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On the eve of the Karabakh Talks in Geneva: What does Armenia gain or lose from a peace agreement? Armenian News Network / Groong May 15, 2001 By Groong Research & Analysis Group The long and torturous road towards the resolution of the Karabakh conflict will reach Geneva next month. The meeting is a follow up to what has been described as "momentous" talks between the Presidents of Armenian and Azerbaijan, first in Paris in March, then in Key West in April. According to Armenia's Foreign Minister Vartan Oskanian, the parties came "closer than ever to a solution." Interestingly, U.S. negotiator Carey Cavanaugh has been, single-handedly, the most enthusiastic promoter of the positive trends in the talks, hoping, perhaps, that repeating the positives may help the sides to believe it. There are a number of potential pitfalls for a peace agreement on Karabakh at this juncture of the process. In the excitement generated about the possibility of a deal between President Aliyev and President Kocharian, certain issues and potential problems are glossed over. Discussing some of these troubling questions does not negate the overall importance of a peace agreement between Armenia, Azerbaijan, and Karabakh. However, a critical evaluation is necessary to highlight some of the assumptions being made. Importantly, on the eve of the Geneva talks, serious discussions in Yerevan and Baku are absent. President Heidar Aliyev's jingoistic statements last week, comparing Armenia to Hitler's fascist forces is far from "preparing his people" for a peaceful settlement of the conflict. On the other hand, recently, nationalistic discourse has dominated the political landscape in Armenia - partly in reaction to militaristic outbursts in Azerbaijan and partly due to the failure of Armenian political parties to articulate a realistic position and distinguish the essential issues from the non-essential. A peace agreement is essential to Azerbaijan, Armenia and Karabakh. The conflict must be settled peacefully and to the satisfaction of the people who are directly affected by the conflict. Nevertheless, on the eve of the talks in Geneva, the key question is: what does Armenia gain or lose by signing an agreement in the immediate future? Based on what is already known, there are several key issues which should be taken into consideration: - Ostensibly, a peace agreement over Karabakh would lead to the lifting of the Azeri and Turkish blockades of Armenia, and opening of the borders of Armenia's two hostile neighbors on the east and west. This has been presented, especially by the West, as one of the significant gains Armenia should look forward to in order to improve its stagnant economy. However, the question remains whether the lifting of the blockade and opening of the borders would indeed have a major affect on Armenia's economic development. At least in the short term, it is likely that Baku and Ankara would continue to squeeze Armenia economically - and politically. In the long run, it is likely that Turkey would make the opening of the borders conditional on the issue of the Armenian Genocide. If and when the borders are opened, the argument goes, Armenia's export routes would be enhanced. However, in the absence of serious industrial production in Armenia, what will Armenia export through the "new routes"? What are the products which Armenia is currently not able to export due to the blockade? Since Armenia's independence, the country's economy has structurally developed around the blockade. The problem with Armenia's economy is not the blockade, it is corruption and the oligarchic system which controls the entire market. Outside a handful of foreign investments, such as HSBC and Coca Cola, there has not been significant direct foreign investments in Armenia. Privatization or selling of state companies and assets are different, and, indeed, have been messy. It could be plausibly argued that after the lifting of the blockade Armenia's economy would not improve significantly unless the oligarchs and their cronies in the government give up their tight grip on the levers of the economy. On the other hand, the opening of the Turkish-Armenian border could also mean dumping (and flooding) of cheap Turkish goods (as from Iran) into the Armenian market. To an appreciable extent this has already happened. However, Armenian consumers have come to recognize the difference between quality products and poorly produced goods, thanks to the availability of choice on the market - despite the blockade. More importantly, in the long term, Armenia could develop economic dependency on Turkey, a prospect whose implications have not been clarified or seriously studied. Finally, it is argued, especially by the U.S., that the settlement of the Karabakh conflict and opening of borders will enhance Armenia's chances of integrating into regional networks of developments - from transportation routes to pipelines, to regional trade and economic cooperation. Obviously, this is very appealing and there are major gains for Armenia. However, such developments are dependent on the issues pointed above. In the short term, Armenia is likely to become simply a conduit for others to conduct their business through. Questions remain as to how such "regional cooperation" would benefit Armenia. Neighboring Georgia's case is instructive. Despite access to international waters, integration into regional military and economic alliances such as GUUAM and NATO's Partnership for Peace, vital involvement in pipeline projects and regular infusions of military and financial aid, the country is in a worst situation than Armenia. - It has become obvious that some form of territorial rearrangements would take place in the final peace agreement. In recent discussions of a "new plan" it seems almost certain that Armenians would have to give up some Azerbaijani districts that they control around the territory of Karabakh. This raises major security concerns for Karabakh and Armenia. Can Azerbaijan be trusted to respect the terms of the agreement? Once these territories are given back, Armenia loses a very significant bargaining chip. On the other hand, the rhetoric of the Azerbaijani leadership - last week President Aliyev promised his people that "Aggressors will always be punished" - and the deep-seated hostility of Azeri society towards Armenians (and vice-versa) give little hope that the borders would remain quiet. In October 1997, then Defense Minister of Armenia, Vazgen Sargsian, underlining the strategic significance of, for example, Shushi and Lachin, said "the existence of Armenia and Artsakh is impossible without them," adding that "When Azeris start talking about Shushi and Lachin one should break the negotiations." Sargsian, who had been on the forefront of the Karabakh conflict, noted that "no concessions are possible [for the security of Armenia and Karabakh], only compromise is possible." The question is what are the compromises that Armenians can make? On the other hand, there is also talk about Armenia providing Azerbaijan with a "corridor" to its exclave situated on Armenia's south west, effectively lifting Nakhichevan's isolation. What are the political, security and economic benefits of such an agreement for Armenia? How would this affect Armenia's relations with its currently most reliable neighbor Iran? - Finally, with the signing of a peace agreement, Armenia might lose its importance in the region. Tdday Armenia does not present an economic value for the region. But, ironically, the Karabakh conflict has raised Armenia's strategic value and earned it the attention of regional and global powers, as well as the international community. Many argue that once a peace agreement is signed Armenia would become a less important player in regional developments and would be squeezed out by other economically more promising states, including Georgia, Azerbaijan and Turkey. In the long term, of course, a peace agreement with Azerbaijan is to the benefit of Armenia and Karabakh. However, under current circumstances, Armenia may have more to lose than gain. An agreement signed in the near future - without exhausting all the relevant issues and implications and, most importantly, without extensive public debate - would simply turn a "no war, no peace" situation into a "cold peace" without much promise of long term benefits for Armenia. Yerevan needs to sign an agreement from a stronger economic and strategic position. But without eradicating the existing corruption and the oligarchic system, a peace agreement will not make a significant difference in the lives of Armenians.