WIRELESS FILE
UNITED STATES INFORMATION SERVICE
STOCKHOLM SWEDEN
08/01/96
TEXT: HERBST 7/30 HOUSE TESTIMONY ON U.S. POLICY IN CAUCASUS
(Outlines U.S. economic, diplomatic efforts in region) (5300)
Washington -- The United States is pursuing a vigorous, broad-based policy toward the
new independent Caucasus republics designed to help them resolve disruptive ethnic
conflicts, develop prosperous market-based economies and democratic institutions and lay
the basis for greater regional cooperation and integration, including positive relations
with neighboring Russia and Turkey.
This was the thrust of the July 30 testimony presented by John Herbst, the State
Department's deputy coordinator for the newly independent states of the former Soviet
Union, before the House International Relations Committee.
Herbst discussed at length economic and political developments in Armenia, Georgia and
Azerbaijan since they broke away from the disintegrating Soviet Union. He emphasized that
the United States has maintained the highest diplomatic contact with these nations,
including a number of meetings between their presidents and President Clinton.
Herbst also discussed in detail U.S. economic assistance to these
countries, its encouragement of democratic reform and participation in
international institutions, and multilateral efforts to help resolve
the ethnic-based conflicts which have ravaged the region.
He made clear that while the United States has encouraged these
nations "to pursue strategies for cooperation with their immediate
neighbors," such as Russia and Turkey, it has warned them "of the
danger of close ties with Iran which continues to promote terrorism
and flout other internationally recognized standards of behavior."
Herbst said that the "particularly strong (U.S.) line against the
development of close military ties between the states of the region
and Iran" has "met with understanding by all three Caucasus states."
He also stressed the U.S. strong policy interest in having its
businesses help the region develop both the vast Caspian Sea oil
reserves and the pipelines that will carry that petroleum to world
markets.
Following is the text of Herbst's testimony as prepared for delivery:
(Begin text)
INTRODUCTION: THE U.S. AND THE NIS
I would like to offer my thanks to Chairman Gilman and the members of
the committee for the opportunity to discuss with you our policy
toward the Caucasus. We value bipartisanship in developing and
implementing policy toward the Caucasus and the other Newly
Independent States. I hope to enhance this today.
America was confronted with a major challenge and opportunity less
than five years ago, when the Soviet Union rapidly disintegrated into
twelve Newly Independent States (NIS). For over fifty years, the
greatest threat to American security came from the territory of the
Soviet Union. Our task was and is to ensure that such a threat would
never again come from that quarter.
Part of this challenge, of course, concerned our policy toward Russia.
Ambassador-at-large Collins has testified on that subject extensively.
But an equally important part of this challenge concerned our overall
policy toward the Newly Independent States. How could we craft a
policy which was both realistic, responsive to the needs of these
states, and yet firmly grounded in our own national interests?
A number of clear priorities quickly emerged, not only for the
Caucasus region, but for the entire NIS. We wanted to support the
independence, territorial integrity and sovereignty of the NIS, and
encourage their rapid progress toward becoming stable, secure and
prosperous members of the world community. That would be the most
effective way to ensure that these countries become our partners and
friends. With this in mind, we developed five major principles
governing American relations with these states:
-- Vigorous support for the efforts of the NIS to democratize, develop
vibrant market economies and pursue political reform, including
respect for human rights.
-- Encouragement of their rapid integration into international
political and economic institutions, as well as their active
participation in emerging European security structures.
-- Promotion of stable, cooperative relations between the NIS, based
upon established international norms, and the early resolution of
conflict situations with international mediation.
-- Assistance in these states' effort to limit and reduce weapons of
mass destruction and to ensure proper handling of their constituent
components -- arguably the most urgent national security task of the
post-Cold War world.
-- Advancement of American business interests throughout the former
Soviet Union.
It is within these fundamental principles that we have pursued good
bilateral relations with Armenia, Azerbaijan and Georgia since 1991.
We established diplomatic missions in these states in the first half
of 1992; at present, all three Embassies are busy pursuing the broad
policy objectives we have set for this important region.
