South Cau­ca­sus: assess­ing Chan­cel­lor Merkel's visit

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The South Cau­ca­sus is an im­por­tant geo-strate­gic re­gion for the EU and for Ger­many in par­tic­u­lar. This is how lo­cal Cau­casian me­dia as­sessed the re­cent visit of Ger­man Chan­cel­lor An­gela Merkel to the re­gion.

The South Cau­ca­sus is an im­por­tant geo-strate­gic re­gion for the EU and for Ger­many in par­tic­u­lar. This is how lo­cal Cau­casian me­dia as­sessed the re­cent visit of Ger­man Chan­cel­lor An­gela Merkel to the re­gion.

Fairly, this ap­plies, to a greater ex­tent, to Azer­bai­jan and Ge­or­gia – the two coun­tries that form the trans­port cor­ri­dor be­tween the Caspian and the Black sea. Af­ter the col­lapse of the Soviet Union, en­ergy and trans­port links lead­ing to Europe be­gan to be laid through these two Cau­casian coun­tries. One day they also turned into a bridge be­tween Europe and the mar­kets of Cen­tral Asia and China, thanks to Baku-Tbil­isi-Kars rail­way.

Ger­many never for­got about its na­tional in­ter­ests, but some re­cent de­vel­op­ments such as the agree­ment with Rus­sia on the con­struc­tion of the Nord Stream-2 gas pipe­line or, re­cent call of the Ger­man For­eign Min­is­ter Heiko Maas to cre­ate Euro­pean pay­ment sys­tems in­de­pen­dent of the U.S. in or­der to save the nu­clear agree­ment with Iran, show that Ber­lin pursues an in­de­pen­dent and far-sighted pol­icy, as be­fits the lead­ing na­tion of the EU.

There­fore, speak­ing about the goals of Merkel's visit to the Cau­ca­sus, we should first con­sider prag­ma­tism and Ger­many's na­tional in­ter­ests. They are, first of all, of eco­nomic na­ture – it is shift­ing of pro­duc­tion to Ge­or­gia and Ar­me­nia, and in­vest­ing in promis­ing, in terms of Ger­man cap­i­tal, in­dus­tries.

For ex­am­ple, de­liv­ery of large ship­ments of mainly sec­ond-hand Ger­man cars to the very pop­u­lar Ge­or­gian car mar­ket in the city of Rus­tavi has long been es­tab­lished, where they are well-pur­chased by cus­tomers from Ukraine, Ar­me­nia, Azer­bai­jan and even trans­ported by ferry to the coun­tries of Cen­tral Asia.

If an as­sem­bly line of Mercedes mod­els mostly pop­u­lar in the re­gion is opened in Ge­or­gia, then Ger­many would con­quer one more large mar­ket for its car in­dus­try.

Azer­bai­jan, to a cer­tain ex­tent, stands apart, pos­sess­ing as­sets Ge­or­gia and Ar­me­nia have never had, i.e. sig­nif­i­cant re­serves of hy­dro­car­bons, which means a cer­tain fi­nan­cial ad­van­tage. This, in turn, broad­ens the bound­aries of choice for Baku.

How­ever, de­spite this fact, Azer­bai­jan also needs new tech­nolo­gies, mod­ern­iza­tion of the in­dus­trial base, new jobs and highly qual­i­fied spe­cial­ists.

Quot­ing Pres­i­dent Il­ham Aliyev: "Of course, we have great oil and gas re­sources, we ex­port them, but the main goal is to de­velop the non-oil sec­tor, and in this area, com­pa­nies from Ger­many, of course, can pro­vide as­sis­tance for us.”

Ms. Merkel, assess­ing the ex­ist­ing bi­lat­eral re­la­tions be­tween the two coun­tries, noted that Azer­bai­jan is the largest and most im­por­tant trad­ing part­ner of Ger­many in the re­gion, where more than 150 Ger­man en­ter­prises op­er­ate.

In­deed, about 70 per­cent of Ger­many's trade with the coun­tries of the South Cau­ca­sus falls on Azer­bai­jan.

