BACKGROUND: During the last years, speculations were mounting in academic and policy communities that the United States and the EU were turning a blind eye on apparent lack of progress in democratic development of the three South Caucasus countries. It was seen as symptomatic that the South Caucasus started to be increasingly viewed in the context of the broader Central Asia region, rather than as a part of Eastern Europe. This trend was dominant in U.S. policy materials, but also started to take root in Europe. Even though all three countries became members of the Council of Europe in 1999-2001, recent policy documents of the European Union do not list the counties under the “wider Europe” framework. As the concept of “Caucasus and Central Asia” became entrenched in policy documents, observers concluded that in terms of democracy these countries would be held to somewhat lesser standards than their counterparts to the west. However, the tables seem to have turned, as this year both the U.S. and the European structures delivered an unprecedented degree of criticism of the ruling regimes in all three states. The parliamentary and presidential elections in Armenia have been criticized both by the EU, the OSCE and CoE observers. Most recently, the Parliamentary Assembly of the Council of Europe delayed acknowledgement of the credentials of the new Armenian delegation, quoting election irregularities. Heydar Aliev’s government in Azerbaijan was slammed in the U.S. State Department County Report on Human Rights Practices, which reads that “the government is dominated by incumbent President Heydar Aliyev, who was reelected in October 1998 in a controversial election marred by numerous, serious irregularities.” The pressure has been applied on Georgia as well. Ambassadors of 14 countries and international organizations have strongly urged the government to adopt viable election legislation, allowing for the holding of free and fair elections. In June, the U.S. State Department gave Georgia four months to take decisive steps to combat human trafficking, or face the prospect of sanctions and other consequences like U.S. opposition to funding from the International Monetary Fund.

IMPLICATIONS: Increased international attention to the democracy track record of the South Caucasus is associated with the need to create a \"rim of democracy\" along the new U.S. plans for the new order in the Middle East, which seems to be endorsed both by European powers and Russia. The timing of the pressure is crucial, as Azerbaijan is facing presidential elections this year, while Georgia is heading for the crucial parliamentary elections that will shape the course of the country beyond the term of President Eduard Shevardnadze, which ends in 2005. The recent elections in Armenia showed that even in the only regional country that has witnessed a peaceful transition of power, things are far from perfect when it comes to democratic practices. Unusually strong criticism of the election violations in Armenia delivers a message on strong possible international repercussions to both Azerbaijan and Georgia if the measures are not taken to ensure free and fair elections in these countries. It is apparent that while both Aliyev and Shevardnadze have managed to restore a degree of stability in their countries in the mid-1990s, the last five years have shown stagnation and even backtracking as far as democratic development is concerned. None of these leaders are autocratic to the extent as to solidify the state system, however undemocratic, to the extent of it being capable to outlive their departure from active politics. The deterioration of Heydar Aliyev’s health has clearly demonstrated that time is short for achieving at least some sort of institutional predictability in Azerbaijan. In Georgia, polls show government approval rates falling below 10%, as the country is suffering persistent economic troubles. Only 20% of the planned budget revenues were collected in the first 6 months of 2003, largely due to economic inefficiency, corruption and dominance of the shadow economy. Increased international pressure plays into the hands of the opposition in Azerbaijan and especially Georgia, while compelling Armenia to play to its strengths in democratization field. Strong opposition movements in these countries see their agendas for higher transparency, human rights and economic development legitimized by the powerful international institutions. At the same time, incumbent governments may feel restrained to excessively use their “administrative resources” – that is economic and political pressure on citizens to vote for the incumbents. In Georgia, where the opposition movement is stronger than in Azerbaijan, the opposition may hence be given a very strong thrust to decisively win the elections. The opposition victory carries minimal risks, as in the current political circumstances liberal-rightist movements with strong pro-western leanings are likely to succeed in both countries in the short term. However, if the stagnation of the economy and of democratization continues, a growth of protest votes may give a higher hand to pro-Islamic parties in Azerbaijan, and populist socialist movements in Georgia. It is essential, however, to articulate tangible benefits to the population and political elites of the South Caucasus countries that will follow the compliance to the agenda of democratic development. Such benefits may include the improvement of prospects for membership to NATO (for Azerbaijan and Georgia), and possibly, the European Union. In the absence of positive incentives, pressures may induce the incumbent governments to react defensively and build “small iron curtains” resembling those of Belarus. Facing increasing international pressures, President Eduard Shevardnadze, one of the most ardent supporters of the international institutions, has in the last two months spoken about the possibility of suspending cooperation with the Soros Foundation and the IMF.

CONCLUSIONS: A consensus seems to be emerging on the need to reinvigorate support towards sustainable democratic institutions in the South Caucasus. Recent international pressure has been instrumental in opening the field for open competition of political agendas, and it has also undeniably strengthened the case of the opposition movements in Azerbaijan and Georgia. Continued pressure is crucial for ensuring free and fair elections in the South Caucasus. However, western powers may need to develop a set of positive incentives for the nations of these countries to avert the possible meltdown of existing state institutions, or a U-turn to authoritarianism.