Aid cuts threaten Caucasus strategy

Date: 01/07/1999

By Simon Taylor

EU GOVERNMENTS' efforts to end territorial conflicts in the Caucasian states could be undermined by plans to cut the EU's Tacis aid programme for former Soviet countries, warn European Commission officials.

They say the bid by member states to shave €100 million off the Tacis budget to pay for rebuilding Kosovo would make it harder to work towards bringing lasting peace and stability to Armenia, Georgia and other strife-torn countries of the region.

"We face difficulties if there are further cuts." said one Commission official working on cooperation with the Caucasian states, who pointed out that the budget for the Tacis programme had already been cut in previous years from €510 million in 1998 to €450 million in 1999.

News of the possible reduction in Tacis funding came just after the EU achieved a major breakthrough in its attempts to stabilise the region, which is beset by border conflicts and major refugee problems.

Union foreign ministers met the presidents of Armenia, Azerbaijan and Georgia last week in Luxembourg and agreed to strengthen mutual cooperation and work towards "gradual rapprochement".

Ministers said afterwards that they would use the new Partnership and Cooperation Agreements (PCAs) with the three countries, which entered into force today (1 July), to improve political dialogue and try to find a peaceful solution to some of the regional disputes in the area.

Armenian and Azerbaijani forces are currently maintaining a fragile cease-fire in the fighting over the breakaway province of Nagorno-Karabakh, while violence in the Georgian province of Abkhazia has created 40-50,000 refugees.

Commission officials say the new accord is an attempt to change the way that the EU tries to help the process of stability in the region. "We are saying that in the future we will not just provide money for humanitarian purposes." said one, pointing out that Union aid had not been spent as effectively as it should have been in the past because of the disruption caused by fighting and population upheavals.

The five Caucasian states which lie along Russia's southern border have received €850 million in aid from the Union since they gained their independence from the Soviet Union in 1992. Almost two-thirds of the money has been spent on humanitarian and food aid to help refugees and deal with the effects of fighting in the region, coupled with some technical assistance from the Tacis programme.

Azerbaijan and Georgia have been the largest beneficiaries of EU aid over the last two years, receiving over €67 million and €58 million respectively.

Union governments are also offering the three countries participation in the EU's Traceca transport infrastructure programme and the Inogate oil and gas project as a way of shoring up the peace process with economic cooperation.

"Setting in place adequate infrastructure that serves to link the three capitals of the South Caucasus countries would be an important step towards better comprehension." said Azerbaijan's Prime Minister Artur Rasizade last week, commenting on the benefits of improved ties.

EU foreign ministers stressed that the Union would use cooperation instruments like the PCAs and the Traceca and Inogate programmes to reflect progress on conflict resolution in the region. The Inogate initiative, which provides a common framework for investment in the massive oil and gas industries of the region, has attracted more than €1 billion of public and private funds into projects in the Caucasian states.

EU governments are also hoping for an improvement in relations with Kazakhstan and Kyrgyzstan, whose PCAs came into force this week.

Senior officials from both sides will attend a Cooperation Council meeting on 20 July which will focus on trade and investment issues, to find ways of improving the business climate in the two countries.

Union governments are also keen for Kazakhstan to follow in its smaller southern neighbour's footsteps by becoming a member of the World Trade Organisation.