Sunday, 12 October 2008

Economist: The Caucusus: at history's centre

The Caucasus

At history's centre
Oct 10th 2008

Oil, war and stirring imperial ghosts


INTREPID travellers have long had a penchant for visiting the Caucasus. This is a land of mountains and seas, squeezed into the borders of three old empires—Persian, Ottoman and Russian. As such it has been strategically important (and remains so, as we learned again in the short war that Russia fought against Georgia in August). And it has an enticing whiff of exoticism, associated with all the old images of fierce mountain tribesmen who spent the 19th century resisting successive attacks by the Russians, always keen to incorporate the Caucasus into their empire.

The city of Baku, where I begin my trip to the three countries of the south Caucasus (Azerbaijan, Armenia and Georgia), was an important Russian base during most of those wars. The old walled town in the centre retains an appealing medieval look. But what attracts the eye more are the garish modern buildings, extravagantly large cars and jeeps, massive traffic jams and the city’s general gaudiness. For this is today an oil town: the equivalent of a Gulf emirate dumped on the shores of the Caspian.

Baku got there first, of course. Amid today’s glitz can be discerned some sturdy late 19th century mansions, many of them put up by the French, when Baku went through its first oil boom. At that time, this region was responsible for as much as half of the world’s oil output. The industry went into decline during the late 20th century under Soviet rule, but it has boomed in the past decade or so, on the back of more offshore discoveries in the Caspian and rising oil prices.

Because of its oil and, increasingly, gas, Azerbaijan has become a key country for the West. A stream of top American officials have visited. The Russians are also courting the country, hoping to persuade it to ship more of its oil and gas northwards. But the government, led by President Ilham Aliev, is wary. There are big advantages in selling energy to all comers, not just to a monolithic unfriendly company like Russia’s gas giant Gazprom. And BP, the biggest Western oil company in Baku, has been a great friend to the country for a decade and a half.

The president, who would not grant us an interview, is no democrat, even though his economic advisers insist that he has liberalised the economy and cut back on red tape. So much so, indeed, that Azerbaijan recently came top for most rapid improvement in the World Bank’s annual report “Doing Business”.

Next weekend Mr Aliev faces an election that the leading opposition candidates have boycotted. In a café, we meet one opposition leader who wanted to run, but he notes that elections are rigged, the opposition is harassed and the media is not free. Indeed, he suggests that things are a lot worse than they were in the days of Ilham’s father, Heidar, who ran the country from 1994 to 2003 before passing it on to his son like some oil-rich satrapy.

In the streets of Baku, plenty of people complain about soaring inflation, and most also suggest that the benefits of high oil prices have not trickled down to ordinary folk. Azerbaijan has a bad reputation for corruption, although BP says it has no problems. Certainly the oil money is going somewhere—the restaurant in the old town where we have dinner, and the hotel in which we stay, are both almost as expensive as in Moscow, which is now the costliest city in Europe. And, given the country’s reputation for corruption, it is no surprise to find that the cost of an entry visa at Heidar Aliev international airport has risen sharply to $100—or that an army of dubious-looking fixers swarm around the arrivals hall offering to sort out all the documents and jump the long queues. For a price, naturally.

YOU cannot avoid BP in Baku. By some estimates the oil company accounts for around half of Azerbaijan’s GDP. So we swing by BP’s palatial headquarters to meet the top man, Bill Schrader, an engaging American who took over the job of running BP Azerbaijan from a Brit, David Woodward, in 2006. Asked how he likes Baku, which is rather a dour place, he bats back that it certainly compares favourably with his previous two postings, Luanda and Jakarta.

BP’s greatest triumph is the Baku-Tbilisi-Ceyhan pipeline, through which oil began to flow at the end of 2006, bypassing both Russia and the congested Bosporus straits. There is a also a gas pipeline to Turkey. Although there were plenty of rumours of possible Russian attacks on pipelines during the war with Georgia, nothing serious seems to have happened—negating one Russian objective, which was to convey the message that pipelines skirting Russian territory were inherently dodgy and vulnerable.


No oil boom here

Yet although Azerbaijan has plenty of oil and gas for now, Mr Schrader is quick to concede that hopes of giant new finds in the western Caspian have been disappointing. The real goal for the future lies in the east, in Turkmenistan. This is where the contest between Russia and the West for gas will be most intense. Turkmenistan is an even more autocratic (and less predictable) place than Azerbaijan. Gazprom desperately needs Turkmen gas just to fulfil its existing contracts. But Western companies (and political leaders) still hope one day to bring it westwards via a pipeline under the sea.

There is little sign that the oil-fed economic boom in Azerbaijan is benefiting ordinary citizens. We stop at a market outside Baku to ask some locals about their daily lives. The older shoppers are quick to say that things were better under the Soviet Union. Younger folk seem more bitter about the loss of Nagorno-Karabakh, an autonomous enclave in the mountains, to Armenia during a war in the early 1990s; several men volunteer that they are eager to fight a new war to regain their lost territory.

Ominously enough, the government has used a chunk of its oil wealth to splurge on military spending. But there is little enthusiasm among the public for Mr Aliev’s government, and no expectation at all of any change after this weekend’s presidential election.