Our interaction with Armenia, Azerbaijan and Georgia has been
intensive and at high, indeed the highest, levels. President Clinton
and Vice President Gore have met multiple times with Presidents
Aliyev, Shevardnadze and Ter-Petrossian. Under Secretary of State
Lynn Davis visited all three Caucasus capitals two weeks ago to
discuss cooperation in the security field and the Conventional Forces
in Europe (CFE) Treaty. Deputy Secretary of State Talbott and Deputy
National Security Advisor Berger went to Baku and Yerevan in March to
advance a settlement to the conflict in Nagorno-Karabakh. Ambassadors
Collins, Morningstar and Presel have made frequent visits to the
region.
THE CAUCASUS: AN OVERVIEW
By way of brief background, the geo-politically vital Caucasus region
is located at the crossroads between Europe and Asia. With a rich
cultural and political-history dating back over 3,000 years, the 17
million people of this mountainous region possess a clear sense of
their historical roots which has proven invaluable in their current
nation-building efforts. This was particularly important following
seventy years of Soviet domination and another century before that
during which imperial Russia exercised the dominant influence.
Armenia and Georgia were among the first states to adopt Christianity
as their national religion, in the first centuries of the modern era.
Azerbaijan also has a deep heritage of Islamic culture. In keeping
with a rich educational tradition, all three countries have produced
luminaries in the artistic, cultural and educational fields, well out
of proportion to their populations.
Through the diligence of its people and the natural bounties of the
region, the Caucasus has long been a center of economic vibrancy and
prosperity. The region now enjoys promising potential, both as a
Eurasian landbridge for trade and transit and as the source of major
energy reserves in the Caspian basin. These reserves are estimated to
rival those of the North Sea or Kuwait in size, and have already
attracted significant interest from major global oil companies; as of
this spring, nine U.S. oil firms had established a presence in Baku
alone.
The Caucasus, rich economic potential and crucial geographic location
has historically attracted the attention of her larger neighbors, in
particular the Russians, the Iranians and the Turks. The past has
also taught a painful lesson to the region. Outside powers have
repeatedly exploited divisions and instability within the Caucasus to
further their imperialist ambitions.
Today there are new rules in play. The states of the Caucasus have
the same rights to independence and sovereignty as other members of
the United Nations, the OSCE (Organization for Security and
Cooperation in Europe) and the international unity generally. It is
U.S. policy to promote these rights and discourage any outside
attempts to encroach upon the independence of the Caucasus states
themselves. We steadfastly oppose the concept of "spheres of
influence" in this region. Nor do we want the geopolitics of the
Caucasus to lead to any resumption of the zero-sum calculations of the
"Great Games" of the 19th century.
PROMOTING ECONOMIC AND POLITICAL REFORM
Perhaps the most fundamental task of the Caucasus states, indeed of
all the NIS, has been replacement of the failed Soviet economic and
political system. The emergence of vibrant, progressive democracies
is the surest way to guarantee the independence of the region and its
fruitful integration with the international community.
Toward this end, the United States has lent moral material support to
the gigantic task of reform in the NIS. Since 1992, we have
contributed over $1.1 billion ($1,100 million) in humanitarian and
developmental assistance to the Caucasus. Overall, I think the region
has made significant progress over the past four-and-a-half-years,
though much more remains to be done. We intend to continue our active
engagement in this process.
Armenia: the economy
The Armenian economy had to overcome two obstacles as it confronted
the challenge of transition to free market principles. First, like
the rest of the (former) USSR, all economic indicators plunged
steadily in the first years of independence. This drop was
exacerbated by the effects of the economic blockades imposed by both
Azerbaijan and Turkey. Nonetheless, assisted by the cease-fire in
effect in Nagorno-Karabakh since May 1994, Armenia has made great
strides here. Its primary objectives have included creation of a
legal, regulatory and policy framework for economic growth in energy,
agriculture, housing and other sectors; promotion of fiscal reform;
and development of a competitive and efficient private financial
sector.
