Published in Field Reports

By Mina Muradova (01/22/2015 issue of the CACI Analyst)

As Azerbaijan prepares to host the first European Games this summer, new sport and non-sport venues are being constructed and infrastructure is being renovated. By investing millions to organize the games in just 30 months, Azerbaijan’s government seeks to promote the young Caspian state through an ambitious sport event.

However, against this backdrop, Azerbaijan’s government has intensified its crackdown on journalists and civil society representatives. Human Rights Watch issued a statement on January 20, saying that over the past year, the Azerbaijani government used a range of bogus criminal charges, including narcotics and weapons possession, tax evasion, hooliganism, incitement, and even treason, to convict or imprison at least 34 human rights defenders, political and civil activists, journalists, and bloggers, prompting others to flee the country or go into hiding. Following the prosecutors’ requests, courts have frozen the bank accounts of at least 50 nongovernmental groups and in some cases the accounts of their staff, as part of ongoing criminal investigations against several foreign donors.

Another human rights watchdog, the International Federation for Human Rights, stated that Azerbaijan has adopted aThe International Federation for Human Rights (FIDH), The International Federation for Human Rights (FIDH), The International Federation for Human Rights (FIDH),  whole arsenal of “anti-NGO laws” since 2013. NGOs are henceforth compelled to register their organization with the government and their funds with the Ministry of Justice in order to receive funding (whether from inside or outside the country). Those who cannot or refuse to register their subsidies from abroad therefore break the law. The use of non-registered subsidies is now deemed to be an administrative offense and the judiciary considers the funds to be a source of taxable personal income.

The latest move to silence alternative voices was a police raid on the office of U.S.-funded Radio Free Europe/Radio Liberty on December 26, detaining journalists for hours. Former journalists of the station have also been questioned by police. Inspectors from the prosecutor’s office ransacked the company safe, seized computers, memory sticks, and documents, and sealed the office shut.

“This operation is clearly designed to block the activities of our Baku bureau and threaten our journalists,” Radio Azadliq director Kenan Aliyev told Reporters Without Borders. In a statement, Radio Azadliq co-director and Editor Nenad Pejic said: “The order comes from the top as retaliation for our reporting and as a thuggish effort to silence RFE/RL.” Prosecutors said the bureau’s work was to be terminated, but did not specify for how long. 
Azerbaijani prosecutors have staged similar raids in recent months on other so-called foreign entities, including foreign nongovernmental organizations such as IREX, the National Democratic Institute, and Oxfam. 

The Baku bureau of RFE/RL was shut down twenty days after the arrest of its prominent anchor Khadija Ismayilova. She is well-known as an investigative reporter who published several reports about government corruption and the business of the president’s family members. Ismayilova was detained for two months on heavily disputed charges of “inciting” a former colleague’s suicide. If convicted, Ismayilova may face up to seven years in prison.

Pejic said “The arrest and detention of Khadija Ismayilova is the latest attempt in a two-year campaign to silence a journalist who has investigated government corruption and human rights abuses in Azerbaijan … The charges brought against her today are outrageous. Khadija is being punished for her journalism.”

In 2012, the Zeit Stiftung and Fritt Ord Foundation awarded Ismayilova with the Gerd Bucerius Free Press of Eastern Europe Award. She has received many other awards and is a respected journalist. She has published stories related to corruption in Azerbaijan, in particular within the Organized Crime and Corruption Project. Most recently, she also worked on consolidating the list of up to 100 political prisoners in Azerbaijan, prepared by Azerbaijani NGOs. Although her accuser, Tural Mustafayev, has withdrawn his complaint, she remains in detention.

“The arrest of Ismayilova is nothing but orchestrated intimidation, which is a part of the ongoing campaign aimed at silencing her free and critical voice,” Dunja Mijatović, the OSCE’s Representative on Freedom of the Media, said in a written statement. Khadija Ismayilova was arrested the day after the head of the Presidential Administration Ramiz Mehdiyev published a lengthy article in which he directly calls NGOs the “fifth column.” He publicly accused Ismayilova of treason and called RFE/RL’s employees in the country spies.

