek military seeks
to increase its forces, enhance its readiness, and
broaden its military doctrine. Uzbeldstan's current
focus is protecting its borders. Ultimately, Uzbeki-
stan's security would benefit most if the United States
and Russia could work together in the region on areas
of common interest.
Ka7nkhstan's Perspective
Yertmuhamet Yertysbayev
Kazakhstan Institute of Strategic Studies
Kazakhstan cannot change its geography. Its national
security policy is dominated by the fact that it lies
between Russia and China�between two different
worlds�both of which are unstable and going
through times of great change.
Kazakhstan's geopolitical strategy consists of the fol-
lowing five directions: 1) beyond the region�the
West, with an emphasis on developing a relationship
with the United States; 2) southern direction�
Uzbekistan and Afghanistan; 3) northern and north-
eastern direction�Russia; 4) eastern direction�
China; and 5) western direction�the energy contro-
versies in the Caspian Sea. In all of these directions,
Kazakhstan sees threats.
In the South, the chaos and instability in Afghanistan
will continue to spill over into Central Asia. This con-
flict does not pose a direct military threat into Central
Asia, however. The more real danger is the drug-
trafficking and the flow of refugees into the region.
43
The Central Asian states must coordinate their
attempts to resolve this conflict and stabilize Afghani-
stan. At the same time, Kazalchs are wary of their
smaller neighbor (Uzbekistan) whose population over-
whelms Kazakhstan. Kazalchstan's relations with
Uzbekistan remain tense due to disputes over land and
control over water.
To the North, the signs of a resurgent Russia, shaped
by either nationalist or imperial motivations, are
emerging. Putin's ascendance to power makes the situ-
ation more complicated and less predictable. Any
indications of a resurgent Russia worry Kazakhstan
that it will be one of Russia's first targets. Northern
Kazakhstan is most vulnerable since Russians con-
tinue to outnumber Kazakhs. Kazakhstan is more
important for Russia than even Belarus in terms of
geopolitical interests. Despite the sovereignty and
security guarantees given by five powerful states (the
United States, Russia, China, France and United King-
dom), Russia poses a threat to the territorial integrity
of Kazakhstan.
To the East, Kazakhstan has established a normal rela-
tionship with China. Although currently China does
not pose a direct military threat to Kazakhstan, one
should not ignore the possibility. The military threat
itself can be defined in different ways, which are
linked to the ethnic, demographic, economic, and
political situation in China and its regions. For exam-
ple, in Xinjiang-Uighur Autonomous Region, the
external support of Uighur separatist tendencies could
potentially cause ethnic conflicts between China and
Kazakhstan. China will never allow the Uighurs to
create a separate nation. The Uighur problem could
cause problems for the oil pipeline that the Chinese
plan to build across the region.
The Caspian has been the gateway to the West. After
the breakup of the USSR, Kazakhstan sought alterna-
tives to Russia's influence. This task became a key
component of the development strategies of all the
Central Asian states. The Caspian energy resources
and their transportation to the world market became a
means for Kazakhstan to develop viable alternatives.
The "oil factor" has lead to the creation of an East-
West energy transport corridor, and Kazakhstan
intends to play a central role in this context. This will
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promote not only economic development, but also
regional cooperation in Central Asia. Initial regime
pessimism about the Baku-Ceyhan pipeline has been
replaced by a belief that the East-West corridor will
strengthen the sovereignty of all of the Newly Inde-
pendent States and will build stronger links between
them. Control over its energy resources and the trans-
port routes is crucial to Kazakhstan's geopolitical
position. Although the pipelines will foster coopera-
tion, because of the variety of interests in the Caspian,
it is the "Balkans of Central Asia."
The potential for conflict is real but does not serve the
interest of any of the littoral states, nor the interna-
tional community investing in the region. However, a
struggle for Caspian oil and the geopolitical influence
in this region between the West and Russia cannot be
ignored. The Russians increasingly feel excluded from
the Transcaucasian region. An alliance between Baku-
Tbilisi is at the center of a larger axis of countries:
Ukraine, Georgia, Azerbaijan, Uzbekistan, and Kaza-
khstan. This "Transcaucasian corridor" seeks to
exclude Russia from Transcaucasia and create a con-
glomeration of the former Soviet republics oriented
toward the West. We may see a new policy emerge in
Russia, however, in reaction to this Transcaucasian
corridor that will lead to direct pressure on the Central
Asian states and above all, Kazakhstan.
All the factors mentioned above, taken separately or
considered together, have the potential to threaten the
territorial integrity and the statehood of Kazakhstan.
At present, however, they are more latent than real
threats. Today in Kazakhstan internal security con-
cerns are the dominant threats for Kazakhstan and for
Central Asia in general. Internal insecurity will con-
tinue until the sharp contradiction between the eco-
nomical necessity and the political possibilities in this
region are addressed. One should recognize that the
social-economic and political transformation has
caused tremendous social difficulties and destabilizing
social conditions.
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Highlights From the Discussion
Russia's Role and Regional Politics
A variety of views were expressed on how the Chech-
nya conflict will impact Russia's strategy toward Cen-
tral Asia and the South Caucasus. Some panelists
argued that cooperation with the South Caucasian
states "made sense" for Russia in order to bound the
quagmire in the North with stability in the South. In
contrast, several panelists declared such a shift in Rus-
sian policy to be unrealistic and that Moscow is more
likely to continue to exploit opportunities to foment
separatist activism, its most effective lever over these
states.
� One discussant argued that President Putin is look-
ing for a way to end the impasse and that the conflict
in Chechnya had created conditions in which coop-
erating with Georgia and Azerbaijan served Russia's
interests. Another regional panelist also commented
on this significant rhetorical change in Georgia and
Azerbaijan toward Putin, but cautioned that the gen-
eral perception in the South Caucasian societies is
one of uncertainty about Putin and fear of an
increasingly vigorous Russia.
� A second panelist from the region added that a con-
structive role for Russia is highly probable. Russia
needs peace in the South Caucasus to manage the
situation in Chechnya, but the real question is whose
peace will be acceptable. He posited that Moscow
could build a stable situation in the region through a
"Pax Russica" arrangement in which Russia would
be preeminent.
� Among those who expressed a negative view on this
issue, a panelist noted that no constituency exists in
Russia which advocates a shift to a more construc-
tive policy toward the Caucasus. Putin's rhetoric and
personal desire alone cannot shift this policy.
Panelists offered a range of views on the potential for
stability and regional cooperation in the South Cauca-
sus if Russia minimind its presence in the region.
� Several panelists opined that many of the ethnic con-
flicts and separatist movements�for example, in
Abkhazia and South Ossetia�would dissipate in the
absence of external (predominantly Russian)
45
support. Although another panelist believed that if
left alone the South Caucasus countries could
resolve their conflicts, he cautioned that a number of
the problems�for example, Abkhazia, Chechnya,
and Nagorno-Karabakh�have been created by the
collapse of the Soviet Union and the politics that
ensued. These problems will be difficult to 'reverse.'
Another questioned whether Russia would accept a
peace between Azerbaijan and Armenia that would
minimize Russia's presence.
� A panelist from Central Asia believed that more
conflict in the region would emerge if the Russians
withdrew. But because this instability could have
negative spillover effects in Russia, Moscow will not
pull out of the region. Therefore, the regional actors
seek to balance Russian presence with support from
the West.
Discussants raised the question of how Russia would
react if Turkey took on a more prominent role in the
South Caucasus. Several panelists noted that Russia
and Iran will be threatened by the prospect of a larger
role for Turkey in the region. A panelist from the
region opined that domestic constituencies in Turkey
and Armenia would not oppose a Turkey-Armenia
rapprochement, and that Section 907 has outlived its
usefulness, becoming more of a burden for the region
than a benefit for Armenia. Another panelist posited
that today Azerbaijan would probably support Turkey-
Armenia reconciliation, even though it had used these
hostilities to squeeze Armenia and as a lever against
Turkey.
There was also some disagreement over how the
South Caucasus states should manage their strategic
options. Several panelist agreed that these states
should focus on distancing themselves from Russia by
pursuing opportunities and relationships with each
other and with other countries, such as the United
States, Turkey, Iran, and Israel. Such a strategy would
insulate them from Moscow's attempts to destabilize
them. It was noted that Azerbaijani President Aliyev
has pursued a balanced foreign policy strategy
successfully.
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Another panelist argued that none of the three South
Caucasus states could hope to play "the big game of
geopolitics" with Russia, Iran, Turkey, or the United
States. Small countries�with or without oil�must
focus on modest and defined foreign policy objectives.
This panelist noted that the region should be thinking
about how to decrease the role of external actors, argu-
ing that the independence and security of the region
will come through regional cooperation not the influ-
ence of external powers.
Uzbekistan
Control over its security and a Western orientation
drives Uzbelcistan's military policy. There is a sense
of crisis on every side for President Karimov. Uzbeki-
stan seeks to gain more control over its foreign policy,
prevent manipulation by outside powers, and assume
more responsibility for its security. The panelist from
Uzbekistan argued that his country seeks to develop a
regional security cooperation regime that could man-
age cross-border problems, but it recognizes that its
neighbors do not have the same security concerns or
control of their borders. The panelist also warned
against expecting a regional structure to address secu-
rity issues to be established in the near term.
The Uzbek Government assumes that Russia will
remain assertive in the region, but Uzbeldstan's pre-
dominate orientation will be to the West. Uzbekistan
sees the West, specifically the United States, as a
source of technology and foreign investment, but more
important, it would like assistance for military training
and leadership development from the United States.
The Uzbek military, however, will continue to rely on
Russia for equipment because it is cost effective. But
Uzbekistan hopes to receive more assistance from the
United States. The panelist reiterated that Uzbeki-
stan's orientation will be increasingly toward the
West, despite the fact the population is approximately
80 percent Muslim. The elite seek to establish a
secular Muslim state that is linked to the West.
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Panel IV
View From the Periphery
This panel explored how the major external actors
view the new relationships that are unfolding between
and among Central Asian/South Caucasus states or
their neighbors.
Chairman: George Kolt
National Intelligence Council
Iran
Mohiaddin Mesbahi
Florida International University
Iran's perception and expectations of gains in the
region are heavily tempered by its anticipation of stra-
tegic threats and losses. The inevitable centrality of
Iran in shaping both the discursive and policy dimen-
sions of the region's geopolitics, the international
political economy of energy, and the geoculture of
identity and ideological preferences, constitutes the
complex web of dynamics within which ban's con-
ception of its policy and its "reading" of the key ele-
ments of the regional patterns are developed and
articulated.
Five critical factors have shaped the Iranian conceptu-
alization of the post-Soviet world:
� A self-perception of Iran's centrality as the natural
political and economic actor in shaping the key geo-
political and economic patterns of interactions in the
South Caucasus and Central Asia, or the Caspian
Basin at large. This self-perception is derived from
Iran's assets and liabilities as an "interregional link-
age state," and its own internally inspired "legiti-
mate" ambitions of being a powerful and self-
respected regional player. The belief that all key
decisions and their consequent dynamics have been
and will be affected by Iran, either deliberately or by
default, is the most important underpinning of the
Iranian conceptualization and understanding of the
regional patterns and developments.
� The "identity" of Iran as an Islamic revolutionary
state, either real and self-described as the Ummu'l
qora' (the Islamic Metropolise), or
47
perceived and labeled as a "rogue state." This ide-
ational factor has been at the core of the develop-
ment of Iran's opportunities and constraints, and a
key ingredient of the "threat model" employed by a
host of otherwise divergent regional and extrar-
egional actors in their assessment of and attitudes
toward Iran. The complicated "reward structure"
attached to this "threat model" in this region, like
elsewhere, not only affects Iran's choices but further
informs Iran's perceptions of regional dynamics and
strategic patterns.
� The significance, if not the primacy, of relations
with Russia as a strategic balancer (regionally and
globally), if not partner, as a source of trade and
arms, and as a partner in political and economic
regional patterns. One might even observe, in view
of Iran's policy in the region, especially in the North
Caucasus and Tajildstan, that Tehran's regional pol-
icy has become increasingly "Russia centric." It
remains to be seen whether the longstanding histori-
cal mistrust and the absence of real structural mutual
interests, which traditionally informed Iranian atti-
tudes toward Moscow, will be replaced, under the
increasing pressure of the United States and the
threatening pattern of regional "alliances," by a solid
strategic convergence of vision, interests, and part-
nership with a more assertive Russia.
� The future nature of US-Iran relations is among the
most important extra regional developments with
strategic impact on key security and economic pat-
terns in the South Caucasus and Central Asia in this
decade.
� The specific historical, ethnic, ideational, and geo-
graphical factors that determine the nature, degree,
and scope of the bilateral and multilateral ties and
interactions between Iran and the new, independent
states in the region. Different dynamics, for exam-
ple, affect Iran's relations with Tajikistan and Turk-
menistan. These bilateral differentiations, while
significant on their own terms, nevertheless are all
heavily affected by the above-four foundational
factors.
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Objectives and Perspectives
The central Iranian foreign policy objectives are:
� To ensure that the uncertain dynamics of the South
Caucasus and Central Asia will not undermine Iran's
national security and territorial integrity (that is,
ethno-territorial conflicts such as Nagorno-
Karabakh).
� To be actively engaged, through bilateral and multi-
lateral ties, in shaping the geopolitical environment
of the region in terms most favorable to Iran. Iran
will oppose politico-military alliances that deny Iran
meaningful participation in regional dynamics.
� To ensure, at a minimum, the involvement of Iran in
the emerging structures of the energy sectors in the
Caspian Basin and, optimally, to position Iran to
become the key logistic linkage of the Caspian
Basin to the outside world.