Working with international financial institutions like the IMF
(International Monetary Fund) and the World Bank, the United States
has been at the forefront of efforts to stimulate progress in these
areas. As part of the program agreed to with the IMF, Armenia has
increased its revenue collection, liberalized prices, eliminated
exchange and trade restrictions and speeded up privatization. The
government has also significantly lowered import and export taxes and
made considerable progress toward WTO (World Trade Organization)
accession. Armenia might well be the first NIS to enter this
organization, with accession possible as early as spring 1997.
Overall, these reform programs have resulted in the country
registering strong economic growth in 1995 and continuing into this
year.
U.S. assistance has played a central role in this process, and also in
addressing the pressing humanitarian needs of a war-weary country in
transition. Over $600 million dollars in American assistance has been
provided to Armenia since independence, with humanitarian assistance
accounting for roughly 85 percent of this total. On a per capita
basis, Armenia has received more aid than any of the other NIS;
indeed, worldwide, only Israel received more per capita assistance
from the U.S. in FY 1996.
In 1995 alone, our aid included 138,000 metric tons of wheat, 25,000
tons of kerosene and 81,000 tons of mazout (low-grade fuel oil), the
latter especially crucial during the bitterly cold winters. Now, with
the Armenian economy demonstrating the wisdom of its staunchly
pro-reform policies, we are shifting increasingly toward developmental
aid in the areas listed above.
Armenia: political reform
Political reform has lagged behind economic reform in Armenia. Last
July's parliamentary elections and Constitutional referendum were
marred by polling deficiencies and problems with the Central Electoral
Commission. Some opposition newspapers were shut down in early 1995
and in December 1994 the Dashnak party banned. Human rights
performance has also been uneven.
In the past few months, however, there have been welcome changes in
the situation there. In May, a district court allowed an opposition
newspaper to reopen, for the first time overturning an earlier
decision by the Ministry of Justice. The National Assembly passed a
new electoral law which addresses many of the shortcomings in the old
law. We are hopeful that this September's presidential elections will
be free and fair, marking a significant step toward pluralistic
democracy. Energetic and well-designed U.S. assistance programs for
democracy and good governance have played a major role in promoting
these favorable trends.
Azerbaijan: the economy
Azerbaijan, too, has suffered from the collapse of the old Soviet
state economic system, as well from the prolonged tragedy of the
Nagorno-Karabakh conflict. Though rich in potential, particularly
given the vast oil and gas reserves in the Caspian basin, Azerbaijan's
economy has declined steadily since the late 1980s. The key to its
transformation both in the manufacturing sector and in agriculture is
privatization. While some steps toward privatization of the
agricultural sector have taken place, it remains dominated by large
state and cooperative farms. Private businesses have begun to emerge,
particularly in the retail and service sectors. The government has
encouraged foreign participation in the privatization program, but
steps to target some 8,000 small- and medium-sized businesses have
progressed slowly.
Baku has made dramatic progress over the past year on the financial
stabilization front. Working closely with the IMF, Azerbaijan has
tightened monetary policy and enacted a restrictive budget for 1995.
It remained in compliance with the IMF Structural Transformation
Facility (STF) loan and standby agreements, resulting in a significant
decline of consumer price inflation. But overall, more needs to be
done for Azerbaijan to break out of its current economic woes.
Azerbaijan: Caspian oil
Azerbaijan has welcomed foreign participation in development of its
vast oil reserves. There is major potential for U.S. firms in the
process; we have already gotten involved in two offshore development
projects, and nine major U.S. oil companies now are represented in
Baku. Planning is under way to send the initial oil from the Caspian
through both Russia and Georgia. We envision multiple pipeline
routes, including a line through Turkey, as necessary before the end
of the decade to develop long-term Caspian oil. As always, the final
word in the development of these fields lies with those willing to
invest in them. But we hope that once peace is established between
Azerbaijan and Armenia, further opportunities for regional cooperation
will emerge.