“She along with her ‘friends’ prepare anti-Azerbaijani programs, make indecent statements, demonstrate an openly hostile attitude to well-known public figures and disseminate a lie. Her position has nothing in common with her journalist profession,” Mehdiyev wrote in his article and specifically noted: “It is clear that this sort of defiance pleases Ms. Ismayilova’s patrons abroad.”

This week a group of international NGOs started a campaign urging President Ilham Aliyev to release prominent human rights defenders who are currently behind bars in Azerbaijan. Another group of NGOs sent a letter to German Chancellor Angela Merkel ahead of her upcoming meeting with Aliyev on January 21 in Berlin. “President Aliyev is seeking a greater legitimacy by meeting the world leaders and hosting mega sporting events,” said Hugh Williamson, HRW’s Europe and Central Asia director. “Merkel should send a clear message that closer political and economic ties with Europe are directly linked to Azerbaijan’s release of unjustly jailed journalists and human rights advocates and respect for fundamental human rights.”

The “Sports for Rights” NGO coalition issued a statement saying “Azerbaijan’s partners should insist that this terrible situation in the country’s human rights record is removed before Baku plays host to the European Games, and that these people be released immediately and unconditionally. We sincerely hope that we can count on your [Merkel’s] principled leadership on this urgent matter.” 

Published in Field Reports

By Eka Janashia (01/22/2015 issue of the CACI Analyst)

At the beginning of 2015, Russia’s state-owned oil producer Rosneft entered Georgia’s oil retail market by purchasing a 49 percent stake of Petrocas Energy Ltd. Petrocas’ affluent assets include an oil terminal in Georgia’s Black Sea port of Poti with a capacity of 1.9 million tons per year as well as a network of 140 gas stations in Georgia under the Gulf brand.

By launching a joint venture with Pertocas, Rosneft will gain high-quality storage capacity in one of the major oil and oil products hubs in the region, enrich supply routes options and enhance its operations in the Central Asia and South Caucasus oil market. “[It] is a new milestone that will highlight the strategic importance of the South Caucasian energy corridor,” the main shareholder of Petrocas, Russian businessman David Iakobashvili said.

The opposition United National Movement (UNM) party insisted that Rosneft plans to acquire a controlling interest in Petrocas and called on the government to revoke a deal damaging to state interests. The government responded that it was during UNM’s term in power that Russian investments penetrated strategic areas of Georgia’s economy such as finances, electricity, chemicals, ore industry, food and dairy products. For example, at that time, the Russian state-owned electricity trader, Inter RAO, obtained 75 percent of Tbilisi’s electricity distribution company Telasi, thermal power generating plants, as well as the management right of two hydro power plants; Khrami I and Khrami II. The government also lamented that it has no right to influence private business, especially the decisions of Petrocas, which is registered in Cyprus and manages its operations from there.

UNM counter-argued that Rosneft operations in Abkhazia breach the Law on Occupied Territories and that the government is obliged to cancel the agreement granting the Russian company “the most important communications on the country’s Black Sea shore.”

Indeed, in 2009 Rosneft started offshore explorations and development of oil and gas fields in Abkhazia under an agreement signed between the company and Abkhazia’s de facto government. Against this background, three of Georgia’s government agencies began to study the legitimacy of the Rosneft-Petrocas deal. The results are yet unknown. 

The recent deal reflects Russia’s strategy to strengthen its infrastructure capabilities in the South Caucasus to ensure an uninterrupted delivery of oil as well as other products to Armenia, which recently became a member of Eurasian Economic Union (EEU) but lacks land access to other EEU members in the absence of common borders. The reconstruction of the railway through Abkhazia and the planned Avro-Kakheti highway from Dagestan to eastern Georgia and then to Armenia, can be understood in this light.

While improving Armenia’s situation is Moscow’s key rationale, the Kremlin is also interested in consolidating its position in the Georgian market. UNM asserts that the Rosneft-Petrocas deal is only the beginning of “a big process” and unless countervailing measures are taken, “Moscow will have no obstacles at all.”

On January 17, Iase Zautashvili, the General Director of Airzena, Georgia’s national airlines, disclosed correspondence between Georgian and Russian state agencies regarding the prospect of restoring flights between the two countries. These clandestine negotiations aim to grant Russian companies a monopolistic position in Georgian airspace, Zautashvili said.