� To avoid and bypass containment strategies through
simultaneous pursuit of bilateral ties to all the new
Central Asian states, in addition to initiating or join-
ing multilateral or tripartite schemes, not only with
regional states, but also with extra regional players.
� To desecuritize Islam and Iran's ideological image
by utilizing the presumed influence of the Irano-
Islamic cultural milieu; capitalizing on the "new"
democratic Iran, and downplaying narrow ideologi-
cal Islam, in favor of an "intracivilizational" interac-
tion and dialogue.
The most seriously perceived long-term strategic
threats to Iran are the US-led or encouraged regional,
political, and economic coalitions that exclude Iran.
Iran fears that such regional schemes will eventually
lead to military alliances, organized around what
Tehran describes as the notion of "US vital national
interest in the Caspian," and made up of Iran's contig-
uous neighbors such as Azerbaijan and Turkey, possi-
bly with an eager extraterritorial antagonist, such as
Israel. In this connection, relations with Azerbaijan,
given obvious and complicated ethno-territorial, his-
torical, and religious affiliations, will remain critical.
In Central Asia, Iran's main regional antagonist is
perceived to be Uzbekistan; the champion of "antifun-
damentalism" whose regional hegemonic ambitions
against Iran's civilizational kin in Tajikistan could be
reinforced only by its politico-security cooperation
with the United States in the containment of "religious
extremism."
Iran's natural competitor, both unilaterally and region-
ally, is Russia. Yet, the overwhelming impact of the
US role has turned Russia into a key regional partner.
A cautious close relationship with Armenia has been
designed to provide the balancing measure, with a
potential tripartite coalition with Russia and Armenia
as a response to the US-Turkey-Azerbaijan-Israel line
on the horizon.
Iran will continue to count, cautiously, on the "posi-
tive neutrality" of Turkmenistan, with the expectation
that through both bilateral ties and Russian pressure,
Turkmenistan will not jeopardize its relations with
Iran in pursuit of a US-centric policy. Iran's concern
over the future course of Turkmenistan has a broader
South Asian angle, as Pakistan and a Taliban-led
Afghanistan have been competing with Iran as an
alternative source of energy transport.
In Central Asia, an Uzbek-centric security arrange-
ment�recognized and supported by the US/NATO,
and organized around the notion of containment of
religious extremism�is being pursued by Tashkent. If
the West accepts and supports Uzbekistan as the cen-
ter of a regional coalition, it can expect a loose tripar-
tite Russian, Tajik, and Iranian coalition as a distinct
alternative response. The Taft-Iranian defense treaty,
though largely symbolic, is indicative. China, already
in favor of a closer security cooperation in Central
Asia, will favor the latter to avoid a strategic US pres-
ence on its border. Furthermore, China's increasing
political, military, and economic ties to Iran have been
underscored by Beijing-Tehran-Moscow conceptual
convergence of interests in opposing perceived US
"hegemony," not only globally, but regionally, in Cen-
tral Asia and the Caucasus.
48
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The rationale that drives these possible patterns of
coalitions, and the glue that sustains them lacks, with
one exception, serious, meaningful and positive ideo-
logical or identity content (that is, coalition of "demo-
cratic," "pan-Islamic," or "pan-Turkic" states). The
rationale remains mostly materially motivated, but
these are also traditional geopolitical calculations in
balancing and "bandwagoning" (that is, distance from
neighboring hegemonic Russia and proximity to the
distant winner, the West and the United States), and
the political economy of access to energy, capital, and
markets.
There is thus no serious ethnic, religious, or ideologi-
cal source of identification strong enough for coali-
tion-building and its sustenance, except a vague, but
powerful, preference for secularism over a fundamen-
talist/Islamist alternative. This dichotomous identity
struggle between "secularism" and "Islam," real or
manufactured, has become a critical discursive ratio-
nale not only for exclusion/containment of Iran, but
more significantly, as a conduit to connect domestic
politics and security with regional security. Domestic
repression of the opposition, especially in Central
Asia, is mostly theorized and implemented via the
"domestic-external Islamic threat," (at times comple-
mented with drug trafficking), and regional security
schemes and justification for military intervention are
discussed and pursued in the same vein.
The process of securitization of the domestic polity
through a deliberate reduction of regime legitimacy to
a fight against "internal/external extremism" may
serve the ruling elite in the short run. In the long run,
however, the enormous underdevelopment of the
region, increasing corruption, and the incredible eco-
nomic gap between the elite and the public pose seri-
ous domestic security threats to existing regimes; too
close and uncritical identification of external actors
will inevitably lead to the unintended consequence of
sharing the blame for existing repression, and paying
the price in wealth, security and prestige. This danger-
ous reduction has camouflaged the serious impact of
absence of structural legitimacy at home as one of the
long-term security problems in the region.
In this context, and in view of the impact of the ide-
ational on US-Iranian relations, the recent changes in
Iran and the relative opening in Washington-Tehran
relations may constitute the harbinger of defusion of
49
securitization of Islam in the region as a whole. The
reward structure attached to being distant from or
opposing Iran has been part of the foreign policy and
security socialization and calculations of the regional
actors since the collapse of the Soviet Union. A drastic
positive change in US-Iran relations will thus be
among the most dramatic structural shifts in those
calculations, and their resultant geopolitical, geoeco-
nomic, and geoideational patterns of cooperation and
discord in this decade.
Alternatively, the continuing or even worsening of
US-Iranian relations will lead to fluid but nevertheless
discernible rivalry in the region. What makes these
divergent scenarios more critical is their organic con-
nections with, and impact on, the Middle Eastern and
Southwest Asian patterns of security in which, for bet-
ter or worse, Iran, geopolitically, geoeconomically,
and ideationally constitutes the key linkage.
Thrkey, Middle East, and Israel
John C. K. Daly
The Middle East Institute
In the emergent post-Soviet power vacuum in the Cau-
casus and Central Asia, Turkey and Israel have
emerged as both trading partners and potential "mod-
els" for development. For many emerging nations, the
two represent models to emulate and a warning to
heed. The one common thread running through both is
energy.
Turkey emerged from the collapse of Communism in
the USSR in December 1991 with both opportunities
and barriers to establishing historic linguistic and cul-
tural links. For Israel, the collapse of Communism
meant both an end to the Soviet tilt toward Arab
nations along with an opportunity for highly educated
Russian Jewish refusniks to reach Israel, enriching
Israeli society with their talents. Both countries
remain America's most steadfast regional allies.
Both countries have resources that interest the South
Caucasus and Central Asia, most notably, their mili-
tary power. In the decade since the collapse of the
USSR, Turkish military academies have trained more
than 4,000 military officers from the Caucasus and
Central Asia. As these officers move into middle
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management positions, former Russian influence is
being supplanted by the secular Kemalist influence.
Israel has an advantage in its infusion of emigres since
the collapse of the USSR; this influx has given Israel
an economic trading "edge" in the CIS. Turkey, for its
part, has long-established links of language and cul-
ture stretching from the Balkans to Xinjiang.
Some countries in the South Caucasus and Central
Asia have a resource of immense interest to both Tur-
key and Israel: inexpensive energy reserves. Both
countries are energy poor, and look at these reserves
as a proximate, non-OPEC source of supply. In this,
Turkey has immense influence over two of the four
potential export routes. In the cases of Baku-
Novorossiisk and Baku-Supsa, Turkish influence
alarms Russia, which sees an American-Israeli-
Turkish "zone of influence" replacing the Soviet one.
Turkey finds itself in direct competition with Russia
for energy transit routes, and Turkey will continue to
block the use of the Bosporus Strait for the export of
Caspian oil. With a new government in Russia, it is
unclear how strongly Western inroads into these
regions will be resisted.
Last but not least, both Turkey and Israel offer suc-
cessful models to the newly emergent nations of the
Caucasus and Central Asia of how to deal with inter-
nal insurgencies. Israel's handling of domestic Mus-
lim fundamentalist terrorism and Turkey's successful
suppression of its Kurdish insurrection offer notable
examples of how to control unresolved separatist ten-
dencies. From Georgia's Ablchazian separatists to
Uzbelcistan's Hizb al-Tahrir, and from Kazakhstan's
restive Russian minority to Kyrgyzstan's southern bor-
der troubles with neighboring Tajikistan, these states
look at Turkish and Israeli success with admiration.
Both Israel and Turkey have great potential for
expanding their influence in the region. Their ultimate
success, however, will be determined by a complex
skein of energy and military issues within the larger
context of American-Russian bilateral relations, as the
guarantors of their respective client states.
China
Ross Munro
Center for Security Studies
Shying away from any neat conceptual framework,
one can argue that China's strategy toward Central
Asia is driven by five factors.
Security Concerns
China has an unrelenting wariness of Central Asia's
potential to serve as a base of support for Islamic
extremism and separatist movements, most notably
for the restive Uighurs of Xinjiang. But the alarm that
characterized the views of many Chinese officials in
the 1989-92 period has ebbed as China has gradually
and successfully pushed for tighter restrictions by the
governments of the Central Asian Republics on
domestic groups that sympathize with dissidents
inside China. For example, a visitor to Almaty in the
autumn of 1999 reported that pro-Uighur groups
seemed to be led by ineffective poseurs and, in one
case, seemed to be a creation of the Kazakh secret ser-
vices. Tiny underground groups are said to exist but
seem very limited in what they can do. Nevertheless,
China continues to keep a close eye on this potential
threat, as any official communiqu6 between it and a
leader of a Central Asian state will attest.
Publicly, Central Asian leaders accept China's asser-
tions that its long-term strategic goals vis-a-vis the
region are unambitious and benign. But, looking just
at Kazakhstan, perhaps as important to China as all the
other Central Asian states combined, one finds that
private and candid views, at least in Almaty, are
exactly opposite the official stance. This is perhaps
because of rapidly rising tensions over oil and water
during 1999. Whether the interviewees were high-
ranking Kazakh Government officials, academics who
had been anointed as "friends" of China or hard-nosed
pro-Russian strategic thinkers, the author found two
schools of thought. The first is that China's long-term
intention is to occupy physically and militarily at least
a significant portion of southern Kazakhstan. The
more "moderate" school holds that China intends only
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to wrap Kazakhstan so firmly inside its sphere of
influence that it is no longer an independent actor, par-
ticularly vis-a-vis energy, natural resources, and other
economic issues. Interestingly, not a single inter-
viewee expressed any hope that the US could or would
play a significant role in helping Kazakhstan with-
stand Chinese pressure.
Russia
China has been very careful about pressing its huge
advantages in Central Asia to the full. The main rea-
son is that China's Central Asia policy today is in
many ways subordinate to, and indeed an integral part
of, its Russia policy. With admirable adroitness, rising
China is fashioning a relationship with declining Rus-
sia that will leave China as the undisputed senior part-
ner. Giving Russia "face"�treating it as if it is not in
decline�is a central part of Chinese policy. China
makes every possible effort not to embarrass Russia
and confront it with its weakness, particularly in Cen-
tral Asia, where China is quite willing for now to
acknowledge Russian primacy. All the while, China
slowly increases its influence in the region and avoids
making any significant long-term concessions to Rus-
sia in the region.
The long-term trend is clear. Increasingly, China has a
free hand in the Russian Far East and parts of Siberia.
And, although there has not yet been a clear test,
China now seems to enjoy an effective veto over Rus-
sia's Asia policy. Both trends can only augment grow-
ing Chinese influence in Central Asia in the long term.
Economics
Since it became less concerned in the early 1990s over
potential threats from the Central Asian states, Beijing
has viewed them, especially Kazakhstan and Kyr-
gyzstan, as both potential markets and sources of
imports particularly, of course, for Xinjiang. Part of
China's development strategy for Xinjiang includes
closer economic ties to Kazakhstan and the other Cen-
tral Asian states, and efforts are even made to give
Xinjiang traders a "piece of the action" in exports of
goods manufactured on China's east coast.
For snore than a decade, there has been plentiful rheto-
ric about a "New Silk Road" of highways, railways,
and pipelines linking China with the Central Asian
51
states and ultimately, in some cases, Europe itself.
Progress has been slow but roads and rail lines con-
tinue to be built.
China continues to see the Central Asian states as an
ideal market for the inexpensive consumer goods that
it produces, and indeed, markets in Ahnaty and Bish-
kek are full of more Chinese goods than modest trade
data suggest. This is due in part to smuggling, poor
recordkeeping and third-country transit (on inquiry, it
turns out that many Chinese goods on sale in Kazakh-
stan are imported via Kyrgyzstan, which has a much
"softer" border with China than does Kazakhstan).
The "soft border" policy of China still has yet to be
extensively discussed. As China reached border
demarcation agreements with the Central Asian states
during the 1990s, these were rightly cited as evidence
of China's desire for stable borders. However, what
went largely unremarked was that China demanded a
quid pro quo�the drastic reduction of restrictions on
the movement of people and goods in both directions.
Naturally, this overwhelmingly and disproportionately
benefited the larger and economically robust China. It
was this new "soft border" policy that led to an initial
slew of reports in the mid-1990s about floods of Chi-
nese migrants and goods. Although many countries
complained, apparently only Kazakhstan succeeded--
in 1994�in re-instituting significantly snore stringent
regulations. This was probably only because China
had been shaken by disturbances in Xinjiang in 1993
and saw considerable virtue in this particular instance
in retreating from its "soft border" policy.
