Against the Odds: Statebuilding in the Caucasus
Thank you for the opportunity to speak with you. The last time I was
here was seven years ago, and I spoke about the Determinants of Armenia's
Foreign Policy. Before coming here today, I went back to my old notes
to see what I had said then. Not much has changed. The Turkish Armenian
border is still closed. The NK conflict has not been resolved. US-Iran
have not reconciled their differences, and Georgia is still trying
to turn the corner.
I will come back to NK and Turkey because those issues are important.
But before I do that, let me address some domestic matters related
to our state-building process, since that is the topic of my talk
today.
Yesterday, I had a similar opportunity to address this topic, at the
World Affairs Council in San Francisco. As we prepare to mark our
15th year of independence next year, I look at these opportunities
as occasions to assess the depth and direction of our state-building
process. It is particularly useful and interesting to conduct this
kind of analysis with an American audience whose experience with nation-building
has been so different from ours.
In a sense, the collapse of the USSR and the emergence and sudden
birth of new republics has been a great civics lesson for America
and the world.
Those of us who lived within that collapse were faced with many questions
which you¹ve never had to ask. Americans live in the only country
to have been born democratic. As such, you have the good fortune to
be able to take this system for granted. And, you are blissfully less
aware of the difficulties and travails of the process of becoming
a democracy.
America was built from the ground up, democratic institutions were
defined and created as you went along. The entire process of nation-building
has been different for us, since we had to undo an existing system
and build a new one.
We in the Caucasus Armenia, as well as our neighbors Georgia
and Azerbaijan have at one time or another since independence
been faced with decisions in three major areas:
The first and most basic question that required answering was our
choice of political and economic systems. These were followed by questions
about our orientation. Who are we and where do we belong?
Let me explain how we answered each of these three questions.
The first and most fundamental was the question about the kind of
political system of governance we would choose. It's clear that
we all assumed, just as Frances Fukuyama did, that by leaving behind
an authoritarian, centralized system, there was no choice but to move
on to its opposite a liberal, democratic system. That this was
indeed the end of the road, that history was complete here, since
we had arrived at the best of all possible systems.
In other words, at the end of the 20th century, these were the only
acceptable choices. They were natural choices. They were easy choices.
But what came next was not easy.
We have spent this near decade and a half creating, learning, adapting,
refashioning our thinking, our actions, our objectives. The road has
been difficult, the challenge overwhelming. We¹ve had, all of
us, many ups and downs, often it's been two steps forward, one
step back. And we¹re still not there yet. We¹re not done
yet. There are traditions, customs, assumptions, practices which must
be changed and altered to correspond to the speed and quality of changes
taking place around us in the rest of Europe.
So, today, how democratic is Armenia? That's a question I¹m
frequently asked. I don¹t know the answer, but I do know that
the process is irreversible. It is not a fast, revolutionary process.
Our strength has been our stable, incremental, evolutionary development.
In that process, our next step is to adopt second generation reforms
which will more deeply implant democratic processes and strengthen
our institutions.
This next Sunday, our citizens will have the opportunity to make a
major impact on making important fundamental reforms. With these changes,
our society will gain greater checks and balances among the three
branches of government, strengthened human rights provisions, and
a reinforced independence of the judiciary.
Democratic institutions and processes are not just ends. They are
also means to creating the necessary political and economic environment
which lead to distributed growth and dignified development. Democracy
then is becoming a tool for development. The cruelties inherent in
the process of massive economic readjustment which we have been undergoing
have led to a sense of powerlessness on the part of ordinary citizens.
Stable, consistent, transparent, strong democratic institutions empower
each citizen. Democracy is more than elections. Democracy is institutions
which are egalitarian and predictable and constrain the actions of
the elite thus preventing uneven playing fields. In other words, we
need strong democratic institutions and legislation to guard against
the weaknesses of human nature.
In the nation-building process, how and how quickly to push economic
reforms were answered easily. First, because we knew we were committed
to moving to a free market economy. Second, because the absence
of financial resources is a great incentive to move quickly to privatization.
