Friday, April 10, 2009

Georgia, Moldova, Turkmenistan and Armenia

Except for Turkmenistan, the donor community has poured tens of millions of dollars into Georgia, Moldova and Armenia. For all the money, Moldova remains an economic basket case and Georgia is in entropy mode. Armenia may move away from the downward spiral it has been experiencing since the end of the 1993 war with Azerbaijan - but it won't have anything to do with the development aid it has received over those years. It will be because of changes in the geo-political make-up of the region, the rise of Turkey and a resurgent Russia intent on re-creating the Soviet Union.

Moldova is an interesting case because I recall a heavy emphasis - at the expense of economic and business support - on civil society programs. This was particularly the case with USAID whose local mission was in thrall to civil society. The problem with that is a poor household does not really care about civil society if it has little or no income or food. What is also surprising is for all intents and purposes, the current government won the election by a few points. They call themselves "communist" but in reality they are not. They simply have an un-reformed soviet style system - despite all that foreign aid - which lives up to its previous inefficiency. Moldova's biggest and unrecoverable mistake was seperating from Romania. The second problem is the Transdneister, that sliver of illegal, trafficking, blackmarket and gun-running dirt with its own unrecognized passport and thousands of Russian troops to protect it from Moldova, of which it is a part. The Transdneister problem is what keeps Moldova tied to Russia. No development aid that does not take that into consideration will succeed. Nor will it succeed without strong political will within the Moldovan government to change. That may require a change in the system.

Georgia - well, that's a different case. It is very clear that Saakashvili must go. It may be that his attempt to assert central government control over the break-away regions of Abkhazia and South Ossetia was partly due to his promise to the more nationalistic parties in Georgia to do so and thereby win the last election, but now comes the blow-back. It was never really important for Georgia to regain control of those two regions over which it has had no effective control for a decade. Even if Russia has overreached and concentrated the attention of Turkey and Azerbaijan on its newly imperial ambitions, Georgia is now in danger of disintegration as long as Saakashvili remains. If Georgia loses Batumi, then it loses its oil transit revenues. A graceful way out is needed and the opposition must come up with a plan for moving forward economically, socially and politically and not just have the removal of Saakashvili as its goal.

Turkmenistan has now accused Russia, through Gazprom, of blowing up its gas pipeline on the Uzbek border this week. That may well be true. It will be interesting to see how the gas war develops because Russia is determined to gain almost total control of gas resources either through production or lines. This is the real great game developing in the western areas of Central Asia.

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