Energy
Just as China's Central Asia policy today is in many
ways subordinate to its Russia policy, China's Central
Asia policy must also be viewed as a part of its world-
wide energy strategy. Fearing that it is becoming
increasingly vulnerable strategically as its ocean-
borne imports of oil inexorably increase, China is
determined to secure at least a significant portion of
its oil supply from countries on its land borders, start-
ing with Kazakhstan. One need only recall the exten-
sive material relating to China's purchase, or right to
purchase, two major oil fields in the eastern Caspian
and its widely publicized commitment in 1997 to
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build a lengthy and expensive oil pipeline to transport
oil from those and other fields to Xinjiang and then to
east-central China. The conventional wisdom contin-
ues to assert that the economics of that pipeline are
such that it will never be built. Announcements in
mid-I999 that China and Kazakhstan had halted talks
over the pipeline were universally viewed as accurate.
This was not the case. According to extraordinarily
well-informed sources in Almaty, negotiations have
never ceased. The negotiations are tense and at times
bitter, but both sides desperately want the line to be
built for both economic and strategic reasons. I predict
the pipeline will be built and that construction will
start within two years. Already China is constructing
and improving what will be the domestic Chinese sec-
tion of the Kazakh line.
Water
Closely related to the energy issue is water. A little-
noticed but extremely important conflict has been
growing between China and Kazakhstan over China's
intentions to divert water from the Irtysh River to irri-
gate newly opened cotton fields in Xinjiang. Although
no one agrees on the exact numbers, it is generally
agreed that China has finished construction of an irri-
gation canal that could potentially reduce the water
flowing into Kazakhstan by 40 to 60 percent. The
Kazalchs interviewed in the autumn of 1999, inside
and outside government, were in what could best be
described as a state of "controlled panic" over the situ-
ation. Inside Kazakhstan, some six to eight million
Kazakhs live in the Irtysh basin or depend on its water
for drinking, irrigation, and hydropower. The Chinese
have indicated that they will reduce the flow of the
Irtysh by "only" 10 percent, a figure that few Kazakhs
find reassuring. Two knowledgeable Kazakhs argued
that the Chinese, without ever being explicit, have
linked the water issue to the pipeline issue�hinting
that Kazakhstan should make concessions on the pipe-
line negotiations if it wants to be certain that China
will not visit a water crisis on the country.
Concluding Observations
Careful readers may have noticed the contradiction
that has crept into this presentation. The presentation
began by asserting that China takes a patient, long-
term strategic approach to Central Asia, but concluded
by describing two issues�oil and water�that are
driving China toward a short-term assertion of its
national interests. It will be interesting to observe
whether China can pursue these interests without
offending Russia. The evidence so far suggests that
China will succeed in doing so.
Pulling back the strategic focus, China may well be at
a strategic crossroads itself that will impact its future
strategy toward Central Asia as well as Russia. There
is currently a debate under way in the Chinese media
over how much of its developmental resources China
should earmark for development of its western prov-
inces. This seems to be part of a larger debate or strug-
gle that has often preoccupied China over the
centuries: the maritime school versus the continental
school, the merchants of the south and east versus the
soldiers and bureaucrats of the north and west. This in
turn relates today to a debate over how many
resources and how much political capital should be
expended on conquering Taiwan.
Russia
Robert Legvold
Columbia University
Russia has no single, integrated strategy toward either
the South Caucasus or Central Asia. Indeed, Russia
never has and likely never will have a single, inte-
grated strategy toward either region due to the differ-
ent challenges and opportunities presented by each.
The fundamental reasons for this are fourfold. First,
the number of domestic actors governing Russia limits
its ability to develop a common approach. Foreign
Minister Primakov briefly imposed a sense of order
during his tenure. Second, crosscutting purposes also
limit efforts at coordinating foreign policy. Russia is
still trying to balance its security needs with its
economic interests. Third, Russia has had difficulty
reconciling the objectives it pursues in these two
regions with its objectives in the wider world. Fourth,
relationships with these countries have ramifications
that Russia has not adequately prepared for.
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Consequently, Russia's policy is inchoate and evolv-
ing. It is occasionally incoherent, has shifted almost
180 degrees during the past decade, and could easily
shift another 180 degrees in the near term.
From 1991 to 1993, as Russia sought to recover from
the shock of the USSR's dissolution, it reduced the
burden imposed by the struggling Newly Independent
States. Russian reformers such as Gaidar tried to cut
loose the turmoil-ridden Central Asian states as an
economic burden. Foreign Minister Kozyrev did the
same in terms of foreign relations. During this period,
"freebooters" in the Russian Government (Parliament,
regional governments, the military) had control of
Russian policy toward Central Asia and the Caucasus.
By 1993-94, Russian policy had shifted to one of
defending Russia from potential dangers in the region
and to restoring Russian influence (though with no
desire to restore the Russian Empire). Russia sought to
ensure that no outside power would predominate in
the region and abrogated to itself responsibility for
keeping order within its limited means. This policy
had crystallized by 1994 into a dual policy of securing
economic advantage vis-a-vis the two regions and
winning the strategic competition in the region with
the West in general and the United States in particular.
Russia's power over the region derived from its supe-
rior strength in relative terms, from its markets, from
its control of regional pipelines and transport net-
works, from its ability to simultaneously create threats
for those states that refused to cooperate (through sub-
version and military aid) or reinforce the security of
the more compliant. In addition, Russia could often
benefit from the outlook and orientation of the Soviet-
era elites still holding power in Central Asia.
Economically, Russia had the power to support and
keep truces in the conflicts in the region, but lacked
peacemaking abilities. Resentment of Russian histori-
cal dominance also deprived Russia of its legitimacy
and capacity for leadership. Russia's overall weakness
as a state also led to growing impotence and a lack of
the means to achieve its ends in the region.
53
Three conclusions follow, none of them yet much
noticed:
� First, to the extent that Russia remains engaged in
Central Asia and the South Caucasus, it is likely to
rely on economic sticks rather than carrots, attempt-
ing to use the leverage of pipelines, debt, and Rus-
sian markets to secure the economic outcomes that
its seeks. For the rest and with powers from outside
the region, Russia, if it chooses to remain engaged,
is likely to compete on security terms, offering the
Central Asians, for example, surer protection against
the threat of Islamic extremism than the West can
muster.
� Second, and notwithstanding the first point, the
greater danger is not a Russia determined to restore
its sway over these two regions, but a Russia that
begins to walk away from the problems of these
areas. There is an isolationist mood stirring among
both the public and elites when it comes to the bur-
dens that a constructive, large-scale Russian role in
the troubles of Central Asia and the Caucasus would
impose. The prospect of Russia's defecting from
responsibility for peace and stability in Central Asia
and the South Caucasus goes unnoticed by most
governments in these regions, which continue to see
more coherence and malevolence in Russian policy
than is warranted.
� Third, and somewhat in contrast with the last point,
at the moment, the strategic rivalry stirring between
Russia and outside powers in the Caucasus and Cen-
tral Asia tends to reinforce another trend in the inter-
national relations of the post-Soviet states: that of
polarization among them. Competitive alignments
such as GUUAM (and several others), on the one
side, and Russia's alignment with Belarus, Kazakh-
stan, Kyrgyzstan, and Armenia, on the other, risk
creating new sources of tension, complicating exist-
ing rivalries.
At the moment, these are only incipient strategic
alignments, but they have a destructive potential that
bears watching.
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�
South Asia
Juli A. MacDonald
Science Applications International Corporation
These remarks are based largely on extensive inter-
views and discussions with strategists and policymak-
ers in Pakistan and India during the past year. They
will focus on how India and Pakistan are thinking
about Central Asia, as I found little interest in the
South Caucasus during my research.
Central Asia is prominent in the thinking of Indian
and Pakistani strategists today, despite a tendency in
the United States to discount South Asia's role and
influence in Central Asia because of its lack of acces-
sible, contiguous borders to the region. The historical
and cultural ties between Central Asia and South Asia
remain strong and have a particularly strong resonance
in northern India. This year, the two regions will cele-
brate their cultural affinity with the 500th anniversary
of the Moghul State in India. Indians seeks to use this
celebration to strengthen cultural and scientific rela-
tionships with Central Asians. Moreover, India's rela-
tionship with Central Asia was strengthened by. close
ties during the days of the Indo-Soviet relationship,
when thousands of Indians were educated and trained
in the region, particularly in Tashkent.
Both India and Pakistan squandered opportunities to
develop closer relations with the new Central Asian
states in the early 1990s. Neither state had much to
offer the new governments in the way of technical
assistance, trade, or aid, which is what the new states
needed most. However, the circumstances have
changed since the early days of the post�Cold War
era. Today Central Asia is a critical component of
Indian and Pakistani thinking as both countries reas-
sess the fundamental changes in their strategic envi-
ronment. I see four areas in which Central Asia factors
into India and Pakistan's thinking.
First, Central Asia is a component of the competition
in South Asia. For both countries, Central Asia is an
extension of their strategic universe. During my time
in New Delhi, Indian policymakers repeatedly referred
to Central Asia as their "extended strategic neighbor-
hood" and as a region with which they share a range of
strategic interests. For Pakistanis, Central Asia is
important because it gives Pakistan what they referred
to as "strategic depth." In this context, India and Paki-
stan are competing with each other in Central Asia for
influence, for political support for their position on
issues such as Kashmir, for energy in the future, and
for access to markets.
Pakistan had hoped that a combination of Islam and
proximity would give it an advantage over India, but
Islam proved to be a liability for Pakistan with current
Central Asian governments when it began supporting
the Taliban in Afghanistan. Pakistan is widely
regarded as the training ground and supplier of the
Taliban and other nonstate militias in the region. In
this context, Pakistan's relatively favorable geographic
proximity has been neutralized by the ongoing insta-
bility in Afghanistan and in Pakistan itself. It is hard to
see how Pakistan as a state will project influence
effectively into Central Asia under these conditions,
but it is clear that some nonstate groups in Pakistan�
particularly Islamic groups and narcotraffickers�and
even factions of the military are and will continue to
make the effort. These activities are largely destabiliz-
ing for the region. In contrast, Indians in many institu-
tions think deeply and coherently about Central Asia
as part of the emerging competition. Central Asia has
captured the attention of strategic thinkers, military
planners, energy companies, and many others. It is not
simply by chance that India today sends some of its
most seasoned diplomats to represent it in Central
Asia.
Second, Central Asia is seen as an arena that is criti-
cal to larger geopolitical competitions and realign-
ments. The Indian strategists who are looking beyond
India's borders see a number of threats and opportuni-
ties in Central Asia. First, Indians are thinking about
how to contain China in Central Asia. They see the
Chinese threat encircling India, as China strengthens
its influence in Pakistan, Myanmar, Bangladesh, and
Central Asia, and some Indians believe that China's
growing economic and political penetration in Central
Asia, especially in Kazakhstan, must be countered
before it leads to strategic realignments, possibly alli-
ances, that might threaten India's interests. In this con-
text, Uzbekistan was referred to as the "key to the
region," and India has taken steps to cultivate close
ties to Uzbekistan. President Karimov plans to visit
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India in May 2000. Second, India and the Central
Asian states share an interest in controlling the highly
unstable and unpredictable situation in and around
Afghanistan and Pakistan from which instability could
cascade in all directions. India is looking to Iran and
to Central Asia�Uzbekistan in particular�to contain
this chaos in the center. Third, Central Asia is consid-
ered the northern border of an emerging east-west
economic corridor that connects Israel, Turkey, Iran,
India, and East Asia, which eventually might replace
the north-south orientation that predominated during
the Cold War. Finally, Central Asia is seen as a con-
duit to the United States. It is a region where Indian
and US interests have the potential to intersect in areas
such as countering Chinese influence, containing ter-
rorism and the drug trade, and promoting stability. But
US and Indian interests could also come in conflict,
particularly in the area of Central Asian energy devel-
opment and transport for South Asian markets, in
which, for India, Iran almost certainly has to play a
central role.
A third aspect of South Asian interest in Central Asia
is economic. Both India and Pakistan seek to develop
stronger trade relations with the Central Asia states.
India's pharmaceutical companies and hotels have
built a strong presence in the region. Pakistani traders
are increasingly active across the region, and they will
benefit from the Economic Cooperation Organiza-
tion's efforts to lower trade barriers among its mem-
bers. Pakistan also sees itself as a potential trade route
for Central Asian states by offering them access to the
Arabian Sea.
Finally, energy will be a major driver of relationships
between Central Asia and South Asia. India and Paid-
stan�with their burgeoning demand for gas�are nat-
ural markets for Central Asian gas, and the
governments in both states have high expectations of
obtaining Central Asian energy, from Turlanenistan in
particular, but also from Kazakhstan and Uzbekistan.
In a decade, India in particular will be importing
energy from multiple directions. Central Asia is con-
sidered a key component of India's energy strategy to
mitigate its dependence on the Middle East over the
long term.
55
Both states seem to be realistic about the prospects for
pipelines. I found no one who felt that a pipeline
through Afghanistan is a viable option, even in the
long-term. Iran offers more promise as a transit state
for Turkmen gas. Some Indians suggest that the
Afghan pipeline be shifted a few hundred kilometers
west, so it can link into Iran's existing north-south
infrastructure. India, Iran, and Turkmenistan signed a
Trilateral Agreement in 1998, and last year a tripartite
working group with India, Pakistan, and Turkmenistan
also signed an agreement in an attempt to pave the
way for such a pipeline. But Indians cite two problems
that impede the construction of any pipeline emanat-
ing from Central Asia or Iran: First, the "the Pakistan
problem", and the vulnerabilities that suggests, must
be addressed. The second problem is US sanctions on
Iran. If Iran is the key transit state, which is likely to
be the case, US sanctions on Iran limit the funding
options available to build a pipeline, even if the Indi-
ans and Pakistanis can agree to cooperate. In this
sense, Indian strategists complain that US sanctions
on Iran are a significant impediment to a broader
India-US strategic dialogue.