As Caspian oil development quickens, it is essential that the littoral
states work out their positions regarding the demarcation of the
Caspian Sea. We continue to encourage the five littoral states
(Russia, Kazakstan, Turkmenistan, Iran and Azerbaijan) to design a
legal regime incorporating principles which will foster international
investment in offshore oil resources -- in particular, establishment
of clear ownership rights through division of the sea bed, and rights
to transfer oil and gas across and under the sea with proper
environmental safeguards.
Azerbaijan: political reform
Political reform in Azerbaijan has also moved at a slow pace,
including respect for human rights. Azerbaijan held its first
post-independence parliamentary elections last fall and adopted a new
constitution. While we welcome these steps toward democratization,
the fall elections were seriously flawed by multiple voting,
widespread instances of official intimidation and misconduct, and
chaotic, non-transparent tabulation procedures. As in other parts of
the NIS, in Azerbaijan old ways die hard and much work remains before
old thinking is fully overcome. This is one of the areas where our
assistance can play a major role in influencing Azerbaijan's
development.
Azerbaijan and 907
Unfortunately, our ability to encourage Azerbaijan's democratic and
economic development has been sharply limited since 1992 by section
907 of the FREEDOM Support Act. This legislation has limited our aid
to Azerbaijan since independence to $80 million, this in a country
which has 780,000 refugees and internally displaced people. By way of
contrast, we have provided $612 million in assistance to Armenia and
$420 million to Georgia. Not surprisingly, 907's limitations have
extracted a sharp toll in American ability to influence Azerbaijan's
progress in ways we have already seen yielding tangible results in
neighboring Georgia and Armenia, as well as other NIS. Likewise, 907
has our ability to address Azerbaijan's pressing humanitarian needs.
Measures such as the Porter Amendment though well-intentioned, would
actually exacerbate the problem by seeking to create artificial ratios
for assistance to the Nagorno-Karabakh region of Azerbaijan and
injecting political issues relating to the status of the disputed
region. That, as our June 12 Statement made clear, is why we oppose
this proposed legislation.
Georgia: the economy
Georgia, too, has been wracked by civil war and internal instability
since gaining its independence in 1991. Economic recovery has been
further hampered by severely deteriorated infrastructure and
resistance to reform on the part of some corrupt factions.
Nonetheless, Georgia under President Shevardnadze has made dramatic
progress in the past eighteen months. Following the IMF's framework,
Tbilisi has slashed inflation, introduced a new, stable currency,
prepared for eventual membership in the WTO, and passed legislation to
push ahead reform in the banking, land and tax sectors.
The U.S. has supported these reforms through both humanitarian and
technical assistance, which has totaled over $400 million since 1992.
As Georgia's economy went into sharp decline just after independence,
our humanitarian assistance was able to address pressing needs for
wheat and fuel. In the technical area, which we are shifting greater
emphasis to all the time, we seek to encourage and reinforce reform
initiatives. We have also begun to attach conditions to the provision
of such assistance, particularly to encourage breakup and
privatization of inefficient state monopolies, including the state
energy monopoly and state bread corporation.
The Georgian government actively seeks increased foreign investment.
The agreements signed this March in Tbilisi between the Azerbaijan
International Operating Company (AIOC) and its Georgian counterpart,
the GIOC, and with the Georgian government laid the foundation for the
development of the Western pipeline for Caspian oil; these agreements
are already producing results. The first shipments of materials
destined for offshore work in Azerbaijan have already moved across
Georgia from the Black Sea to Baku. President Shevardnadze has made
clear his intention to use the pipeline as an opportunity to upgrade
Georgia's dilapidated rail and road systems, allowing them to become
part of a major Eurasian trade network. America has provided critical
technical assistance on pipeline and energy-related reforms. We will
continue to work with the Georgian government as it establishes its
reputation as a significant player and partner in this area.
Georgia: political reform
President Shevardnadze's political reform agenda is also impressive.
Following presidential and parliamentary elections last November
described by credible outside observers as the freest and fairest in
the Caucasus or Central Asia, Shevardnadze is working with Georgia's
reformist parliament to crack down on crime and corruption, establish
higher human rights standards and lay down the legal framework
necessary to move ahead on a range of reform initiatives. We are
working to target our assistance in support of these policies. An
example is the decision to give priority to rule of law assistance for
parliamentarians drafting laws designed to give force to the
commitments embodied in the new constitution passed in August 1995.