When you see that a large enterprise, such as an airport, is costing
the budget millions each year, selling it off is an appropriate
remedy. Today, 80% of our GDP comes from the private sector.
Today's Armenia's rate of growth is double digit, and
it's been that high for five years. Our macroeconomic indicators
are stable and positive. In hindsight, this is nothing short of
miraculous.
A country with no natural resources, huge energy dependence, blockaded
on the east and the west by neighbors Turkey and Azerbaijan who
mistakenly thought they could use economic pressure of the most
extreme kind to elicit political concessions no one would
have thought Armenia would be ahead of its neighbors economically.
But we are.
Today, even before the Baku-Ceyhan oil pipeline coming on line,
Azerbaijan already exports 300,000 barrels a day. They¹ve been
doing so for four years and the revenues are accumulating. Yet today,
per capita income in Armenia is greater than that in Azerbaijan.
Georgia, too, is behind us. They have access to the sea, their geography
is certain more favorable, they reap transit frees from the Supsa
pipeline today, and will from the Baku-Ceyhan pipeline tomorrow,
yet their per capita income is 2/3 of Armenia's.
On all international economic indices and assessments from
World Bank to UNDP to the Wall Street Journal Armenia's
rankings are higher than those of our neighbors.
You ask how. Let me cite four reasons.
First, our reforms started earlier, went deeper and are more successfully
implemented. Armenia's economic reforms began early, immediately
following independence. Armenia was the first former Soviet republic
to aggressively and comprehensively privatize land. As a result,
the agriculture sector accounts for a good 1/3 of our GDP. The Heritage
Foundation ranks us high among liberal economies.
Second, our economy was flexible and adapted quickly to new, even
overwhelming circumstances, including the blockade. In the process
of this adaptation, it became more diversified, putting the emphasis
on exportable items less dependent on transportation. As a result,
our IT sector has grown to its current 3% of GDP. This is close
to the European average. The jewelry sector is now responsible for
a large part of our exports.
Third, we have received generous foreign assistance, in the forms
of technical assistance and financial investments. This is only
half the story. We have also used this assistance in the right ways.
The World Bank will shortly issue a report which assesses countries¹
institutional performance capacities. Armenia rates second in the
world.
Finally, Diaspora involvement and infusion, ranging from the very
large inputs by the Lincy Foundation, the Armenia Fund and others,
to the smaller individual projects that many people in this room
have embarked on, there has been job creation, importing of new
thinking and new technology, and economic development that flies
in the face of our closed borders.
Our challenge today is to sustain our high economic growth to be
able to address more effectively the remaining macro-economic problems
such as high poverty rate and high unemployment. We need not only
to sustain this, but also increase the rate of growth. In order
to do that, we need to continue to make progress in all four directions.
We need to continue with our reports, here too we must embark on
the second generation of reforms, economic reforms. We need to eliminate
the remaining monopolies, fight cronyism and remove the disbalances
that result from unfair tax collection.
We need to continue to diversify our economy, putting the emphasis
on exportable items. We need to solicit more foreign aid, and at
the same time, further improve our utilization of that assistance.
And finally, we need to further mobilize the Diaspora to become
more involved in Armenia. We need to provide them with the right
tools and mechanisms to engage deeply in activities which will be
both productive and profitable.
The third question was that of our orientation. At the end of the
20th century, the Caucasus had suddenly been transformed into a
region, and this region had to decide where to belong -- to Europe,
to the Middle East or to Asia. Our region is too small to live in
isolation, too small to be a viable unit in a globalized world.
During the Soviet years, Russia clearly had a major impact on our
region. But throughout the centuries, there have been layers of
influences Roman, Byzantine, Mongol, Arab, Persian, the Crusaders,
the Turks and the Russians. Therefore, after the collapse, the choice
was not an obvious one. Some said we belong with the Middle East,
historically and religiously. Some said we belong with the West,
historically, culturally, religiously and politically. Some said
we belong with Asia, because of the continuing impact of the last
100 years.
Armenians, and our neighbors Georgians and Azerbaijanis, chose Europe
as the direction that would be most beneficial, most natural, most
likely to lead to integration.