Indians have a late start, but they are seeking to
develop a presence in Central Asia's energy sector.
For example, several years ago it teamed with the Chi-
nese Natural Gas Exploration and Development Cor-
poration to develop a small field in Kazakhstan. The
Indians are also exploring the possibility of importing
electricity from Kyrgyzstan, which has an excess of
hydropower. This scheme would probably involve
transmitting the power across Chinese territory.
For all of these reasons�South Asian competition,
larger geopolitical considerations, economic interests
and energy�South Asia, particularly India, is likely
to be an important player in Central Asia in the next
decade. India's relationships with the Central Asian
states will be multifaceted, based on shared strategic
interests, and part of a broader Indian strategy in Eur-
asia. Pakistan also will be involved, though at this
moment it is hard to see the outlines of a coherent
Pakistani strategy. Currently, Pakistan is viewed more
as a threat to Central Asian stability than as a con-
structive player.
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Europe
Roy Allison
Royal Institute for International Affairs
The focus of concern for the EU in the region has been
the South Caucasus, which is perceived to impinge on
European interests far more directly than develop-
ments in Central Asia, and can even be viewed as the
European part of the CIS. The EU is extending its
efforts at political dialogue and support for interna-
tional measures aimed at conflict resolution and
regional cooperation in the South Caucasus. However,
these efforts are only weakly reflected in EU policy
toward Central Asia, which is more distant from direct
European concerns. The EU cannot act coherently as a
single state actor in developing a strategic view on the
region. But the EU has a considerable agenda for the
region and could go further to adopt a common posi-
tion within its Common Foreign and Security Policy
(CFSP) for at least the South Caucasus.
Three phases in EU policy and thinking may be
identified:
� 1992-98. The strategy was based on bilateral Part-
nership and Cooperation Agreements (PCAs). The
hope was that the FSU countries had the possibility
and political will to follow the East-Central Euro-
pean countries in the direction of Western Europe. A
European space�a network of states bound together
by contractual obligations and common values�
could be extended eastward. Regional cooperation
was emphasized through the Tacis and Transport
Corridor Europe Caucasus Asia (TRACECA)
projects.
� 1998�June 1999. In this period, the EU better under-
stood the difficulties of unresolved conflicts and
reform efforts in the region and developed a much
more political approach. Conditionality began to
affect policy, although the term was not used. Inter-
est also grew in the second pillar of the PCAs�
political dialogue�and this was initiated with Geor-
gia. The EU later welcomed the accession of Geor-
gia to the Council of Europe. Political dialogue, as
set out in the PCA treaties, is intended to bring about
an increasing convergence of positions on interna-
tional issues and to increase security and stability in
the region.
� Since June 1999. At the Luxembourg quadripartitite
summit for the signing of the PCAs with the South
Caucasus states, they were put on notice by the EU
that it would not support the status quo by providing
generous amounts of aid. Action and assistance are
now viewed as incentives for positive change. EU
officials are now reflecting on what kind of dialogue
is needed and whether the EU needs more active
engagement in the region. A new approach to Cen-
tral Asia is likely also in 2000.
EU officials favoring greater priority than previously
to the South Caucasus region can argue that: 1) The
EU is expanding and the future of the South Caucasus
will affect the interests of Turkey, Bulgaria, and
Romania; 2) The prospects for the Chechnya and
Nagorno-Karabakh conflicts, particularly the danger
of broader regional destabilization, emphasize that EU
priorities must include conflict resolution; 3) Caspian
gas is important for European energy strategy. Turkey
will be a major conduit of gas onward to Europe and
not just as a market for gas. The Shah Deniz, other
potential new Azerbaijani gasfields, and established
gasfields in Turkmenistan together constitute a vital
strategic interest for gas-hungry Europe. The gasfields
further reinforce the importance of the trade and
energy transport corridor supported by TRACECA
and the Inogate and designed to bypass Russia by
passing through Georgia, despite the fact that the EU
continues to declare its support for multiple pipeline
routes chosen on a commercial basis; 4) European
companies also wish to invest strategically in the
energy sector of the Caspian states; 5) The Caucasus
states are also transit routes in a negative sense�for
drugs and illegal goods�and this has interested these
countries in the third pillar of the PCAs concerned
with justice and home affairs. This issue is of particu-
lar interest to those European countries affected by the
drug trade.
But in fact the PCAs are not working as they were
originally intended, and it could be argued that the EU
should follow its Northern Dimension initiative with a
Southern Dimension�a wide regional policy�which
involves trade, investment, energy, transport, legisla-
tive approximation, and countemarcotics.
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EU Policy on Conflict Resolution and
Regional Cooperation
The 1999 Luxembourg declaration of the EU and the
South Caucasus states reflects the EU view that the
threat to European security posed by instability in the
Caucasus has, if anything, been increasing, and that
the root cause of many of the problems facing the
three republics is the stalemate over ethnic conflicts.
EU officials argue that the present stalemate has
aggravated humanitarian problems and has tended to
impede the development of democratic institutions
and the market economy. This has reinforced these
states' reliance on international assistance, while at
the same time rendering that assistance less effective.
It is believed that actions aimed at enhancing regional
cooperation and post conflict reconstruction offer the
best option for progress on both confidence building
and economic recovery. The EU considers that its
assistance should increasingly be related to conflict
resolution and subsequent normalization, as well as to
the political obligations of the PCAs and economic
obligations with international financial institutions.
In practice, EU efforts at conflict resolution can only
complement and reinforce international mediation
through the OSCE and UN. The EU supports, for
example, the Minsk Group on Nagorno-Karabakh and
the Friends of Georgia group. It also has proposed
specifically that railways linking the countries (Baku-
Nakhichevan, Yerevan-Julfa, and Abkhazia-Tbilisi-
Yerevan) be re-opened to promote intraregional coop-
eration and build confidence among the parties to the
conflicts.
57
It is believed that EU assistance in the field of regional
cooperation should be coordinated with other policies
and cooperation initiatives (such as those for the Black
Sea, the Balkans and Central Europe) and extended
westwards. Energy is viewed as an important factor
for integration; the EU pays particular attention to the
promotion of international cooperation in this domain.
The EU has discussed the US idea of a Caucasus
Cooperation Forum, but considers it problematic if the
countries select projects to be funded by donors, since
these may not be the best projects. This whole issue
could be taken up between the EU and the United
States in the transatlantic dialogue.
EU cooperation with Central Asian states varies from
state to state and is less likely to be an active part of
the CFSP than such cooperation with the South Cau-
casus states. PCAs are in force with Kazakhstan,
which seems open to cooperation; Kyrgyzstan, which
is sympathetic to European affairs; and Uzbekistan,
where export and import controls create problems.
Thrkmenistan's PCA is not yet in force. Tajikistan
lacks a PCA and the EU cannot work there for secu-
rity reasons. But the EU has launched projects on
drugtrafficldng in Central Asia, and the Caspian states
of Central Asia are important for the overall Eurasian
corridor concept and the flow of energy, supported by
TRACECA and other EU initiatives.
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Highlights From the Discussion
Iran's Role
The US-Iran relationship is a key driver of regional
dynamics. Panelists and Discussants explored how the
strained US-Iran relationship shapes regional dynam-
ics and how this would change if, following a rap-
prochement, Iran is no longer treated as a rogue state.
Several panelists and discussants noted that one con-
sequence will be the flow of Caspian and Central
Asian energy through Iran. It is unclear how such a
shift in US-Iran relations will change politics in the
Middle East, Central Asia's views toward Iran, and
Iran's relationship with other major powers, such as
Russia, India, and China. The discussion revealed that
there has been little attention beyond sanctions to
assess the threats and challenges of the new strategic
environment that will emerge when Iran returns as a
key actor.
Iran's relationship with Russia remains an enduring
north-south axis. The Russia-Iran relationship reflects
shared strategic, political, and economic interests
under current conditions (that is, US sanctions). But
panelists were careful to point out several difficulties
in their relationship. For example, Iran competes
directly with Russia for transport routes for Caspian
energy, and Iranian goals and sympathies differ radi-
cally from Moscow's in Tajildstan and Chechnya.
Tehran has softened its approach toward Tajikistan
and muted its reaction to Chechnya to gain Russian
assistance with its nuclear power program. Views
were mixed about how US-Iran normalization might
affect Russia-Iran relations. Several discussants
assessed that Russia is generally nervous about a
potential US-Iran rapprochement. Panelists argued
that US-Iran normalization could deepen Russia-Iran
ties. If sanctions were lifted, Russia could pursue a
closer relationship with Iran, without worrying about
irritating the United States.
Iran's label as a rogue and revolutionary state has
hindered its ability to be a serious actor in these
regions. A panelist argued that ideological rhetoric,
which has dominated the discourse in both regions
during the past decade, does not reflect Iran's policies
toward Central Asia and the South Caucasus. He notes
that "Iran's foreign policy toward ideology has been
fundamentally pragmatic." He cited several explana-
tions for this pragmatic approach: 1) geopolitical
interests have prevailed in Iran's foreign policy;
2) Iran recognized that it could not communicate its
revolutionary messages to the large Sunni popula-
tions; and 3) Iran's flirtations with ideological policy
at the start of Tajikistan's civil war faded away
quickly, because of internal divisions in the conserva-
tive party. A discussant observed that Iran's policy
toward Afghanistan has evolved from a sectarian pol-
icy to a realpolitik strategy in which Iran now supports
anyone who is anti-Taliban. He posited that Iran is
pursuing a foreign policy to guarantee its borders, not
to support Shiites.
One discussant noted that Uzbekistan and Azerbaijan
have had complicated relations, at best, with Iran since
independence, because of Iranian support for the
United Tajik Opposition and for opposition leaders in
Azerbaijan. A panelist described Iran's policy toward
Azerbaijan as a tit-for-tat approach, in which both
sides are responding to what they perceive as threats
on the other side. In terms of domestic politics, Iran
has adopted sensible policies to deal with its sizable
Azeri minority, allowing Azeris to attend their own
schools and to speak Azeri. He noted that such poli-
cies reflect the fact that the Azeri population control a
number of industrial sectors in Iran, but it also illus-
trates a coherent and sensible policy. For Uzbekistan,
Tehran's reconsideration of its Tajik policy and a shift
toward support for anti-Taliban forces has created
common objectives.
The EU and South Caucasus
The European Union acts tactically, not strategically,
in the South Caucasus. A panelist explained that EU's
attention has been diverted from the South Caucasus
to the Balkans, which has become the primary foreign
policy concern of the EU during the past two years.
The EU remains concerned about the ongoing con-
flicts in the South Caucasus, however, and has been
brokering talks between and among the three South
Caucasus states. The European Commission is debat-
ing whether it should attach political conditions to its
economic aid in order to push the negotiating pro-
cesses forward. One panelist argued that a policy of
conditionality would not be enough to push political
leaders in the South Caucasus to take steps toward real
progress and would undermine EU policies in the
region. He warned that EU policies that are effective
in Europe might actually undermine the sovereignty of
the weak states in the Caucasus.
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South Asia
Central Asia is only one of a number of directions in
which India is engaged. A discussant asked where
Central Asia fit into India's strategic calculus related
to its other interests. The panelist conceded that India
has priorities in other directions. The Middle East
remains a top priority for India because of its depen-
dence on oil imports. India is also looking East and
engaging states in East and Southeast Asia, such as
Japan, Vietnam, Indonesia, and Malaysia. Central
Asia is important, however, not only because of
India's interest in the region's energy, but also because
Central Asia is linked to how India thinks about other
major actors, such as Iran, Pakistan, and China. For
example, the Indians worry about growing Chinese
influence in Kazakhstan.
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Panel V
Impressions From the Field
This panel features scholars who have spent consider-
able time doing research in the region. Panelists
shared their insights on how the regional and internal
dynamics are changing based on their experience on
the ground, questioned the prevailing verities about
the region, and offered an assessment of how research
on the region should be focused in the future.
Chairman: Angela Theriault
National Intelligence Council
Nora Dudvvick
The World Bank
What are the prevailing verities?
The trajectory of change is unidirectional, and will
ultimately result in democratic societies (as measured
by the establishment of electoral democracies and
"free and fair elections"). At the beginning of the 90s,
despite the war in Nagorno-Karabakh, many Arme-
nians and many Western observers were optimistic
that Armenia was moving in a democratic direction.
Armenians had just voted in a government untainted
by connection to the Communist Party. They took
pride in being the most stable country in the South
Caucasus, a fact they attributed to the high degree of
ethnic homogeneity in a country with a strong sense of
national identity. Most activists preferred to character-
ize the "Karabalch Movement," which had brought the
Communists to power, as a national democratic rather
than purely nationalist movement. Aside from
severely flawed national elections and near-coups of
recent years, the institutional framework and "demo-
cratic" style of governance (with due respect to the
fact that definitions of democracy vary considerably
across cultures) are still lacking. Armenia has lost
one-third of its population to emigration, and many of
the people remaining in the country, particularly those
who have not benefited from the economic changes,
express bitter disappointment and cynicism about
"democracy" and rampant corruption at every level of
government. Without predicting the "end point" of the
political and social changes under way in Armenia, it
seems clear that there is no reason to assume any
61
longer that change will necessarily be smooth, linear,
or bring Armenia toward a structure that resembles
Western democratic states.