Referring to other covert correspondence taking place between the Russian and Georgian sides via the Swiss Embassy, UNM claims that 11 Russian companies, including Vladimir Putin’s Private Company, will enter Georgia’s airspace by dumping prices and eliminating the competition, including the national airlines, in order to obtain a monopolistic position in the Georgian market. The UNM also claims that some of these companies fall under the international sanctions against Russia while others have violated the Law on Occupied Territories.

The Enguri hydropower plant with a total capacity of 1,300 megawatts could become another target of Russian strategic interest. Russia allegedly intends to register Georgia’s most powerful hydroelectric station in the region in Abkhazia. Although Georgia’s Ministry of Energy categorically denies that the plant’s ownership is under discussion, Aslan Basaria, Director of Abkhazia’s power company Chernomorenergo, claims that negotiations have already been launched with participation of the Georgian side. “The plant is located on Georgian territory and belongs to the Georgian state. The Chernomorenergo Director General’s statement is far from reality,” the Ministry of Energy says. Despite the denial, Sokhumi in fact raised the question of the Enguri hydropower plant’s ownership a month ago when Abkhazia’s de facto leader Raul Khajimba said “what is located on our territory should be owned by the Abkhaz people.”

In fact, the Enguri generators are located on the territory of occupied Abkhazia while its arch dam is in the Georgian-controlled area. According to the informal agreement reached between Tbilisi and Sokhumi in the 1990s, Abkhazia gets 40 percent of the electricity generated by the plant free of charge while the rest goes to Georgia. The fact that the agreement terms are rather favorable to the Abkhaz side suggests that the questions raised over the plant’s ownership comes from Moscow, rather than Sukhumi.  

Taken together, signs are emerging of several steps taken by Russia to make inroads into vitally important sectors of Georgia’s economy.

Published in Field Reports

By Arslan Sabyrbekov (01/07/2015 issue of the CACI Analyst)

On December 23, Kyrgyzstan signed an accession agreement to become a member of the Russia-led Eurasian Economic Union (EEU). The new union is an expansion of the Customs Union grouping together Russia, Kazakhstan, Belarus and now also Armenia and Kyrgyzstan.

Upon signing the new accord, Kyrgyzstan’s President Almazbek Atambayev expressed his hope that Bishkek will become a full-fledged member of the EEU by May 2015 and thanked his colleagues for fairly determining accession conditions. The treaty will now fully enter into force after its ratification by the member countries’ parliaments. Russia’s President Vladimir Putin welcomed Bishkek’s decision and noted that the new union will now have a combined economic output of US$ 4.5 trillion, bringing together more than 170 million people.

In the meantime, Bishkek-based civil society activists have issued a statement criticizing the political leadership’s quick decision to enter the EEU. According to them, the government has failed to engage in comprehensive public debate on the subject matter and made the decision behind closed doors. According to MP Omurbek Abdrakhmanov, an outspoken critic of Bishkek’s integration with Moscow, “no one has probably seen the text of the treaty except the country’s key political leadership. The Parliament was supposed to take a decision approving the initiative of the president to enter the Union, but the procedure was not observed. The text of an agreement consequential to the nation’s sovereignty was approved in half an hour.”

Bishkek’s EEU deal comes in the midst of the financial crisis in Russia. Over the last couple of months, the Russian currency has lost between 40 and 55 percent of its value against the Dollar and for the first time in history has even lost ground against the Kyrgyz Som. The ongoing depreciation of the Ruble means that millions of Central Asian migrant workers in Russia can send home less money. The Kyrgyz government is preparing for windfalls from abroad to fall by approximately US$ 1 billion. The decline in remittances, accompanied by massive government spending to keep the currency closer to the dollar, clearly poses a problem to the country’s already troubled budget. In addition, the ongoing financial crisis in Russia along with tougher regulations is already forcing a number of labor migrants to return home and join the pool of unemployed. According to Bishkek based economist Azamat Akeleev, “Kyrgyzstan lacks capacity to accommodate its returning work force and this will definitely lead to various social tensions in the future.”

