What role for the EU in post-war Karabakh?

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Baku, 22 December 2020 –

By Borut Grgic and Bernhard Knoll-Tudor

The five-week-long war in the South Caucasus between Armenia and Azerbaijan for control over Nagorno-Karabakh and the surrounding districts has ended in a Russia-brokered ceasefire. President Putin has managed to score yet another victory in the region, establishing a foothold, this time on the border with Iran.

Europe, on the other hand, has been unable to project any influence in the region; its prestige has suffered immensely. What, then, can Brussels do in the post-war period to play a more central role in the peace process and to rehabilitate its image in Baku and Yerevan?

On a broad strategic level, the EU’s collective weakness has been apparent. The debate in Europe about the EU’s eastern neighbourhood regularly starts – and ends – with issues gravitating around human rights and the rule of law, which are important.

But these are not foundations for a strategic vision; they are the benefits to be reaped once we have decided on what a grander vision could look like. Which is astounding, given that major infrastructure projects already transverse this region, carrying oil and gas from the Caspian to Europe.

The EU-China fibre-optic information highway passes through this region, as well as a complex transportation system designed to support and promote direct land trade between Asia and Europe.

For Europe’s foreign policy establishments, how is this not a priority area for strategic engagement? The Slovenian EU Presidency in the second half of 2021 will have an opportunity to develop this file.

It could make the EU-South Caucasus strategic framework a priority area, and push for the adoption of a new document detailing the EU’s long term commitment to the region, culminating in the EU-South Caucasus leaders’ summit.

On the tactical level, the EU’s role should expand to post-conflict management and to foster an environment in which people-to-people relations in both countries gradually stabilize. Clearly, economic opportunities will be a sphere where both countries may recognise the existence of mutually shared interests.

At the centre of European immediate re-engagement could be the creation of a Karabakh Development Bank, which could be a joint EU-Azerbaijan-Armenia project modelled after the European Bank for Reconstruction and Development (EBRD).

The new bank could finance projects related to infrastructure, electricity, municipal rehabilitation, construction, agriculture and supporting small and medium business initiatives. With long-term peace and security still uncertain, a development bank with such a mandate could play an anchor for the international investment community by offsetting risk and liabilities for private investors.

This is an area where the EU has ample experience from the Western Balkans, which it could use in setting up and co-managing the new Karabakh Development Bank that embraces the two conflicting parties as shareholders.

Further, the European Commission could publish calls for tech innovation in the context of the EU’s Eastern Partnership dimension, sponsoring projects jointly authored by Azerbaijani and Armenian teams of coders, subject to selection by an expert jury.

It could also assist Azerbaijan and Armenia in setting up free economic zones (FEZs) north and south of Lachin as well as between Shusha and Stepanakert (Khankendi). Borrowing from the Dubai precedent, each of these FEZs could be further classified as tech, energy and agro zones.

Products made and services rendered within these zones could be sold tax free in the region and on the European market.

Take electricity, for instance, which could be generated on a green basis in this new energy zone and traded down the grid on a tax-free basis. FEZs could be linked – via a new railroad line – to the Alat free port south of Baku and Georgia’s Poti Seaport.

The necessary infrastructure to support the development of these exclusive economic zones can be spearheaded by TRACECA, an originally EU-sponsored infrastructure project based in Baku.

The second segment of post-war assistance and cooperation could see the EU extend offers to foster cultural and educational links.

One idea is sponsorships for an Armenian-Azerbaijani film co-production, premiered at a major European film festival. Second, Shusha and Stepanakert (Khankendi) could jointly apply for an ‘intercultural city’ competition awarded by the Council of Europe.

A tripartite agreement could be signed between Azerbaijan, Armenia and Georgia, and supported by the EU, for the establishment of a three-campus anti-corruption academy for an executive degree in Rustavi, Stepanakert (Khankendi) and Shusha.

Another effort could see European assistance in rebuilding Agdam into a Eurasian artist colony, similar to what Marrakesh has been to Europeans or Todos Santos in Mexico is to Northern Americans.

Following the shining example of Daniel Barenboim in bridging the Israeli-Palestinian divide through performance, the EU could sponsor joint orchestra appearances in Europe. In the sphere of sports and youth exchange, UEFA could fund the rebuilding of the Agdam stadium for Qarabağ FC and sponsor soccer clinics for returning Azerbaijani and Armenian kids.

For this crucial demographic, the European Broadcasting Union could co-finance, jointly with the Russian Federation, a progressive trilingual Karabakh radio station and entertainment digital platform, with HQs in both Baku and Yerevan and regular exchanges between the two.

There is no shortness of ideas when it comes to an EU role in a post-war period that provides incentives for building confidence between the two sides.

So far, the limiting factor has been the lack of will in Europe to play a more prominent role in the South Caucasus, and a deplorable absence of strategic vision that treats the region as an opportunity for projecting not merely liberal values but economic and cultural prowess.

The recent armed conflict is a wake-up call to Brussels to stake its claim in a territory that has geostrategic and immense cultural significance for our continent.


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