Despite rocky beginnings, which include widespread
impoverishment, natural catastrophe (in Armenia)
and armed conflict in both Armenia and Georgia, the
presence of skilled and educated populations, pro-
grams of privatization, liberalization, and globaliza-
tion should eventually help restore production and
alleviate widespread poverty. Since 1994, field work
on the economic and noneconomic dimensions of
poverty in Armenia, Georgia, Kyrgyzstan, and
Uzbekistan reveal that sizable segments of the popula-
tion, in urban, and particularly rural areas, are experi-
encing severe poverty. This portion of the population,
many of whom worked in agricultural or industrial
enterprises, has not particularly benefited from privati-
zation or liberalization; on the contrary, privatization
has meant the end of many social services and other
benefits, a loss of which has hurt low-income house-
holds. The spread of informal payments for ostensibly
free health and education services, coupled with the
severe decline in the quality and accessibility of health
and education services also means that low-income
households, particularly those in poorly served rural
areas, are likely to be left further behind as the econ-
omy improves. Certainly, this portion of the popula-
tion will not particularly benefit from "globalization,"
which, particularly in the form of improved communi-
cations and exposure to the outside world, predomi-
nantly benefits the urban and the educated.
The strong and extensive kinship networks that char-
acterize society in the South Caucasus will act as
"safety nets" and soften the impact of impoverishment
for the poorest households. Sadly, one of the most
striking social phenomena of the past 10 years has
been the weakening of the seemingly durable ties of
kinship and reciprocal obligation that characterized
South Caucasian and Central Asian societies in
response to the widening gap between rich and poor.
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Poor people are being excluded�and also exclude
themselves�from the many social and cultural events
that traditionally served to affirm these ties, because
they can no longer afford the expenses connected with
participation. The poor feel humiliated by the need to
ask help from richer relatives, while the newly pros-
perous increasingly find their poor relatives a burden
they cannot or do not want to support. Poor people
complain that the Soviet-era economy of reciprocal
favors and services has become increasingly mone-
tized, and that kinship ties must now be supplemented
with cash.
What questions should be asked?
How do informal institutions, particularly connections
and networks, actually work on local and national lev-
els, and how do they affect political and economic
processes? Field studies demonstrate that whether at
the national, regional, and local level, most respon-
dents are convinced that politics and economics are
determined by personal ties. Even when this is not the
case, the perception itself shapes behavior. Case stud-
ies to date, particularly of entrepreneurs, demonstrate
the extent to which personal networks determine the
flow of resources between the state and its citizens.
Likewise, fieldwork in agricultural communities sug-
gests that informal networks and power relationships
are highly significant in terms of shaping policies and
explaining political and economic events. It is there-
fore important for research at any level�national,
regional, or local�to carefully examine the specific
history and character of the informal and historical
connections among economic and political actors.
How do personal experience and internalized assump-
tions from the Soviet period, and new (ethnically
shaped) national identities affect how people perceive
and respond to new institutions and practices?
Although very few people in the FSU would express
support for Marxism-Leninism, clearly many aspects
of "actually existing socialism" were internalized,
such as notions of social justice (egalitarianism) and
of positive rights (to employment, for example). Even
if they verbally support the idea of a market economy,
many people still expect the state to take primary
responsibility for creating employment. Although they
criticize the government for corruption and incompe-
tence, more traditional rural populations in particular
still consider it the government's responsibility to take
initiative and provide direction. When examining how
new institutions and structures are functioning,
researchers need to continually pose the question of
how local populations interpret these institutions, and
in what way their functioning results from internalized
assumptions and local experience specific to postso-
cialist reality.
What are the sources and dynamics of social change
at the local level? Local formal and informal institu-
tions have changed considerably, and new power
arrangements and mechanisms are forming. Whether
in rural villages or urban neighborhoods, for example,
local communities have taken the initiative; in others,
relationships have become even more hierarchical
than before. What are the key ingredients and dynam-
ics that make some groups and/or communities
change? How are local changes affected by economic
and geographic factors? What role is played by indi-
viduals, by urban or international organizations, by the
"demonstration effect" of guided change elsewhere?
What are the practical implications of these findings?
What issues should regional experts focus on,
and why?
Social and economic exclusion. Even as societies and
economies are restructured and globalized, large parts
of the population (unskilled youth and unemployed or
underemployed older workers in rural areas and
depressed single-company towns, poor children, the
disabled, elderly people living alone, ethnic minori-
ties) are being socially excluded. Poor children and
youth have decreasing access to education and train-
ing, which will make them less competitive if and
when growth increases. Likewise, geographic isola-
tion and deteriorating infrastructure has worsened the
position of rural populations. The increasing rich-poor
gap reduces social cohesion and potentially leads to
political instability (as seen recently in Armenia). In
ethnically heterogeneous countries and politically
fragile countries such as Georgia, even the perception
that exclusion is caused by discrimination based on
ethnic affiliation could be politically very destabiliz-
ing. The economic and social marginalization of siz-
able portions of the population should therefore not be
ignored.
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David Hoffman
University of California-Berkeley
I have spent approximately four of the last seven years
in the former Soviet Union, in particular in the states
of what Russians term "the near abroad." During this
time, I have had the opportunity to engage the region
from a number of different perspectives�that of jour-
nalist, energy consultant, academic researcher, and
human rights representative. Naturally, each of these
occupations brings to the table its own insights into
the region, as well as its own set of institutional
"blinders" and biases.
This panel brings together scholars who have been
active in conducting in-country fieldwork in the states
of the South Caucasus and Central Asia, and who thus
are in a position to inject invaluable firsthand knowl-
edge into the larger meta-conversation that this con-
ference represents. In this milieu, my contribution, as I
understand it, might best be made in the form of sober
reflection, and the juxtaposition of the salient ques-
tions and issues raised by preceding speakers against a
backdrop of the realities of political, economic and
social life in the South Caucasus and Central Asia.
Thus, I hesitate to proffer anything in the way of a
concrete thesis at this early stage. Given my experi-
ence, not only in studying, living in, and working on
this region over the past seven years, but in interacting
with others engaged in similar activities, I think one or
two tentative comments can be made at this point, less
as definitive statements than as a way for framing fur-
ther discussion.
Regional experts should be cautious of the sources of
information we use in crafting our understanding of
the region. The gradual penetration of new forms of
electronic information-gathering and dissemination
into the South Caucasus and Central Asia has made it
increasingly easier to gather information on the
regions from afar. Internet versions of local newspa-
pers (Zerkalo from Azerbaijan and the Ahnaty-based
Delovaya Nedelya and Panorama are particularly
good examples), e-mail listserve groups, news wire
compilations and the like are opening up the region to
outside observers as never before. And, of course, the
gradual loosening of visa regimes and intellectual
migratory patterns has enabled a quantum-leap in per-
sonal and institutional contacts between representa-
tives of the Western and regional academic,
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government, and business communities. The informa-
tion pipeline out of the region is clearly widening,
albeit in fits and starts (witness virtually every govern-
ment's attempts to control, in some form or another,
access to the Internet).
This trend is heartening, but it should be taken with
more than a small grain of salt. I will limit myself to
noting here two reasons, in particular, that ought to
give us pause. Of perhaps immediate consequence to
many scholars' work has been my finding, over the
course of my fieldwork, that macroeconomic indica-
tors in many of the countries in the region are
extremely unreliable, and in some cases represent out-
right fantasy more than the real state of the economy.
Interviews with regional statistics committee employ-
ees in one Central Asian department revealed an office
gutted by a lack of financing and eight-month wage
arrears. It should be no surprise, then, that bureaucrats
who have not been paid for nearly a year are less than
likely to enthusiastically carry out their assigned task
of collecting output, employment, and wage data from
the various economic enterprises in their region. In
fact, they had not, and thus current figures were
merely extrapolated from those of previous years. If
one is going to use macroeconomic statistics in a seri-
ous and consistent manner, it is imperative to investi-
gate "where the rubber hits the road," so to speak:
employees at regional offices of state statistical com-
mittees are but the foot soldiers in the larger process of
statistics-gathering. Their results, I found, are often
subsequently manipulated and massaged according to
prevailing political winds at each of the higher stages
of data accumulation, culminating in, as one bureau-
crat jokingly called it, the "red-pencil stage," where
undesirable figures or numbers are banished to obliv-
ion with the stroke of a high-ranking official's hand.
Thus, often by the time statistics reach the Western
"consumer," whether in government, a university, or
an international financial organization, the cumulative
product can be worth less than the paper it's
printed on.
Informal and illegal rent-seeking should be called
what it is�putting a "positive spin" on it helps no
one, least of all the governments and people. My own
work is rooted in the intersection of the petroleum sec-
tor and state-building in Azerbaijan and Kazakhstan,
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specifically in the interaction between the intertwined
processes of pursuing petroleum-led development,
while simultaneously attempting to develop a measure
of state capacity across critical institutions�extrac-
tive, regulatory, and redistributive. Though not a prime
focus of my research, one of my more interesting find-
ings has been the degree to which informal revenue
channels have insinuated themselves in the regions'
oil and gas sectors. What would I tell you if actual
crude and refined oil product output in Azerbaijan was
actually almost double the official figure? The produc-
tion of private profit and public loss damages not only
these countries' prospects for economic development,
but ultimately the perhaps more important task of
developing strong state institutions.
Short, impressionistic visits to the field often remain
just that: short and impressionistic. Several years ago,
a group of European experts paid a working research
visit to Azerbaijan. Their purpose was to survey the
state of the oil machinery sector. On the basis of their
report, I revisited what they had judged the "stron-
gest" four enterprises. My walk-through of the factory
floors, interviews with workers and management, and
inspection of the machinery, however, revealed equip-
ment with birds nesting in them, a work force that
seemed to be 80 percent invisible or not present, and
capital stock that had not been operated in years. The
difference between my visit and the previous lay in
that I visited all of the sites, rather than conducting
telephone or remote-site interviews with the plant
managers. Short trips to the field, relying heavily on
official contacts and translators, are useful, but their
limitations should be taken into account.
What, then, are some of the basic lessons we can
learn? Relying on the Internet, official statistics, and a
small circle of local sources (who may or may not, in
fact, be based in their home country) carries with it a
degree of risk. This, of course, varies with the scope
and goals of a given research project�certain topics
obviously lend themselves more to small-n analysis
and/or anthropological observation. In an environment
where the basic statistics-gathering institutions of the
state have withered, where local experts and/or insti-
tutes sometimes have political or personal axes to
grind, and where new forms of information technol-
ogy add breadth, but not depth, to our understanding
of the area, we must be wary, indeed. The first lesson,
obviously, is that numbers and statistics are malleable:
on numerous occasions I have seen economic
"progress" generated at the drop of a hat. True, econo-
mists can, to some degree, massage meaning out of
the sometimes perverse raw data generated by state
statistics committees. But the fact remains that an
overreliance on official statistics and economic data is
an invitation to facile and flawed analysis.
This cautionary tale clearly places a heavy method-
ological burden on the researcher. As mentioned,
some topics are easier to "get at" than others. The
political economy of oil, for example, tends to be
wrapped in a double cloak of political opacity
(regional, kinship, and patronage networks are insular
and tough to crack if you are an outsider) and eco-
nomic dissimulation. Nevertheless, effective research
requires first of all that we be aware of these dangers.
As the internet casts its net broader and wider, we
should be conscious of the overall lack of depth of
most of its offerings up to date: the primary sources
for many websites and listserves are relatively few and
incestuous. Another basic lesson that follows from
this discussion is that field research ideally should: a)
consist of multiple trips, in order to facilitate the
development of deep, rather than broad, contacts; and
b) benefit from appropriate language skills, since
using a translator, while in some cases unavoidable, is,
unfortunately, often a hindrance, especially when the
topic at hand is sensitive for the interviewee.
Cynthia Werner
Pitzer College
Almost nine years have passed since the breakup of
the Soviet Union, yet the transition to a more demo-
cratic system with free market trade seems to be
stalled in the middle of chaos. Although the political
and economic systems have definitely been changing,
they are not necessarily changing in positive direc-
tions. One of the buzzwords that analysts repeatedly
use to explain what is wrong with the transition pro-
cess is "corruption." In Western policy reports and
popular newspapers, widespread corruption in the
former Soviet Union is often portrayed as the leading
threat to political democratization and economic
liberalization.
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Journalists, for example, have published stories on
how corruption impedes political elections, media
reporting, factory production, property privatization,
and foreign trade. These perceptions of corruption, in
turn, force international development organizations to
question whether or not it is pragmatic to continue
sending foreign aid to these countries. Similarly, for-
eign businesses must decide whether or not potential
profits are worth the risk of operating in an environ-
ment with a strong "mafia" presence.
Here I would like to address the issue of corruption by
sharing my own firsthand knowledge of corruption in
post-Soviet Kazakhstan. As a cultural anthropologist
conducting research in a small Kazakh town, rather
than a Western businessman making deals in a large
Kazakh city, my knowledge of corruption is based
largely on what people have told me about corruption,
rather than my own personal experiences with the
local mafia. In the field, I was able to acquire consid-
erable information about the contexts in which bribes
are most frequently presented, the cash value placed
on bribes for various services, and the proper etiquette
for presenting bribes. I was also able to gather infor-
mation on the ways in which rural Kazakhs view the
morality of bribery and nepotism. Not surprisingly,
their ideas of what activities are illegal yet morally
acceptable and what activities are illegal and morally
reprehensible do not exactly correspond to American
views. In my opinion, understanding the way people
talk about corruption and the way they think about
corruption can be very important for developing prac-
tical strategies to fight corruption.