The decline of the Russian currency is not only a concern for the dependent economies of the Central Asian states but risks undermining the overall stability of the EEU. In light of the ongoing crisis, the President of Belarus Alexander Lukashenko has demanded trade in the Union to be denominated in Dollars or Euros and not in Rubles. He has also sharply criticized Moscow over its trade dispute with Minsk. In response to Western sanctions, Moscow has recently banned imports of foodstuffs from the European Union and in order to prevent Minsk from reselling EU products to Russia, has halted imports of Belarusian milk and meat products through its territory, referring to alleged sanitary reasons. “Contrary to all international norms, we are being denied the right to transit goods from the territory of Belarus and all of this has been imposed unilaterally, without any consultations,” Lukashenko said.

Meanwhile, Kazakhstan’s President Nursultan Nazarbayev has also suggested that Russia’s isolation from the West over the crisis in Ukraine is creating tensions between Moscow and its closest partners. “The instability of world markets and the policy of sanctions will impact the process of building the Eurasian Economic Union,” said the Kazakh leader during his state visit to Ukraine. Contrary to the Kremlin’s position, the Kazakh President also spoke in support of the country’s territorial integrity and offered financial and energy based aid to the struggling government in Kiev.

These stark differences in positions is proof that Moscow’s capacity for influence might be shrinking. The Kremlin was able to draw two small states into the Union, Armenia and Kyrgyzstan, but its ability to transform the union into a broader alliance extending to the political and diplomatic arenas is unlikely to be realized, at least for the time being.

The author writes in his personal capacity. The views expressed are his own and do not represent the views of the organization for which he works.

Published in Field Reports

By Eka Janashia (01/07/2015 issue of the CACI Analyst)

The changes taking place in Georgia at the end of 2014 will have crucial implications for next year’s political and economic agenda. In the beginning of December, a bout of reshuffles started both in government and inside the ruling Georgian Dream coalition (GD). It was the second wave of shifts since November, when the Free Democrats, led by the former Defense Minister Irakli Alasania left the GD coalition. This time, the alterations occurred within the GD party itself and affected the senior and mid-level government officials as well as party’s political council.

The party’s executive secretary, and PM Irakli Garibashvili’s relative, Zviad Jankarashvili resigned. Until April, 2014 he was head of the General Inspection of the Ministry of Internal Affairs (MIA). Meanwhile, first Deputy Interior Minister Giorgi Zedelashvili, a distant relative of Jankarashvili and one of the most influential figures in the MIA, was detached from the ministry and moved to the post of Deputy Secretary of the State Security and Crisis Management Council.

The head of the Special State Protection Service (SSPS) – an agency responsible for the security of high-ranking officials, state facilities and buildings – Teimuraz Mgebrishvili, was replaced by Ivanishvili’s former chief bodyguard Anzor Chubinidze. Another close associate of Ivanishvili, Nodar Javakhishvili, replaced Zurab Kopadze on the post of Deputy Minister of Regional Development and Infrastructure.

The heads of the State Security Service (SSS) and the General Inspection of the MIA, Malkhaz Chikviladze and Irakli Samkurashvili, also resigned. Ivanishvili’s crony, Mirian Mchedlishvili became head of the SSS.

Nearly all opposition parties detect Ivanishvili’s hand behind the recent relocations. Rumors swirled about Ivanishvili’s growing mistrust toward Garibashvili. Allegedly, Ivanishvili appointed his trusted associates to tactically important posts in order to control the PM.

The United National Movement (UNM) accused Garibashvili’s family of bribery long before the reshuffles. At the beginning of this year, the party disclosed an apparent corruption scheme run by Garibashvili and his father-in-law, Tamaz Tamazashvili. The scheme allegedly envisaged the establishment of fake firms and companies to participate in state tenders and accumulate large amounts of money. UNM asserts that the total volume of corrupt deals amounts to US$ 8 million.

The changes in government and GD were accompanied by a drastic depreciation of the Georgian Lari (GEL) which lost around 12 percent of its value against the U.S. Dollar in mid- December. Although Garibashvili’s government insisted that the drop was mainly caused by external factors, economic analysts argue that the government’s inefficient economic policy disrupted the balance between the US$ and GEL.