Local elections are planned for 1997, and we will be working with
parliamentarians and local officials to ensure they reinforce and
strengthen democracy in Georgia.
At the same time, we continue to press Georgia to improve upon its
mixed human rights record. While Georgia has an admirable history of
tolerance for religious and ethnic minorities, the performance of its
law enforcement community, including prison officials, leaves much to
be desired. The lack of progress in this area is due largely to the
resistance of certain factions to give up authority they enjoyed under
the old regime. Since his near-brush with assassination last August,
Shevardnadze has gone on the offensive against these forces, with
considerable success. But more needs to be done. We are working with
the parliament and the courts to strengthen alternatives to the old
system, and will continue to do so.
INTERNATIONAL INTEGRATION
As with the rest of the NIS, we have seen greater cooperation and
integration, both within the Caucasus itself, and with the outside
world, as an essential guarantee of the region's long-term stability
and security. This is a tough neighborhood, and the three Caucasus
states' prospects of survival and prosperity will be greatly enhanced
if they can pool their efforts, both economically and politically.
Obviously, the existence of conflict zones in the Caucasus -- in
particularly the Azerbaijani-Armenian face-off over Nagorno-Karabakh
-- places definite limits on what is possible today. But this is the
path of the future, and there are certain modest steps which cam be
done even now.
Participation by all three states in fora where practical approaches
to economic cooperation are considered -- for instance in the energy,
transport and communications fields -- is one example of things that
can be done now. Regular meetings among senior leaders of the three
Caucasus states provides another avenue for frank exchanges of views
on regional cooperation. The development of bilateral contacts among
the three states is also taking place. With the resolution of
conflict situations in Abkhazia, South Ossetia and Nagorno-Karabakh --
and we hope that won't be too far off -- these channels will take on
greater significance.
Greater participation in multilateral fora will further cement
Armenia, Azerbaijan and Georgia's position as new members of the world
community. They are already members of the U.N., OSCE and NATO's
Partnership for Peace (PFP). Under Secretary Davis used her trip to
the Caucasus to encourage more intensive participation in PFP.
The Caucasus states also actively participate in economic institutions
like IMF and the World Bank, have applied for membership in the
Council of Europe and enjoy cooperative relations with the EU.
Armenia and Georgia are vigorously pursuing membership in WTO, and
Azerbaijan will follow once her economic reforms make this possible.
The United States supports and encourages these developments, which we
believe will bolster an interlocking web of bilateral relationships to
the benefit of the Caucasus region's independence, stability and
prosperity.
REGIONAL SECURITY, THE CAUCASUS AND THE NIS
A key precondition to the prosperity and development of the Caucasus
is the creation of a stable and secure environment in the region. The
United states has pursued a multilayered approach to the problem of
promoting security within the Caucasus. As mentioned above, we have
encouraged the gradual development of practical regional cooperation
among Armenia, Azerbaijan and Georgia. In time, and particularly as
regional conflicts are addressed, this can take on a more direct
security component.
Iran, Turkey and Russia
We have also encouraged these states to pursue prudent strategies for
cooperation with their immediate neighbors, though warning of the
danger of close ties with an Iran which continues to promote terrorism
and flout other internationally recognized standards of behavior. We
have taken a particularly strong line against the development of close
military ties between the states of the region and Iran; this policy
has met with understanding by all three Caucasus states. During Under
Secretary of State Lynn Davis' recent trip to the region, we had
useful exchanges with all three countries' leaders on ties with their
neighbors. We came away with several key impressions.
First, all three Caucasus states are determined to develop good
relations with all their neighbors. Closer relations with Turkey are
a key component in this strategy. The U.S. actively encourages
normalization of Armenian-Turkish ties, while recognizing that the
pace of this trend will remain somewhat limited so long as there is no
settlement of the Nagorno-Karabakh conflict. We also support the
close bilateral ties which are developing between Ankara and both
Georgia and Azerbaijan.