Similar to the other former Soviet republics, Kazalch-
stan is known as a place where "nothing is allowed,
but everything is possible." In other words, despite
attempts to dismantle the Soviet bureaucratic system,
laws and documents still regulate and monitor almost
all social and economic activities. Yet, bureaucrats
who control the flow of documents and the observance
or regulations are known to provide a quick service or
limited privilege to individuals who pay bribes or call
in personal favors. Everybody knows that traffic
police and customs officials take bribes for real and
imagined offenses; judges receive bribes for favorable
sentences; employers secure bribes in exchange for
available positions; and university officials accept
65
bribes for admission. In addition to paying bribes,
people know that personal connections, including clan
ties, can be useful for getting around the system.
Everybody in Kazakhstan also knows that bribery and
nepotism are illegal. But, the way that corruption is
legally defined does not correspond perfectly to the
way that it is culturally or morally defined. In other
words, some crimes are morally acceptable while oth-
ers are not. Going further, people take different posi-
tions when it comes to the morality of such activities,
which further varies depending on the context. When
it comes to the morality of bribery, people factor in the
content of the bribe, the official's personality and gen-
erosity, his or her regular salary, the estimated amount
of income received from bribery, and whether or not
the bribes are voluntarily presented. Similarly, the
morality of nepotism is context-specific. For example,
in southern Kazakhstan, most Kazakhs accept and
even praise bureaucrats, who are loyal to their family
and clan in hiring practices, as long as the benefactors
are somewhat qualified for the position.
For this conference, I was asked to address several
questions: What prevailing verities do you accept or
reject? What questions should be asked but are not?
And, what things should we be focused on? To begin,
I do believe that pervasive corruption is a real problem
that hinders development and democratization in Cen-
tral Asia. This is not just a local problem, as the level
of corruption in Central Asia also affects international
politics, foreign aid, and foreign trade. Although there
are no easy solutions to this problem, the situation is
not completely hopeless. International organizations,
such as the World Bank, are already taking some initi-
atives to fight corruption in Central Asia.
As these international organizations and foreign gov-
ernments take a more active role in fighting corruption
in Central Asia, it is important for us to start asking
new questions. First, we need to think about ways to
develop culturally compatible solutions to the corrup-
tion problem. As I have already discussed, Americans
and Kazakhs do not necessarily share the same under-
standings of what constitutes "corrupt" behavior. It
would be easier to gain support for anticorruption
campaigns in Central Asia that are initially targeted
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against those forms of corruption that are universally
perceived to be immoral. At the same time, local gov-
ernments could introduce educational programs that
link the anticorruption movement to notions of nation-
alism, patriotism, and social justice. Second, it is
important to think about the unintended consequences
that will arise with anticorruption campaigns in Cen-
tral Asia. As Soviet history demonstrates, the intro-
duction of anticorruption measures often opens the
door for practices akin to witch-hunting. Individuals
who would ideally be targeted by these efforts tend to
possess both the connections and the skills necessary
to avoid being caught. At the same time, the most cor-
rupt individuals often use these campaigns to root out
their enemies. We need to determine whether or not it
is possible to change the system without trying to
identify and remove corrupt leaders. In this regard, we
need to study the factors, such as low wages and
excessive bureaucracy, that foster corruption in Cen-
tral Asia. By addressing these questions, it is possible
to develop more effective anticorruption measures in
Central Asia.
Kathleen Kuehnast
Mellon Foreign Area Fellow,
Library of Congress
What prevailing verities do you accept or reject?
History is key to understanding the present is a given,
but! would add that the present may also be key to
more fully understanding the Communist past. It is
essential that we continue to reexamine the late Com-
munist period from new vantage points, and if need
be, to revamp our analysis of it. As we move further
away from Cold War rhetoric, new questions must be
raised. Since our orientation to date has focused dis-
tinctly on Communism's shortcomings and failings,
we must also begin to identify what actually worked
during the socialist experiment. This additional
knowledge will give us a better framework for under-
standing the fault lines and impediments of current
institutional reforms, since these institutions are based
as much on human agency as they are on
ideologies.
The states of Central Asia will continue to maintain
their Soviet-inherited borders is an assumption that!
think will prove to be false. In my estimation, there is a
high probability that the current geopolitical borders
of Central Asia will be different in ten years time.
With a number of recent interregional border disputes
(Uzbekistan-Kyrgyzstan; Uzbekistan-Kazakhstan;
Ferghana Valley), reconfigurations may occur sooner
than later. Moreover, it is important to note that Rus-
sia's President-elect Putin also appears to be making
more of an overture toward Central Asia than did his
predecessor. It is not out of the range of possibilities
that Russia could play a covert role in destabilizing
borders as a means of consolidating further depen-
dency on Russia's military strength in the region. Fur-
ther, another question which begs to be answered is
how will the countries of Kyrgyzstan and Tajikistan
maintain their independence when economic develop-
ment and sustainability appears very uncertain at best,
and where their poverty levels are at 51 percent and 94
percent respectively?
Central Asia's drug-trafficking problem is huge and
perhaps even insurmountable, is not only an accurate
assessment but begs for global awareness and inter-
vention. Drug trafficking is not going to disappear in
Central Asia. Growing rural poverty, lack of economic
development, and a general willingness by Central
Asian governments "to look the other way" makes the
situation in the region extremely vulnerable to active
drug trafficking. Not only is this a national security
issue, but it is only a matter of time before "drug
money" starts playing a public and pivotal role in poli-
tics of the region.
What questions should be asked?
Although women are actively engaged in the arena of
NGO development, why have they not gained footing
in the new political arena, either in elected parliamen-
tary positions or appointed ministerial positions?
Women today have less of a role in public discourse
than they had during the Soviet period, in part,
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because most women are coping with day-to-day sur-
vival problems. In addition, traditionalism and resur-
gent religious ideals have advocated a far more
conservative position for women in Kyrgyz society
than the prior Soviet era when Central Asian women
were encouraged to be educated and to work outside
the home. The increasingly conservative rhetoric
about women's roles in society may not only fore-
shadow potential human rights abuses, but it also indi-
cates the level of tolerance for diversity in the social
milieu.
No matter the level of literacy or work experience
Central Asian women gained over 70 years, the last
decade has seen many women mired in the new pov-
erty that has engulfed these countries. It is not that
women are any more poor than men, but they are more
burdened. With the collapse of socialism and the many
mechanisms of support, including child care, pensions
for the elderly, universal health care, etc., women are
not only relegated to taking care of their own family
and extended families, but also in some regions are the
primary breadwinner. There is simply no time for
most women to partake in the public political process.
Poverty undermines the voices and participation of
women. Their silence, in fact, sounds a loud signal for
the need for nation-building efforts to address worsen-
ing social and economic problems. As one young rural
Kyrgyz mother expressed angrily in an interview,
"New democracies and economies are of no use when
people can no longer feed or clothe their families."
Although women are actively involved in NG0s, it is
important that they are not marginalized in the politi-
cal processes under way in these nascent states. Pro-
tecting the constitutional rights of women, as well as
developing a sound legal system, should not be done
without the active participation of women.
What is the long-term impact of poverty on the youth
of Central Asia? An important factor to consider in
Central Asia is the demography of the population,
since nearly 40 percent of the population is now under
18 years of age. In spite of the many inadequacies of
the Soviet system, health and education indicators for
child development in Central Asia were high, espe-
cially when compared to other developing countries in
the world. It is now proving exceedingly difficult to
67
maintain the same sort of commitment to the needs of
children in the uncertain economic and political pre-
dicaments of Central Asia. Furthermore, with the col-
lapse of central planning, many of the new states are
having difficulty maintaining basic infrastructure,
such as roads and public transportation.
In the rural areas, where over half of Central Asians
reside, the repercussions of poverty are particularly
devastating. Poverty destabilizes society and creates
stress lines and fissures. As a result, many children
have experienced the abrupt diminishment in the qual-
ity of their lives. They have also felt the trickle-down
effect of economic crises, including such problems as
the increasing rate of school dropouts, the spread of
debilitating communicable diseases (tuberculosis,
syphilis, and hepatitis), malnutrition among younger
children, unprecedented homelessness, and an
increase in youth crimes, mental depression, and sui-
cide among teenagers.
Although women are often singled out as a vulnerable
group, there is growing evidence that unemployed
young males are also highly vulnerable. Young males
are the most likely group to move into the illegal drug
trade, as well as the most likely candidates for
involvement in radical political or religious groups. In
various interviews over the past decade, many villag-
ers in Kyrgyzstan spoke of their terror of these groups
of young males. Many complained that "the streets are
no longer safe in the evenings for women and chil-
dren." Indeed, the incidence of violence, suicide, and
crime among this age group has increased over the last
decade.
Clearly, the problems of children today foreshadow
the human development issues of tomorrow.
What things should we be focused on?
What is the impact of poverty on democratic reforms?
Current poverty levels in Kyrgyzstan are having an
impact on national stability. Extrapolated during the
coming decade, the widespread poverty cannot be
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underestimated in terms of breeding political discon-
tent or intensifying illegal activities that may destabi-
lize Akayev's government. In 1996, one older Kyrgyz
woman in Naryn foreshadowed the current economic-
political predicament in Kyrgyzstan when she said
about the next round of elections that "I would rather
vote for Communism and eat, than vote for democracy
and starve."
What are the implications of the increasing stratifica-
tion, not only between the rich and poor, but also the
urban and rural regions? We see a rapidly disappear-
ing "middle class" (at least by former Soviet levels).
Using the consumption-based measurements of the
World Bank (versus an income measure), 51 percent
of the population in Kyrgyzstan now lives below the
poverty line. The Gini Inequality Coefficient (1997),
which calculates the degree of class inequality, indi-
cates a value for Kyrgyzstan of 0.41, which is higher
than that of Kazakhstan at 0.35, although still lower
than Russia's 0.46.
The rural poverty rates in Kyrgyzstan (65 percent) are
more than twice that of urban rates (29 percent). And
extreme poverty rates in rural areas (21 percent) are
about four times those of urban areas (5 percent).
With the most onerous economic problems affecting
those who live in rural Kyrgyzstan, it is important to
explore how rural poverty can further weaken borders
that are already quite porous and potentially danger-
ous. Three of Kyrgyzstan's four borders are certainly
troublesome, especially the ones with Tajilcistan and
Uzbekistan in the Ferghana Valley, and of course,
western China, most notably the Xinjiang Province. In
each instance, these borders are for the most part in
remote, mountainous areas, which means that they are
often poorly guarded. Where guard posts do exist on
the roadways, it is a well-known fact that these guards
are generally susceptible to bribes, thus affording easy
access for the cross-border drugs or even arms trade.
In the past five years, two important developments
have occurred simultaneously with respect to drug
trafficking in Kyrgyzstan. First, a Russian market for
drugs has opened up. Second, Iran, once on the drug-
smuggling route, launched a strict antidrug campaign,
virtually sealing its border with Afghanistan. This has
redirected the drug trade northward through Kyr-
gyzstan. It is essential to consider that as economic
conditions worsen, or even if they remain the same,
the only viable business for many of the rural poor
may be drug trafficking. Extensive rural poverty
makes gainful, albeit illegal opportunity, appear rea-
sonable and necessary to desperate people.
Economic disparity may significantly exacerbate pre-
existing tensions between the titular group, the Kyr-
gyz, and other ethnic groups. This is especially true
since agricultural resources are limited, and there are
relatively few fertile valleys in the country. For exam-
ple, Chui Valley in the North, the Kyrgyz retain a
latent resentment toward successful Chinese and
Uighur farmers. Tensions between Russians and eth-
nic Kyrgyz living around Lake Issyk-Kul peaked in
1992, during a march to commemorate Kyrgyz who
had died in the 1916 uprising against Russian settlers
who had encroached on their grazing lands. And of
course there were the now-infamous Osh riots of
1990, which erupted over land rights in the Ferghana
Valley, home to both Uzbeks and Kyrygz. Certainly,
limited access to arable lands and resources may be a
catalyst for conflicts of a regional or ethnic nature.
What is the impact of poverty on social networks? The
weakening of rural social networks as the result of
increasing isolation and poverty has only recently
begun to be considered as a significant social develop-
ment concern. Since many of the transactions among
people living in the rural regions pertain to survival
issues�securing food, obtaining health services, find-
ing fuel and water, and so forth�social networks, as a
type of informal institution, are a critical dimension of
day-to-day rural survival. The Kyrgyz Republic Social
Networks Study (Kuehnast & Dudwick, 2000) indi-
cates that the ability of the social networks of the poor
to insulate them from the mounting problems of rural
life is diminishing rapidly. As a result, the rural poor
are finding themselves in a patronage relationship in
which they borrow goods, food, or cash from their
wealthier neighbor, and then become indentured to
that neighbor as a means of paying off their debts. In
Georgia and Armenia, this same sort of predicament
has been called "medieval work conditions," denoting
the feudalistic strategies being used by the poor to
survive.
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Michael Thurman
The World Bank
There are many verities in the prevailing body of
research on Central Asia which I accept, for example:
� Central Asian states and elites are dependent upon
Russia.
� There are many factors that could lead to instability
in Central Asia, such as irredentism, economic
decline, possible conflict over transboundary
resources, and "spillover" from events to the south.
� Central Asia is a region in which the United States
should be actively involved.
� Central Asians are politically passive in the face of
authoritarianism.