According to some economic analysts, the toughened visa regulations for foreigners imposed by the government last year have damaged the overall investment climate. The volume of investments has dropped by 10 percent for two quarters in 2014 compared to the same period of 2013. Although another source of external financing – export – has recently increased, the growth rate of imports is still much higher than that of export. Meanwhile, the ongoing economic recession in Russia contributed to a drop in the volume of remittances to Georgia.

As a result, abridged US$ inflows instigated a depreciation of the GEL, especially harmful for those who get their incomes in the national currency but have taken loans in Dollars. Data from Georgia’s National Bank disclose that 60 percent of all loans and 77 percent of mortgages are dollarized, implying that a significant share of the population is affected by the Lari depreciation.

Moreover, the appreciation of USD against GEL connotes that imported goods will become more expensive for Georgians. Taking into account that import comprises 49 percent of Georgia’s GDP while imported products constitute 70 percent of Georgia’s consumer basket, the ongoing depreciation of the GEL appears to be especially troubling.

Economic concerns amplified the uncertainty triggered by the shifts taken place inside the GD party. Several analysts and politicians have discussed Ivanishvili’s changing confidence in Garibashvili, which could end with the PM’s reassignment. Many speculations have also been devoted to the question who might be the next PM and whether Ivanishvili himself may officially return to politics.

Although the expected changes will heighten the political turbulence and economic fluctuations in the country, instability seems to be growing even without further shifts in the government. GD’s pattern of ruling deprives Georgia of institutional development and instead benefits crony networks, clan clashes and personality politics.

Meanwhile, if economic predicaments are not dealt with timely and efficiently by pursuing a more liberal economic policy, the country may face both political and economic crises. Alarmingly, these problems could derail Georgia’s Euro-Atlantic course and seriously slow the country’s democratic development.

In 2015, the Georgian government will have to address the most critical issues to maintain social stability. Thus, this year may present the true litmus test for GD and its ability to preserve its status as Georgia’s dominant political force. 

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Joint Center Publications

Silk Road Paper Svante E. Cornell and S. Frederick Starr, Modernization and Regional Cooperation in Central Asia: A New Spring, November 2018.

Book S. Frederick Starr and Svante E. Cornell, ed., Uzbekistan’s New Face, Lanham, MD: Rowman & Littlefield, 2018.

Article Svante E. Cornell, “Turkish-Saudi Rivalry: Behind the Khashoggi Affair,” The American Interest, November 6, 2018.

Article Mamuka Tsereteli, “Landmark Caspian Deal Could Pave Way for Long-Stalled Energy Projects,” World Politics Review, September 2018.

Article Halil Karaveli, “The Myth of Erdoğan’s Power,” Foreign Affairs, August 2018.

Book Halil Karaveli, Why Turkey is Authoritarian, London: Pluto Press, 2018.

Article Svante E. Cornell, “Erbakan, Kısakürek and the Mainstreaming of Extremism in Turkey,” Current Trends in Islamist Ideology, June 2018.

Article S. Frederick Starr and Svante E. Cornell, “Uzbekistan: A New Model for Reform in the Muslim World,” Central Asia-Caucasus Analyst, May 12, 2018.

Silk Road Paper Svante E. Cornell, Religion and the Secular State in Kazakhstan, April 2018.

Book S. Frederick Starr and Svante E. Cornell, The Long Game on the Silk Road: US and EU Strategy for Central Asia and the Caucasus, Lanham, MD: Rowman & Littlefield, 2018.

Article Svante E. Cornell, “Central Asia: Where Did Islamic Radicalization Go?,” Religion, Conflict and Stability in the Former Soviet Union, eds Katya Migacheva and Bryan Frederick, Arlington, VA: RAND Corporation, 2018.

 

The Central Asia-Caucasus Analyst is a biweekly publication of the Central Asia-Caucasus Institute & Silk Road Studies Program, a Joint Transatlantic Research and Policy Center affiliated with the American Foreign Policy Council, Washington DC., and the Institute for Security and Development Policy, Stockholm. For 15 years, the Analyst has brought cutting edge analysis of the region geared toward a practitioner audience.

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