QUESTION: What are the major problems facing the Southern Caucasus republics, economically and politically?

ANSWER: "Economically and socially, they are in a mess, more or less since the disruption of the Soviet Union. They have not recovered, they have not succeeded in changing over from a socialist planned economy into a functioning market economy. They have deteriorated into mafia and clan-ruled, corrupted economies, where major incomes come from nonproductive activities, like smuggling and taking bribes. So the vast majority of the population have suffered an enormous decrease in their living standards."

QUESTION: Could you elaborate on the political situation?

ANSWER: "There are also positive signs, like the fact that these countries are not dictatorships. They are not full-fledged democracies, but there is the possibility for opposition, most, of course, in Georgia, but also in the other countries. You have human rights organizations. You have some kind of debate. It is not the Soviet-type system any more at all, and it is not fascist, either. It is poorly working nascent democracy, I would say."

QUESTION: Have the leadership changes in Georgia set the stage for improvements?

"[The present leadership] came to their senses several years ago and realized it was not possible to simply go on, so they all quit the gang of [then-President Eduard] Shevardnadze and started real opposition. And by pursuing this real opposition for fair elections, and against corruption and really starting from the bottom up to restructure Georgian society in a modern and a democratic way, as we know from the presidential elections, they got an absolutely unique amount of confidence from the population. I mean, this was a purely fair and democratic election, when a president was elected with figures like we are used to seeing in dictatorships, but this was not a dictatorship. This was absolutely fair. I was there, and everybody agrees, it was a free election, and people wanted Mr. [Mikheil] Saakashvili -- 95 percent and more wanted him. So that is an enormous sign of hope and confidence and gives him an enormous responsibility to deliver pretty soon."

QUESTION: And what of Azerbaijan, where the late President Heydar Aliev was replaced by his son Ilham?

ANSWER: "I had the opportunity to meet with the new president, Mr. Ilham Aliev, and he had two faces at the meeting with me. First, with Azerbaijani journalists and aides present, he talked in Azerbaijani, and he was very, very tough, according to the translations. Then he sent them out, all of them, and then there was only me and my adviser, and him and an adviser, and then he talked in almost fluent English, and it was quite another approach. He was very conciliatory, and he really wanted to meet with [people], especially concerning the conflict with Armenia. I mean, if he was not bluffing all the time -- and I don't think he was -- I think there is a possibility for an opening up and reconciliation with Armenia.

"And that is the basic prerequisite also for democracy in Azerbaijan, because when you have such conflicts, the country is occupied, several provinces are occupied, 1 million people are internal refugees, it creates enormous tension in the country. It is difficult to maintain a real working democracy. So I think there is a link, and there is a hope, but international society must act forcefully, to push them. They need to be pushed, both Aliev in Azerbaijan and [President Robert] Kocharian in Armenia -- they need [us to push them] and they ask us to push them."

QUESTION: So there are prospects for ending the long-running dispute between the two neighbors over the Nagorno-Karabakh enclave?

ANSWER: "I think there is a minimum compromise possible, and that would be that Nagorno Karabakh would not become an internationally acknowledged state with a seat in the United Nations, etc. That's what the so-called president of the enclave (Arkady Ghukasian) has told me - that's not the most important thing for them. But they will never accept to be administratively subordinated to authorities in Baku. That is their bottom line. So they could be from a formal, legal point of view still a part of Azerbaijan, but they should have a complete autonomy on everything that is important in everyday life. But they do not demand to have a seat in the United Nations or the Council of Europe or whatever -- there, Azerbaijan could sit for them, or not for them, or whatever. They have stopped demanding that because they have understood it is not realistic, that the international community is not in favor of establishing more sovereign states.

"And as for the Azerbaijanis, what do they want? They really don't want to rule the [Nagorno Karabakh] Armenians any more. They have understood that that is out."

QUESTION: You suggested earlier that the Southern Caucasus region needs more international support?

ANSWER: "It needs international support, but it does not need a continuation of the so-called 'Great Game.' That has done a lot of damage to that area, including the greater area with Afghanistan, and all these things, where great powers have fought for their own interests."

QUESTION: Is it important that the European Union is considering incorporating the Southern Caucasus republics into its Wider Europe program, which allows for intensified relations with the EU?

ANSWER: "We [in the EU] have one enormous advantage, and that is that these three states, they have a European ambition, they don't want to return to the Russian fold, and they neither want to nor are able to become states or dependencies of the U.S.A.

"But they are already members of the Council of Europe, and they have ambitions -- difficult as that may seem -- to become full members of the European Union, and in order to make this more possible, they are ready to adapt."