My research in the field, however, has led me to some
conclusions that are not shared by many scholars of
Central Asia. These include the following:
� Central Asian society is not overwhelmingly "tradi-
tional" or "feudal." One often hears the comment
that you "go back to the middle ages" when you
leave the capital cities of the region for the country-
side. This is based on a false perception that roots
rural areas in a static, "traditional" reality where
"custom," familial ties, and religion are the predom-
inant influences on the population. In fact, indige-
nous social and political structure and religion were
greatly transformed by collectivization and subse-
quent years of rule by the "command-administrative
system." Clans and kinship ties are ultimately sub-
servient to Soviet modes of transmitting power
through the Party, which is closely intertwined with
both social and political structures.
� The view that Central Asia is a hotbed of Islamic
fundamentalism is based on Western stereotypes and
prejudices, some of which have been acquired from
Russian and local elites. The village where I con-
ducted my field research is predominantly populated
by self-avowed "fundamentalists." However, their
fundamentalism should be likened more to Church
69
of Christ fundamentalism than to a firebrand ideol-
ogy. No one rejected me based on my Christian con-
victions. The imam expressed to me his belief that
"God is the same" for all religions. The population
favors a secular government and greatly admires the
United States.
� Although many factors make instability a concern in
Central Asia, the region is not a "tinderbox." My
research was mainly conducted in rural areas of the
Ferghana Valley, one of the most commonly men-
tioned "hotspots." Despite the fact that socioeco-
nomic conditions in the region are much worse than
before independence, there has been no repeat of the
conflagrations of 1989 and 1990. Many of the fears
for my safety expressed by Western, Russian, and
urban Central Asian friends proved to be entirely
unfounded. In my opinion, the rural population is, if
anything, too passive in the face of authoritarianism.
� Political passivity should not be mistaken for lack of
a capability to respond to incentives and changing
circumstances. Central Asians are resourceful in
adopting mechanisms for coping with the prevailing
command-administrative mode of governance. They
typically make sound decisions when involved in the
decision-making process. This is evident in the
experience of the Leninsky District Farmers Associ-
ation in Tajikistan, which has empowered farmers to
manage their own affairs and overcome resistance
from the local government.
Research on Central Asia can be improved in several
ways:
� Micro-level studies are needed. The prevailing body
of research generalizes a fund of specific informa-
tion that is often woefully inadequate for the
purpose.
� The Central Asian experience should be compared
with that of other parts of the world. Specific locales
of Central Asia should also be compared with one
another.
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. . . _ _ .
� For a region that is predominantly rural, there is lit-
tle research on the countryside of Central Asia. In
part, this is because it is more difficult to access
rural areas, and that it is much easier to conduct
research in the relative comfort of the capital cities.
� By adopting an historical perspective, scholars of
Central Asia would learn more about change in the
past, thus enabling them to identify most significant
features of the present system. There is also a great
deal of room for "old-style" history concerning the
70
region, since we know only the most basic facts
about its past. Soviet interpretations of the past, on
which many scholars base their opinions, are often
entirely spurious and bear a closer resemblance to
pamphleteering than serious history.
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Highlights From the Discussion
Economic Challenges
Oil is a liability more than an asset for economic and
political development in the region. Several panelists
and discussants noted that, if the oil sector was not
managed properly, there will be wide-reaching eco-
nomic, political, and social implications. Other discus-
sants expressed concerns about transparency issues.
� Oil has the potential to overwhelm the state. One
panelist argued that success of these countries will
depend largely on how they deplOy and digest
energy revenues in a meaningful way and build
institutions to support the state. Currently the Azer-
baijani Government is unable (or unwilling) to
privatize SOCAR because it is such a lucrative
source of informal revenue. At the same time, reve-
nues from the oil industry are not being re-invested
in other capacity-building sectors or in other institu-
tions.
� Other sectors are neglected as the foreign investment
pours into the oil and gas industry. One panelist
argued that Kazakhstan is the best example of a rela-
tively diverse economic portfolio. Some foreign
investment has flowed into a variety of sectors, such
as light manufacturing and metallurgy. But the
energy sector will continue to be favored unless the
local government provides incentives to attract more
investment into other sectors.
� Poor regulatory regimes discourage investment in
many of these countries, and investment is often
squandered. Regional governments seek to avoid
transparency. Turkmenistan has the most opaque
system in the region. None of the panelists could
comment on what is happening in Turkmenistan.
Strategies for assessing economic data were debated.
One discussant argued that despite endemic collection
problems, data may be more accurate than we think.
First, he observed that the data reflected a sharp fall in
economic performance in the region after the Russian
crisis, which suggests that the governments were not
simply extrapolating past trends. Second, bad data
may make it difficult to assess performance levels, but
discerning economic trends remains possible. Several
71
panelists concurred that deliberate falsification and
simple neglect make economic data from the region
very difficult to use for purposes of assessing needs. If
the falsification is done consistently, however, it is still
possible to discern various trends. Another discussant
asserted that accurate data can be obtained if an out-
side agency pays the locals to do it properly, which is
a strategy that the United Nations employed to collect
data for its Human Development Report. Other discus-
sants asserted that the quality of data depends largely
on the country. For example, the quality of data com-
ing from Uzbekistan and Kazakhstan far exceeds the
quality and quantity of data from Turkmenistan. Tacis
and IMF economic data were mentioned as useful as
external checks on the economic data from the region.
Social Challenges
A number of social problems were raised in the dis-
cussion. While political and economic problems tend
to be country-specific, most of the states in the region
confront common social problems at the microlevel.
The issues raised during the discussion include:
� Population Dynamics. The population dynamics of
the former Soviet empire are in flux. Russia's popu-
lation is shrinking, and Central Asia's population is
growing. Several panelists believed that the govern-
ments in the region will be unable to cope with the
future population pressures, from growth rates as
high as Turkmenistan's 3.8 percent. A panelist
noted, however, that this population growth must be
somewhat qualified by the fact that many women are
starting to realize that they cannot afford to raise as
many children and are employing self-imposed birth
control and having abortions. In addition, popula-
tions are moving from rural to urban areas.
� Unemployment. The endemic poverty of the region,
combined with population growth, is naturally lead-
ing to a significant unemployment problem for the
young generation in Central Asia. Forty percent of
the population is under 18. Islamic extremism may
be a direct consequence of the regional unemploy-
ment problem.
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� Corruption. Local and national leaders, who exploit
their positions for personal gain, are found across
both the South Caucasus and Central Asian regions.
Mafia leaders and drug traffickers also drain
resources and hurt economic productivity. There are
some cultural norms for corruption which are
socially acceptable.
� Role of Women. Panelists agreed the role of women
in these societies has been neglected, but they are
playing an increasingly important role in the region.
Present gender problems must be understood in the
context of the past.
� Breakdown of social order/networks. The collapse
of the political and economic system has also shat-
tered the traditional social order in these countries.
Research on the ground reveals that people are so
focused on survival that traditional informal net-
works and channels of communication no longer
exist. Even traditional family structures are breaking
down. Some people are unable to give or attend
weddings or funerals, due to cost considerations.
These social events were used to exchange news and
information.
How should the West be thinking about these
problems? An attendee noted that the picture painted
by the panelists is one of unremitting poverty among
Central Asians and a seemingly unstoppable down-
ward spiral in their prospects. Panelists observed that
the gap between government promises and the reality
of increasingly deteriorating living conditions is grow-
ing, but it is unclear how long those impoverished will
accept these conditions. One panelist commented that
Central Asians do not know anything else, unless they
are presented with an opportunity. For this reason, it is
difficult to predict when a threshold that leads to a vio-
lent reaction will be crossed.
One panelist offered four possible scenarios, observ-
ing that there are no optimistic outcomes at this
moment:
� The young will continue to migrate to urban areas
and the elderly will be left impoverished in the rural
areas.
� The population will continue to tolerate poor eco-
nomic conditions.
� The young will seek alternative economic activities
which are primarily illegal, for example, drug traf-
ficking. A criminalized economy will have serious
political implications.
� The population demands change from the govern-
ment, which leads to civil unrest and possibly an
overthrow of the regime.
Why do we not see greater social unrest with such
deteriorating conditions? Panelists explained that the
pervasive lack of trust mitigates against social mobili-
zation of any kind. Not only have social networks bro-
ken down, but people refuse to work together. Small
businesses are reluctant to collaborate to protect their
interests because they fear that the connections will
make them vulnerable. Another panelist, however, had
seen people unite around common causes, such as
water issues. For example, a group of Uzbeks recently
founded a water association, which could have politi-
cal implications, but it was an unlikely vehicle to
foment social unrest.
Recommendations
� Panelists strongly urged long-term, grassroots stud-
ies. Only significant time on the ground in these two
regions, particularly away from the capitals, will
contribute to a greater understanding of the prob-
lems in these regions.
� Central Asia and the South Caucasus must be under-
stood on their own terms. Some discussants argued
that the West requires a better understanding of
these countries' cultures, histories, ethnic groups,
economies, and the role of Islam. Westerners tend to
arrive in the region with an agenda and policy pre-
scriptions that they seek to impose on the natives. It
is important to discern what the locals want and
need.
� An understanding of political stability in other
developing countries that are undergoing structural
adjustment programs can provide lessons learned
that could be applied to Central Asia and the South
Caucasus.
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Panel VI
Concluding Roundtable:
The Outlook of the Larger
Geopolitical Environment
and Key Variables
The objective of the roundtable was to reemphasize
particularly salient points that emerged during the pre-
vious day and a half; to help establish the architecture
for debate on contentious points; and to suggest a
"research menu" for going forward.
Chairman: S. Enders Wimbush
Hicks & Associates, Inc.
S. Enders Wimbush
Hicks & Associates, Inc.
Central Asia is at the center or on the near periphery
of the national security interests of all states in the
region. In the view of states near Central Asia, Central
Asia is not a small, isolated group of former Soviet
colonies that is of interest only because of its histori-
cal quaintness. Most countries in the region have mul-
tiple interests that converge in Central Asia. India,
which seems far away, is a case in point. It views Cen-
tral Asia as its "extended strategic neighborhood" in
the competition with Pakistan, and it has a direct inter-
est in controlling the political chaos in Pakistan and
Afghanistan; its interest in Central Asian energy is
paramount; and it sees Central Asia as a key piece of
its effort to contain Chinese expansion and prevent
"encirclement" by China. In this sense, Central Asia is
a critical strategic juncture point in its national secu-
rity planning for China, the Middle East, and South
Asia. Similarly, for nearby states such as Turkey, Iran,
Pakistan, China, and, of course, Russia, as well as for
some more distant states such as Israel, Central Asia
and the South Caucasus are no less important in their
strategic calculations.
Since the collapse of the USSR, strategic dynamics
now cascade across regions. Organizations that are
constrained by a focus on discrete regions will not see
many of the direct consequences that flow from politi-
cal change, and the second- and third-order conse-
quences of developments in one region for
surrounding regions.
Terminology matters. Western catch-phrases for
desired development such as "civil society," "eco-
nomic reform," "democracy-building," and
73
"globalization" all speak to Western goals for the
region, but they tend to distort both the reality of Cen-
tral Asia and thwart good judgment for what is needed
there. They tell us little about how these peoples think
about themselves, which is the critical variable in
studying any strategic culture. The language and ana-
lytical filters used for the region may need to be recal-
ibrated or thrown out all together after we have gained
a better understanding of how the people of the region
think about these problems.
Rajan Menon
Lehigh University
Many scholars continue to view Central Asia through
a post-Soviet prism. This conference has highlighted
the dangers of clinging to a "top-down" view. A num-
ber of areas require further research or need to be
reassessed:
� High politics should be replaced with a "ground
floor" approach. A better understanding of the situa-
tion in the region at the grassroots level, and how
grassroot issues could affect Western interests in the
region is necessary. For example, Central Asia's
nascent "lost generation," unsuited to attain or
accept the benefits of or protect themselves against
the adverse effects of globalization, will be suscepti-
ble to extremist movements.
� Russia should be reassessed as a major player, par-
ticularly in terms of the viability of the Russian Fed-
eration as it is currently constituted. We should not
assume that Russia's borders will not continue to
change. What does the further fragmentation of
Russia imply for the Caucasus and Central Asia
� A deeper understanding of Islam and its role in the
regional context is necessary. The current debate
tends to be unidimensional and focused on funda-
mentalism, which begets a phobia of Islam. From
Indonesia to Algeria, Islamic groups play different
roles in the political process. The West should
expect the same degree of heterogeneity in the role
that Islam will play in Central Asia.
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� It is important to think about how US and Iranian
interests might be converging on certain issues. It
could turn out that the United States and Iran share
some strategic interests.
Ian Bremmer
The Eurasia Group
The conference focused on change in the South Cau-
casus and in Central Asia and on the changing dynam-
ics surrounding these regions. The key areas of change
include:
� Internal Change. Political succession during the
next decade probably will result in significant
changes in leadership. A strongman can be a force
for positive change, as is the case with President
Shevardnadze in Georgia. But Georgia has been a
unique case in the South Caucasus and will unlikely
be replicable. Focusing on alternative leadership
scenarios and key players who may be involved may
provide a better understanding of the direction these
states may go after a political turnover. Another key
question of interest is whether or not the post-
Communist generation will be more promarket.
� Change on the periphery. Central Asia and the
South Caucasus will also change because the major
actors that surround these regions are undergoing
significant change.
� Turkey. Turkey's economic influence in Central
Asia and the South Caucasus is underrated and
tends to be overshadowed by its cultural affinity.
However, Turkey understands how to conduct
business in both regions. If Turkey's economy
changes for the worse in the future, its influence
in both regions will probably diminish.
�Iran. The US-Iran relationship is evolving. This
will have serious consequences by changing the
calculations of all players in and around these
regions.
� Russia. Should Russia develop a more coherent
policy toward these states, it would become a
more pronounced and assertive player in these
regions.