The atmosphere is quite different in Tbilisi, where we fly to in the afternoon. There is surprisingly little evidence in the Georgian capital that the country was only recently at war with Russia, and indeed that in mid-August there were fears that the city might be overrun. Restaurants and bars are full, roads are choked with cars and ordinary Georgians seem, as usual, to be out having a good time. It is commonplace in Tbilisi to stay up drinking and eating until one or two in the morning. Unlike Azerbaijan or Armenia, there are few signs that this place was part of the Soviet Union only two decades ago.

The same is true of Georgia’s political scene. Russia’s bugbear, President Mikheil Saakashvili, is criticised by some for his authoritarian instincts—and by many more for apparently (and very unwisely) starting the August war with his decision to shell the South Ossetian capital, Tskhinvali, on the night of August 7th.

But he remains highly popular among voters, he won a presidential election earlier this year and his party has a large majority in parliament. Despite Russia’s trade embargo on Georgia, the economy is growing fast. This is, in short, a place that feels as if it is rapidly breaking away from its Soviet past and becoming part of the liberal, democratic West—something that is much less certain in the rest of the Caucasus.


WITH few signs of the war in Tbilisi, it is time to head to the front. We drive out to Gori, which the Russians occupied in mid-August (and where they dropped a cluster bomb that killed, among others, a Dutch journalist). The clearest evidence of recent conflict along the way is from the fires that Russian forces set to destroy trees and crops, but we also pass a Georgian armoured column gingerly exercising on a side-road.

In Gori the market is functioning much as usual, and acres of shattered glass have mostly been repaired. Parked in the central square behind the statue of the town’s most famous son, Joseph Stalin, is a clutch of modern trucks, several of them from the Italian Red Cross. Not far away, hard by another statue of Stalin, is a refugee camp, where Georgian families driven out of South Ossetia are living in tents that look worryingly ill-equipped to face a Georgian winter. Yet building proper accommodation for the refugees will take time (and money); the government says there are as many as 60,000 of them in all (on top of those left after the wars of the 1990s).


Stranded in Gori

Our driver then takes us north, as close to the “border” with South Ossetia as he can get. At a Russian checkpoint we find an impressive-looking military helicopter. We talk to a scruffy Russian soldier, who is happily waving through Ossetian and Georgian traders. His commanding officer comes over to shoo us away. These soldiers are clearly not going to let the European Union observers, who have just arrived to monitor the ceasefire and Russian withdrawal, into the disputed enclaves, which Moscow has now recognised as independent countries.

Back in Tbilisi, we get caught up in everybody’s favourite argument: what really started the war? The Russians and Ossetian militias say it was an unprovoked attack on the South Ossetian capital, Tskhinvali, ordered at around 11 pm on August 7th by the Georgian president, Mikheil Saakashvili. But Georgia’s interior minister, Vano Merabishvili, produces radio intercepts to show Russian forces entering the Roki tunnel and pouring into South Ossetia long before. The government’s line is, in short, that they were responding to a Russian invasion. Mr Merabishvili also plays us hilarious video footage showing one drunken Russian soldier smashing up a Georgian barracks and another offering to sell his weapons and hand grenades for cash.

Certainly Georgian voters seem to be behind their leader—one poll recently gave Mr Saakashvili a 76% approval rating. Yet beneath the surface there lurks plenty of discontent, as was reflected in the street protests last November that the government suppressed. One of the president’s closest former allies, Nino Burjanadze, a former speaker of parliament, is now a critic both of his authoritarian ways and of the war. She tells us that she plans to form a new opposition party; perhaps she will join forces with others over the coming year or two.

None of this, however, seems to faze the president himself. Late in the evening, we go to see him high above the river in his presidential compound, which looks like nothing so much as a scaled-down version of Berlin’s Reichstag. He has already given several interviews during the day but he remains calmly and courteously insistent that, if he had to do it again, he would take the same decisions. The Russians were itching for war on any pretext. He also suggests that they will not stop at South Ossetia and Abkhazia—the history of the 1930s suggests that there will be more examples of Russian aggression, either in Georgia or elsewhere.

With his command of English (and other languages) and his forceful manner, it is hard not to be impressed by Misha Saakashvili. He has undoubtedly done many good things for his country, starting by firing almost the entire corrupt traffic-police force. He even makes jokes about his hot-headed reputation. But it is hard to leave him without wondering if his personal crusade against the Russians and his insistence on restoring Georgia’s territorial integrity have always been entirely wise.


BEFORE leaving Tbilisi, we take one last look round its churches and monuments. One notable feature of the Caucasus how ancient its civilisations are, though like so many other modern cities, Tbilisi is suffering from a rash of modernisation. The Romans were here, and left some recognisable remains, including temples, in both Armenia and Georgia. The early Christians were here too. Indeed, there is today a (friendly) rivalry between the Armenian and the Georgian Orthodox churches over which is older.