It was a policy of realism, not optimism that led Armenia to join
the Council of Europe, and later, to embark on a cooperation agreement
with the EU. These associations encouraged us to undertake the political
and social commitments necessary to make the kind of transition
that would ensure the building of a viable, functioning democratic
state. We often say that the process of trying to become a member
of the European Union will benefit Armenia greatly. We will be beneficiaries
of the process.
Now let me come back to Turkey and Karabakh.
Unfotunately, our border with Turkey is still closed and we have
no diplomatic relations.
In the days immediately following the collapse of the Soviet Union,
a vacuum had been created in our region, and Turkey could have stepped
in with a regional approach. But it didn¹t. Thus, it lost the
opportunity to rise to the occasion, de-link history from politics,
and become a regional player.
Today, Turkey has a second chance to take on the role of regional
player. It is now a candidate for EU membership. It is a NATO member.
Turkey can be a political bridge between Europe and the Caucasus.
It is in fact a geographic bridge. Thus, Turkey has the obligation
-- and the opportunity -- to truly serve as a connector, as a neighbor.
The three countries of the South Caucasus are members of the European
Union's Neighborhood Policy. That neighborhood physically includes
Turkey. Turkey will be required to behave as a neighbor.
Normal relations with all its neighbors is a requirement of EU membership
for Turkey. Freedom of speech and expression are requirements of
EU membership for Turkey. Therefore, Armenia would like to see Turkey
become an EU member so that our borders will be open, so that our
compatriots and Turkish scholars will speak more freely about Genocide.
We would like to see Turkey as a member so that our churches and
properties will be protected and restored.
Armenia believes that, at exactly this time, when Turkey is having
to reconsider human and civil rights, freedom of expression and
religion, it must be encouraged, and persuaded, to acknowledge its
past. Such encouragement and persuasion must come from outside,
from Turkey's friends in the US and more importantly,
from within Turkish society.
And finally, Karabakh.
Over the course of the last decade, the content and focus of the
negotiations on Karabakh have changed dramatically. Today, with
sufficient political will on all sides, we can move more concretely
towards resolving our differences about this conflict which began
in 1988.
For us, the basis of resolution is the affirmation of the right
of the people of Karabakh to self-determination and international
recognition of that right.
Since the conflict began, international developments and self-determination
processes in different parts of the world have led to fundamental
changes in international thinking on this issue. Relationships between
states new and old are evolving. We have witnessed East
Timor's independence through a referendum and the signing of
an agreement in Sudan concluding a decades-old conflict on the basis
of a referendum to be held in one part of the country. There are
serious deliberations about the possibility of a referendum to determine
Kosovo's status. Among political, legal and academic experts,
there is a growing awareness of the possibility and reality of recognizing
the right of self-determination in certain circumstances.
Those circumstances nearly exactly describe NK today. Azerbaijan
has no control whatsoever over Karabakh, which has achieved the
attributes of complete sovereignty in the last 15 years. In addition
to the duration and depth of its self-determination, Nagorny Karabakh's
situation is further reinforced and made complete by the following
facts. First, it seceded legally, according to the laws of the day.
Second, the territory in question has never been within the jurisdiction
of independent Azerbaijan. Third, Azerbaijan, in perpetrating violence
against people that it considered its own citizens, has lost the
moral right to custody over those people. And, finally, there is
the de facto political reality of Nagorny Karabakh's proven
ability to hold elections, govern its people, protect its borders
and conduct international relations.
The only way to a solution is to demonstrate political will and
embrace realistic positions. The solution will not be found either
through military action or international resolutions, and no solution
can be imposed from the outside. This conflict is not about territories.
When this conflict began, there were no territories outside Karabakh
under Armenian control. Those territories came under Armenian control
not only because there was disagreement about Karabakh's status,
but also because Azerbaijan attempted to suppress the self-determination
attempts, militarily.
Azerbaijan thinks that time is on its side, a belief rooted in the
confidence that oil revenues will enhance their military capacity.
This is a great deception. The only possible solution is a peaceful
one agreed to around the negotiating table.
Thank you.
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