Germany is heavily engaged in Georgia. At the same time, Germany does not have a comprehensive foreign policy in the Southern Caucasus. Currently, policy planners in Berlin are debating a concept for regional cooperation for the Caucasus that bears strong resemblance to the Balkan Stability Pact. Close cooperation with the US on such a matter is very important.

Only after the attack on Beslan in the Russian Northern Caucasus on Sept. 12, 2004, did the significance of Georgia, Armenia, and Azerbaijan for European security receive attention in the German foreign policy community. Several crucial energy supply routes run through regions in which there is a long history of instability, acting as a breeding ground for terrorism and organized crime. The situation in the Southern Caucasus is of immediate relevancy to Europe. But thus far, there are no useful supra-regional initiatives to reconcile the conflicting interests of Russia, Turkey, Europe, Iran, the U.S., and the respective local governments.

The Key is in Berlin

The different perceptions in Europe and the Caucasian states are one reason why it has been so difficult to shape a common European regional policy toward the Caucasus. The Georgian President Mikheil Saakashvili, for instance, has little understanding for the growing suspicion of the German government toward his reforms. In a personal meeting, he said that "every journalist in Georgia needs to criticize me, or else no one would read him. That is his right, but many Europeans believe only what these journalists say and don't take a look at what I did. My approval ratings run up to almost 70%." Germany has supported the reform process with 250 million euros and ranks second after the U.S. in financial aid given to Georgia. At the EU Summit in Thessaloniki in June 2004, Germany successfully supported the inclusion of the South Caucasian countries into the European Neighbourhood Program. One has to admit that the ongoing transformation in Georgia does diverge from the European ideal. However, it is import to compare today’s Georgia with the one during Shevardnadze’s presidency to see the astonishing progress that has been made. It would be a tragic mistake if the mutual disappointments would lead to German resignation and detachment from the crisis-ridden region. Saakashvili needs to be aware that a key to his country's integration into Europe is in Berlin.

A Weak Opposition in Baku

The peaceful regime change in Georgia has an impact on Armenia and Azerbaijan. Ilham Aliev, president of Azerbaijan, receives a small group of Western visitors. His fluent English and elegant demeanour convey the charm of a well-mannered, wealthy, and powerful son. He shows too much effort to emphasize the importance of free and fair elections and the integration into the Euro-Atlantic community. These insights, however, did not hinder him to dissolve the opposition's rallies shortly before the elections on Nov. 6 last year. Yet, the opposition did not have a charismatic leader, as the Georgians had during the "rose revolution," and the Ukrainians during the "orange" one.

The Azeri president also used the election to get rid of influential advisors from his father's days. His father, Haidar Alijew, was also his predecessor. But the central question framing the election was a different one: Who is going to profit from the $200 billion of oil revenues flushing into a country with a state budget of $2 billion? Will the population receive their fair share, or will only a few powerful families benefit from the oil boom?

The new Turkish pipeline from Baku via Tbilisi to the Turkish Mediterranean port Ceyhan was built to circle around Armenia. Armenia is dependent on Russia. As a result, Armenia is excluded from transit fees and pipeline profits. That doesn't seem to bother Armenia's foreign minister, Varnan Oskanian. When asked, he points to the growth rates of the Armenian economy. He doesn't mention the fact that more than $100 million a year is coming straight from the Armenian Diaspora in Russia, the U.S., and France.

When asked whether Armenia would be willing to withdraw its troops from Nagornyi Karabakh, he said that his government would always be willing to negotiate with Turkey. During the Soviet era, and in line with Soviet politics vis-à-vis the nationalities, the Kremlin gave the enclave Nagornii Karabakh, inhabited by Armenians, to Azerbaijan. There will be no stabilization of the entire South Caucasian region without a solution to the Nagornyi-Karabakh conflict. For years, the Minsk group of the OSCE has been trying to solve the frozen conflict which has helped to buttress the authoritarian regime of the Armenian President Kotcharian. To support Azerbaijan, Turkey has closed its borders to Armenia and is still grappling with the question whether the mass murder of Armenians in 1915 can be labeled genocide.

Russia's unclear role

The European Neighbourhood Program and the NATO "Partnership for Peace" are not sufficient to disentangle the conflicting interests in the South Caucasus. Because of that, German politicians are looking for supporting initiatives. There are considerations to extend the Balkan Stability Pact to the South Caucasus with the declared goal of strengthening regional cooperation in the economy, traffic, infrastructure, and environmental protection. One of the weaknesses of such an approach would be Russia's refusal to participate, although Russia's role in the region would make its participation necessary.

Therefore, it might be make sense to widen the circle of participants. The states of the Black Sea region – Romania, Bulgaria, Moldova, Ukraine, and Turkey – should be included, as well as the United States. There are sufficient hints indicating a political will, such as the cooperation of the Guam group (Georgia, Ukraine, Azerbaijan, Moldova), last August's declaration of Ukraine's and Georgia's presidents, the proposal of the Romanian President Traian Basescu for a Black Sea Forum.

Cooperation a la carte

Simultaneously, the U.S. needs to have at least observer status in such a Black Sea Stability Pact. Without Washington's participation, it will be impossible to solve the "frozen conflicts" in Nagornyi Karabach, South Ossetia, Abchasia, and Transnistria. Such a Black Sea Stability Pact needs to be served a la carte. That means that within such a pact the member states get the right to choose with whom to cooperate, without being impeded by another member’s veto.

For Germany to initiate such a Black Sea Stability Pact a la carte in the EU in cooperation with the East European EU members – that would be a constructive German foreign policy toward the U.S., Russia, and the East European members simultaneously. Such a pact would create the perspective for a transatlantic cooperation in a region where both the U.S. and Germany need to prevent "failing states." It would give Russia a chance to contribute toward stabilizing a region which has a negative impact on Chechnya and Dagestan in the Northern Caucasus. Even if Russia would not participate, the pact members could still cooperate amongst themselves. In the end, it would give the states of the South Caucasus and the Black Sea a perspective that could be more than the noncommittal neighbourhood policy of the EU without forcing Brussels to make binding proposals toward EU membership.