On a hill near Tbilisi that overlooks the old capital of Mskhetha stands one of Georgia’s finest old churches, Djvari (picture), built in the 7th century. Like the cathedral in Mskhetha, which dates from two to three centuries later, it is being restored. Unlike the cathedral, at least when we visit, it has few tourists, being somewhat inaccessible. In this at least it differs from some of Armenia’s ancient churches and monasteries, which seem to be overrun by tourists when we get to them.


View to the past

For Armenia is our next destination after Tbilisi. The drive through the mountains and up to Lake Sevan is exhilarating. We stop for a simple lunch in a hut by the lake and are brought not only delicious bread and salad but also some excellent barbecued fish just pulled from the water. It makes a nice contrast to the noise and pollution awaiting us in a dusty Yerevan, Armenia’s capital, where we arrive in the late afternoon only to join a horrendous traffic jam down the main street that makes us late for most of our appointments.

Yerevan has neither the ancient walls and seashore of Baku nor the river and picturesque setting of Tbilisi. But on a good day it does offer one remarkable sight: the looming hulk of Mount Ararat, which is sacred to the Armenians but is actually in Turkey. As one travels about the city, views of the mountain where Noah’s Ark is supposed to have come to rest after the flood subsided occasionally break through the haze. Most Armenians wish to climb Ararat before they die; unfortunately the border with Turkey is closed and the only way round is a long journey via Georgia.

As it happens, talks on normalizing relations with Turkey with a view to reopening the border have recently begun, helped by Abdullah Gul, Turkey’s president, who attended a World Cup qualifying match between the two countries in Yerevan. We ask a diplomatic adviser to the foreign minister, who has been enthusing about the promise that might grow out of the presidential visit, who won the match, but she cannot remember (it was Turkey; Armenia is now out of the 2010 World Cup).

I reflect that there are some notable female diplomats in this part of the world. The newly arrived American ambassador to Yerevan is a woman, as is her counterpart in Baku, where the British ambassador is also female. The new British ambassador in Moscow is too. Perhaps having women as ambassadors in these still largely patriarchal societies is a good way of giving the host countries a shock.


LIKE the rest of the region, Armenia was troubled by Russia’s August war with Georgia. But the Armenians have two more specific reasons to be edgy. The first is that they are traditionally Russia’s strongest ally in the Caucasus, to the extent even of hosting two Russian military bases. The second is that they are landlocked and face closed borders to the west (with Turkey) and the east (with Azerbaijan). That means 80% of their trade goes through Georgia, whose ports the Russians smashed up during the war. Brief as the fighting was, the country soon began to suffer from petrol shortages.

With a clutch of other foreign journalists, we go along to see the president, Serzh Sarkisian. He is anxious to be on good terms with both Russia and the West, and clearly finds it harder than it used to be to balance the two. Hence his cautious negotiations with the Turks, which may yet lead to an opening of the border. Dealing with Azerbaijan is harder, for the fact that he (like his predecessor, Robert Kocharian) comes from the disputed enclave of Nagorno-Karabakh. Although Armenia is ready to give up some of the Azerbaijani territory that it now controls, there is no way it can compromise over the autonomy of Karabakh.

Mr Sarkisian seems secure enough in his job (though some rumours suggest that Mr Kocharian would like to come back). But his election as president last February was highly controversial. Independent election monitors were critical of its conduct, and the opposition candidate, Levon Ter-Petrossian, announced that the result had been fixed. He even brought his supporters out onto the streets of Yerevan. When the government suppressed the demonstrations, ten people were killed, and as many as 74 are still in jail.

We visit Mr Ter-Petrossian, the grand old man of Armenian politics, a former member of the Soviet politburo who became the independent country’s first president. Today he lives in a splendid timber house surrounded by beautiful grounds, right above Yerevan’s football stadium. Sitting in his garden, drinking tea, he insists that the election was falsified and calls the government deeply corrupt. When we tell him we have been told there are no political prisoners in Armenia, he laughs and says that Stalin said there were no political prisoners in the Soviet Union. But for all his charisma, it is hard to see him playing a big political role in future.

As an antidote to Armenia’s troubled politics, we finish our trip by visiting perhaps Yerevan’s most haunting site: the genocide museum, perched on top of the hill above Mr Ter-Petrossian’s house. On a beautifully sunny afternoon, it is a strangely peaceful place. In the grounds are trees planted by visiting presidents and American congressmen. The museum itself is simple and moving: it shows records, newspaper articles, books and letters recording just what happened in Anatolia in 1915, when the Young Turks in charge of the country decided to expel the Armenian population. As many as 800,000-1m Armenians died. Next to the museum is a memorial with an eternal flame.

Yet the issue of what really happened remains highly controversial today. The Armenian government no longer insists on Turkey recognising what it calls the genocide as a precondition for better relations. But there is a powerful Armenian diaspora in France and California that lobbies vociferously on the matter. The US Congress almost passed a resolution recognising the Armenian genocide last year; it may return to the issue after the November election. Turkey is moving heaven and earth to stop this resolution. Whatever happens, it certainly negates Hitler’s remark, as he planned the Holocaust in the 1930s: “Who now remembers the Armenians?” The answer, thankfully, is that we all do.


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