I would be misleading if I did not say here that the Caucasus states
have concerns about their northern neighbor. This is particularly
true oft Azerbaijan and Georgia. All three Caucasus states were
pleased with the results of the Russian elections. Nonetheless,
Georgia is particularly concerned that Moscow assist more in the
search for peace in Abkhazia, rightly believing that the Russians have
considerable influence with "leaders" in that breakaway region of the
country. Likewise, Azerbaijan would like to see Russia play a
positive role in international efforts aimed at achieving a balanced
settlement of the Nagorno-Karabakh conflict, but worries about the
Armenian-Russian military cooperation, particularly as it relates to
Karabakh.
The Caucasus and CFE
The maintenance of the CFE (Conventional Forces in Europe) Treaty
makes an important contribution to security and stability in the
Caucasus. Under the CFE flank deal provisionally agreed to in Vienna
this spring by all thirty member-states of the CFE Treaty, including
the three Caucasus states, Russia must reduce the overall amount of
treaty-limited equipment (tanks, artillery and armored combat
vehicles) in the current flank zone by 800 pieces by May 31, 1999.
Russia has also committed not to increase the amount of equipment it
has in this area between now and 1999, when the agreement takes
effect.
Georgia and Azerbaijan remain concerned about the Russian angle as
they consider formal agreement to the flank package. We have made
clear our view that this is a good deal for them on its own merits,
though clearly CFE cannot solve all of their security concerns. In
particular, CFE is not an avenue to solve either Abkhazia or
Nagorno-Karabakh. We have also made clear to the Caucasus states --
and to Russia -- that Moscow's right to negotiate temporary
deployments of treaty-limited equipment or Tashkent quota
reallocations with other NIS can be done only with the voluntary
consent of the involved parties, and must fully respect the
sovereignty of all sides. To ensure respect for these principles, the
United States has offered to serve as intermediary or facilitator in
any discussions between Russia and the Caucasus states on such
equipment transfers.
The Caucasus and CIS
A word about the Commonwealth of Independent States (CIS). All three
Caucasus states are members of the CIS and regularly participate in
high level meetings where a whole range of issues affecting the former
USSR are discussed. Such gatherings afford opportunities for the
various non-Russian NIS leaders to meet informally. That said, there
is widespread concern within the NIS concerning the pace and direction
of possible CIS integration driven out of Moscow. Some nostalgic and
conservative elements in Russia have seen this as a vehicle for
reestablishment of the former Soviet Union. President Yeltsin, too,
has promoted integration, but has always stressed that the process
should be voluntary and gradual. The debate in Russia about relations
with their neighbors played a role in the recent elections, and will
continue to be an emotional domestic issue for some time to come.
The U.S. position on efforts to deepen CIS integration has
consistently been that this process should be voluntary, transparent
and should not limit the ability of the individual NIS to broaden
their interaction with the world community as a whole. We have made
these views clear to Moscow at the highest levels, while continuing an
open dialogue with all our partners in the former Soviet Union on the
role of the CIS.
Regional Conflict Resolution in the Caucasus
A key challenge to the establishment of a stable and secure Caucasus
has been the persistence of tragic separatist conflicts in South
Ossetia, Abkhazia and Nagorno-Karabakh. The achievement, with
international support, of balanced and enduring political settlements
to these conflicts remains a top U.S. objective. Ambassador Presel
will deal in greater detail with this problem. Therefore, here I will
deal only with the main aspects of these regional conflicts.
First, the roots of these ethnic disputes long predated the formation
of the USSR, but during the seventy years of Soviet rule expression of
nationalist sentiment was affectively suppressed. The breakdown of
the Soviet system in the late eighties allowed these historic disputes
to reemerge. Thus Abkhaz and Ossetian separatism and ethnic tensions
between Azeris and Armenians over Nagorno-Karabakh became even more
intense just as the USSR was collapsing in upon itself.