� China. China's growing demand for energy is
increasing its prominence, particularly in Central
Asia. The Chinese presence is most clear in
Kazakhstan.
Thomas Graham
Carnegie Endowment for International Peace
We must think about the potential for significant
changes in the region; it should not be assumed that
the current states will survive. Conditions in these
states lend themselves to instability. For example, the
Ferghana Valley is particularly susceptible to Islamic
extremism. What kinds of things could cause a major
change in the trajectories for countries in the region?
Will challenges be internal or external? What can be
learned from developments at the grassroots level?
One must look below the surface in these countries to
understand the linkages and movements at the grass-
roots level and to assess the possibilities for political
mobilization.
Russia is the largest unknown variable. We should not
assume that Russia's policy will be more coherent
under President Putin. Instead, we should consider a
Russia that may be weaker and further fragmented.
How might regionalization in Russia affect Central
Asia? What ties are developing between southern Rus-
sia and Central Asia?
Rank Sh. Saifulin
Institute for Strategic and Regional Studies
For Uzbekistan and the other states in Central Asia
security and stability are the top priorities. Without
security, there can be no economic growth or Foreign
Direct Investment (FDI), no democracy, and no human
rights. Central Asian states face myriad internal prob-
lems and regional threats that spill over the region's
highly porous borders.
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George Kolt
National Intelligence Council
The conference has brought out a number of external
variables which will shape future developments in the
South Caucasus and Central Asia.
� US-Iran relations. Changes in the US-Iran dynamic
will affect all other relationships in the region. Ten-
dencies to be "romantic" about a potential US-Iran
rapprochement should be resisted. Normalcy will
not be a panacea.
� Afghanistan. The chaos and instability in Afghani-
stan complicates everything and exacerbates all
problems in Central Asia. No solution is likely in the
foreseeable future.
� Russia. Russia is likely to be weaker in the future,
but this weakness could foment aggression and
anger that could be directed at the United States.
� We will not understand Central Asia and the South
Caucasus if we view the region through one filter. A
number of different filters�the perspectives of the
major external actors�must be incorporated into
our thinking on these regions. In addition, these
external filters should be adjusted by research at the
microlevel.
Stephen Jones
Mt. Holyoke College
Only research based on experience on the ground will
enable a full understanding of the role of Islam in
Central Asia.
Scenarios based on projections of today's trends con-
strain our thinking and will probably not capture the
real change in the future. Microlevel research assists
in understanding but will probably not help us to see
the range of future scenarios.
Ghia Nodia
Caucasian Institute for Peace, Democracy, and
Development
The most striking impression from the conference is
that Georgia has been singled out by the US research
community as such a positive model in an otherwise
grim region. Most Georgians would be surprised to
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hear this assessment, which reveals a disconnect
between external perceptions of Georgia and
Georgia's self-perceptions.
Gregory Gleason
University of New Mexico
Globali7ation is a reality in Central Asia. Anyone on
the ground in the region sees it in the pop culture and
the ubiquitous American brands. Economic aid must
be accompanied by technical assistance, so that devel-
opment can be sustained.
Paul Henze
RAND Corporation
Some countries cannot afford to take a risk on democ-
racy, given their current domestic situation. Scenarios
for regime changes in these regions are disturbing,
even if they are carried out democratically.
When thinking about Central Asia and the South Cau-
casus, we should avoid being intellectually con-
strained by narrow categories. Central Asia and the
South Caucasus consist of more than eight countries.
When they think about Central Asia, policy-makers
should include Iran, Western China, Siberia, Turkey,
and the North and South Caucasus.
Leila Alieva
School of Advanced International Studies
Some of the past prejudices about Central Asians that
existed in the early 1990s have diminished. The level
of sophistication and education of the locals should
never be underestimated. Enriching the categories that
the West uses to analyze Central Asia and the South
Caucasus will provide a deeper
understanding.
Gerard J. Libaridian
East-West Institute
It is necessary to take a long-term approach when
thinking about democracy in the South Caucasus and
Central Asia. Stability must be a precondition for
progress. Democracy is a set of values, not laws. Laws
and democracy will follow stability.
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Appendix A
Conference Agenda
Central Asia and the South Caucasus:
Reorientations, Internal Transitions, and Strategic Dynamics
Airlie House, Warrenton, Virginia
April 5-7, 2000
5 April 2000 Airlie Room
5:30-6:30 Opening Reception
6:30-8:00 Dinner
Keynote Address
A US Strategic Perspective on Central Asia and the South Caucasus
Introduction
John Gannon, Chairman, National Intelligence Council
Speaker
General Anthony Zinni, Commander in Chief, United States
Central Command
6 April 2000 Federal Room
8:00-8:30 Opening Remarks
George Kolt, NIO for Russia and Eurasia
8:30-10:30 Challenges to State-Building: Internal Faultlines and Impediments
This panel will examine the internal conditions and challenges these gov-
ernments face as they modernize their political and economic institutions.
The panel will also explore how the history of these countries is shaping
their future direction and what might be expected of the new generation as it
rises to leadership positions.
Chairman
S. Enders Wimbush, Hicks & Associates
Creating/Modernizing State Institutions
Gregory Gleason, University of New Mexico
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The Legacy of the Past versus New Leadership Generations:
South Caucasus
Audrey Altstadt, University of Massachusetts
The Legacy of the Past versus New Leadership Generations: Central Asia
Martha Brill Olcott, Carnegie Endowment for International Peace
Economic Change and Modernization: South Caucasus
Ben Slay, PlanEcon
Economic Change and Modernization: Central Asia
Boris Rumer, Harvard University
10:30-11:00 Break
11:00-1:00
1:00-2:30
Challenges to State-Building: The Impact of Megatrends on the Region
This panel will examine the impact of global and regional trends that are
shaping these regions and beyond, and explore how the states are dealing
with these challenges and opportunities. How are the states equipped to deal
with both the positive and negative effects of globalization, the spread of
ideologies and Islam, and the growing grass roots movements across these
regions? Are the states capable of mitigating the negative effects of reli-
gious fundamentalism, and the emerging regional drugs and arms markets?
Chairman
S. Enders Wimbush, Hicks & Associates
Globalization: Economics and Communication
Rajan Menon, Lehigh University
Civil Society: Grassroots Organizations in South Caucasus
Stephen Jones, Mt. Holyoke College
Civil Society: Grass Root Organizations in Central Asia
Fiona Hill, The Eurasia Foundation
Islam and Other Ideologies
Olivier Roy, CNRS
Narcotrafficking and the Rise of Independent Militias
S. Fredrick Starr, Central Asia-Caucasus Institute
Lunch Presentation
Speaker: The Honorable James Schlesinger, Lehman Brothers
The Caspian Region: Where Geopolitics and Geo-economics Meet
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Introduction
Ellen Laipson, Vice Chairman, National Intelligence Council
2:30-5:00
Regional Dynamics
This panel will examine how each new state views its relationships with sur-
rounding states, including both other Newly Independent States and those
outside the boundaries of the former Soviet Union, taking a regional
approach, not an intraregional approach. This new regional context has
many new features that also involve outside states (for example, common
opportunities and threats, ethnicity, trade flows). Speakers from the South
Caucasus and Central Asia are asked to outline how each of their respective
countries is thinking about its strategic universe.
Chairman
Tom Zamoshay, Office of Russian & European Analysis
Strategic Universe of the States in the South Caucasus
Paul Henze, RAND Corporation
Insider Perspective: Reactions/Comments
Georgia�Ghia Nodia, Caucasian Institute for Peace, Democracy,
and Development
Azerbaijan�Leila Alieva, School of Advanced International Studies
Armenia�Gerard Libaridian, East-West Institution
Strategic Universe of the States in Central Asia
S. Fredrick Starr, Central Asia-Caucasus Institute
Insider Perspective: Reactions/Comments
Uzbekistan�Rafik Sh. Saifulin, Institute for Strategic and
Regional Studies
Kazakhstan�Yertmuhamet Yertysbayev, Kazakhstan Institute
of Strategic Studies
6:30-8:00 Dinner
7 April 2000 Federal Room
8:30 � 11:00 View From the Periphery
This panel will explore how the major external actors view the new relation-
ships that are unfolding between and among Central Asian/South Caucasian
states and their neighbors. Where are strong relationships possible and
likely, and where are they impossible or less likely, and why? What is the
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�
"glue" that will cement these relationships (for example, trade, ethnicity,
history, culture, language, shared threats, shared opportunities, common
alliances or third parties)?
Chairman
George Kolt, NIO for Russia and Eurasia
Turkey, Middle East, and Israel
John Daly, Middle East Institute
Iran
Mohiaddin Mesbahi, St. Antony's College, Oxford University
and Florida International University
China
Ross Munro, Center for Security Studies
Russia
Robert Legvold, Columbia University
South Asia
Juli A. MacDonald, Science Applications International Corporation
Europe
Roy Allison, Royal Institute for International Affairs
11:00-11:30 Break
11:30-2:00 Working Lunch
Impressions From the Field
This panel will feature scholars who have spent considerable time conduct-
ing research in these regions. They will share their insights on how the
regional and internal dynamics are changing based on their experience on
the ground and will offer an assessment of where research of the region
should be focused in the future.
Chairman
Angela Theriault, National Intelligence Council
Panelists: David Hoffman, UC Berkeley; Nora Dudwick, World Bank;
Cynthia Werner, Pitzer College; Kathleen Kuehnast, Mellon Research
Fellow, Library of Congress; and Michael Thurman, World Bank
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2:15-4:30 Concluding Roundtable: The Outlook of the Larger Geopolitical Environ-
ment and Key Variables
The objective of the roundtable is to reemphasize particularly salient points
that emerged during the previous day and a half, to help establish the archi-
tecture for debate on contentious points, and to suggest a "research menu"
for going forward.
Chairman
S. Enders Wimbush, Hicks & Associates, Inc.
Panelists : Rajan Menon, Lehigh University; Ian Bremmer, The Eurasia
Group; Thomas Graham, Carnegie Endowment for International Peace;
Robert Legvold, Columbia University; Rafik Sh. Saifulin, Institute for Stra-
tegic and Regional Studies; and George Kolt, National Intelligence Council
(General participation encouraged.)
4:30 Concluding Remarks
George Kolt, MO for Russia and Eurasia
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Appendix B
Participants
General Anthony C. Zinni, Commander in Chief,
United States Central Command
The Honorable James Schlesinger, Lehman Brothers
Dr. Leila Alieva, Research Fellow, School of Advanced
International Studies
Dr. Roy Allison, Director, Russia and Eurasia Programme, Royal
Institute of International Affairs
Dr. Audrey L. Altstadt, Associate Professor, University of
Massachusetts-Amherst
Dr. Ian Bremner, President, The Eurasia Group and Senior Fellow
and Director of Eurasia Studies, World Policy Institute
Dr. John C. K. Daly, Scholar, Middle East Institute
Dr. Nora Dudwick, Social Scientist, World Bank
Dr. Gregory Gleason, Director of the Public Finance Consortium
and Associate Professor, University of New Mexico
Dr. Thomas Graham, Senior Associate, Carnegie Endowment for
International Peace
Mr. Bernard Paul Henze, Resident Consultant, RAND
Dr. Fiona Hill, Director for Strategic Planning, Eurasia Foundation
Mr. David Hoffman, Doctoral Candidate, University of California,
Berkeley and Senior Associate, Cambridge Energy Research Associates
Dr. Stephen Jones, Associate Professor, Mount Holyoke College
Mr. George Kolt, National Intelligence Officer for Russia and Eurasia,
National Intelligence Council
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Dr. Kathleen Kuehnast, Research Associate, George Washington
University and Research Scholar, Kennan Institute for Advanced
Russian Studies
Dr. Robert Legvold, Professor, Columbia University
Dr. Gerard J. Libaridian, Senior Research Fellow, East-West Institute
and Senior Consultant, IREX
Ms. Juli A. MacDonald, Program Analyst, Strategic Assessment Center,
Science Applications International Corporation
Dr. Rajan Menon, Monroe J. Rathborne Professor and Chairman of the
Department of International Relations, Lehigh University and adjunct
professor of Political Science, Columbia University
Dr. Mohiaddin Mesbahi, Professor and co-chair of the Asian Studies
Department at Florida International University
Mr. Ross Munro, Director of Asian Studies, Center for Security Studies
Dr. Ghia Nodia, Chairman, Caucasian Institute for Peace, Democracy and
Development
Dr. Martha Brill Olcott, Senior Fellow, Carnegie Endowment for
International Peace and Professor, Colgate University
Dr. Olivier Roy, Senior Researcher, CNRS (French National Center for
Scientific Research) and Consultant, French Ministry of Foreign Affairs
Dr. Boris Rumer, Senior Fellow, Harvard University
Dr. Rafik Sh. Saifulin, Director, Institute for Strategic and Regional
Studies under the President of the Republic of Uzbekistan
Dr. Ben Slay, Senior Economist, PlanEcon, Inc.
Dr. S. Fredrick Starr, Chairman of the Central Asia-Caucasus Institute,
Johns Hopkins University's Nitze School of Advanced International Studies
Ms. Angela Theriault, National Intelligence Council
Dr. Michael Thurman, Consultant, World Bank
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Dr. Cynthia Werner, Post-doctoral research fellow, Pitzer College
Mr. S. Enders Wimbush, Vice President for International Strategy and
Policy, Hicks & Associates
Dr. Yermuhamet K. Yertysbayev, Director, Kazakhstan Institute for
Strategic Studies
Mr. Thomas Zamostnsy, Transitioning States Issue, Office of Russian and
European Analysis
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