Tragically, the NIS were incapable of reining in these tensions, which
exploded in renewed violence in the early nineties, fueled in some
instances by Russian elements. The fighting in Abkhazia and
Nagorno-Karabakh in 1992-93 was particularly costly both in political
and human terms. Fortunately, cease-fires, uncertain as they remain
in the absence of permanent settlements, are now in place in all three
of these Caucasus conflict zones. Furthermore, there are
internationally supported peace processes in all three conflicts,
involving both the U.N. and the OSCE.
The United States remains committed to working with the parties and
other interested states, including Russia, in the search for lasting
peace settlements preserving the territorial integrity of the three
Caucasus states while addressing the legitimate security concerns of
minority populations. We support the OSCE Minsk Process aimed at
resolving the Nagorno-Karabakh conflict, the U.N. mediation effort in
Abkhazia and the OSCE peace process in South Ossetia. We maintain an
active dialogue with Moscow on these conflicts along its southern
border, convinced that their early resolution is as much in Russia's
interest as it is in the interest of the Caucasus states. For only
once peace has been permanently established in this area will the goal
of economic and political development within a stable and secure
Caucasus region become truly achievable.
WEAPONS OF MASS DESTRUCTION
Our principled strategy within the NIS of seeking to limit and reduce
weapons of mass destruction and ensure proper handling of their
constituent components following the breakup of the Soviet Union was
primarily directed at the nuclear weapons states of Russia,
Kazakhstan, Belarus and Ukraine. That said, we have worked with the
Caucasus states to ensure that they were alert to the danger of
nuclear materials smuggling through their territory, particularly
given their proximity to Iran. We have also urged efforts by these
states to minimize the danger of experts in these areas being
recruited by the Iranians or other rogue states to work on their
weapons acquisition projects.
Finally, we opposed the recommissioning by Armenia of the nuclear
power plant at Medzamor -- due to design shortcomings and its location
in a seismically active zone. Our dialogue with Yerevan contributed
to the Armenian decision not to operate the plant beyond 2004. With
this decision, we agreed to provide modest assistance to the Armenians
to improve the safety mechanisms associated with the plant operation,
working closely with the French, Germans and other allies.
PROMOTING U.S. BUSINESS
The vigorous promotion of U.S. business interests is a central tenet
of American policy toward all the NIS, including in the three Caucasus
states. Our three ambassadors, and their staffs, in Yerevan, Baku and
Tbilisi, have made this a top priority. They work closely with
resident businessmen, both individually and through the American
Chamber of Commerce, to understand the business climate and to enhance
opportunities for U.S. business interests. This has also been a key
goal of high level U.S. visitors to the region. For example, in late
May, Deputy Secretary of Energy Curtis visited Baku to attend the
annual Oil and Gas Show, then went on to Tbilisi to discuss American
energy interests with top Georgian officials. We recently negotiated
Bilateral Investment Treaties with Georgia and Armenia and are
pursuing this same goal with Azerbaijan.
As my description of the economies of the three Caucasus countries
above noted, we see great potential for U.S. business interests in
this region. Since 1992, two-way trade between the U.S. and Georgia,
Armenia and Azerbaijan topped $600 million, mostly in American exports
to these emerging states. But much more can be done. The development
and export of Caspian oil and gas provides the single biggest avenue
for our interests, but there are multiple other trade and investment
opportunities in all three countries.
Continued progress by the Caucasus states toward economic and
political reform and resolution of regional conflicts will broaden
these opportunities further. We remain dedicated both to promoting
current prospects and improving the climate for future ones. The
State Department works closely with the Commerce Department and other
relevant government agencies in this effort. We are also in frequent
contact with American business representatives in support of this.
CONCLUSION
American engagement in the Caucasus region is robust and growing. It
is an integral, yet discrete, part of our overall policy toward the
NIS. Integral, because there are certain basic interests we share in
all the NIS. Discrete, because the Caucasus is a separate,
geopolitically coherent part of the NIS, with its own impressive
history, challenging present and promising future. Our task, with our
partners in each of the three Caucasus states, is to bring that future
closer.