Speak­ing about the visit of the Ger­man Chan­cel­lor to the re­gion, we should not for­get that Ger­many is part of the EU and aims to pro­mote the in­ter­ests of the whole Union. This is about the de­liv­ery of Caspian gas to the coun­tries of South-Eastern Europe.

Gas in the frame­work of the South­ern Gas Cor­ri­dor (SGC) project should come from the Azer­bai­jani Shah Deniz 2 field to Europe in 2020, and all vol­umes have al­ready been con­tracted. But there is also gas from Turk­menistan, a Cen­tral Asian coun­try on the Eastern coast of the Caspian Sea with huge nat­u­ral gas re­serves.

We do not know for sure whether the con­nec­tion of Turk­men gas to the SGC was dis­cussed, but at a press-con­fer­ence, an­swer­ing the ques­tion of a Ger­man re­porter, Pres­i­dent Aliyev noted that the con­struc­tion of the Trans-Caspian pipe­line should be of in­ter­est to the gas owner in the first place, and that tran­sit coun­tries should not take the ini­tia­tive.

“If in the Eastern part of the Caspian sea [Turk­menistan] the de­ci­sion is made to sup­ply gas to the world mar­ket through the ter­ri­tory of Azer­bai­jan, then of course, we can con­sider it with great in­ter­est and then make our de­ci­sion. But this de­ci­sion should not be ours, but that of the op­po­site side,” he said.

Maybe, Merkel is con­cerned about the un­cer­tainty in the is­sue of fur­ther, af­ter 2019, Rus­sia's use of the gas trans­porta­tion sys­tem of Ukraine for the de­liv­ery of Rus­sian gas to con­sumers in Europe.

She would like tran­sit through Ukraine to be pre­served; other­wise a num­ber of coun­tries in South­East­ern Europe may suf­fer. And al­though Pres­i­dent Putin at a meet­ing in Ber­lin in Au­gust as­sured Merkel that the tran­sit via Ukraine will be main­tained, Merkel wants to have a con­tin­gency plan at hand.

In any case, the Ger­man Chan­cel­lor had the op­por­tu­nity to make sure that Azer­bai­jan and its part­ners in the SGC project are com­mit­ted to their in­ter­na­tional obli­ga­tions on the tim­ing of the de­liv­ery of Azer­bai­jani gas to Europe.

How­ever, the Ger­man ap­proach sug­gests that be­fore large in­vest­ments are made in the South Cau­ca­sus, se­ri­ous progress should be made to re­solve long-stand­ing regional con­flicts.

“We openly talked about the Nagorno-Karabakh is­sue. I once again stressed that Ger­many is in­ter­ested in re­solv­ing this con­flict, and we will con­trib­ute to this within the frame­work of the Minsk group,” An­gela Merkel said at a press con­fer­ence.

But this visit seems to have a po­lit­i­cal back­ground as well, and it is nec­es­sary to con­sider the his­tor­i­cally es­tab­lished spe­cific re­la­tions be­tween Rus­sia and Ger­many.

A week be­fore her visit to the South Cau­ca­sus, Merkel had a meet­ing with Rus­sian Pres­i­dent Vladimir Putin. It is not ex­cluded that the har­mo­niza­tion of po­si­tions re­gard­ing Ger­many's greater pres­ence than ever in the re­gion took place.

The Amer­i­can pol­icy of cre­at­ing a belt of in­sta­bil­ity on the bor­ders of Rus­sia is push­ing the lat­ter to di­vert at­ten­tion from de­vel­op­ing its own econ­omy. Ge­or­gia is rush­ing to NATO; Ar­me­nia is look­ing to the West. And here it is – the West it­self comes to the re­gion with one of its bright­est and most ad­vanced rep­re­sen­ta­tives, of­fer­ing in­vest­ments and the world’s best tech­nolo­gies.

In the light of se­ri­ous dis­agree­ments with the United States, and es­pe­cially now, in the light of grow­ing Amer­i­can sanc­tions, Rus­sia would be quite sat­is­fied to have a peace­ful South Cau­ca­sus at its bor­ders, with­out Amer­i­can in­flu­ence, and re­main­ing within the am­bit of Rus­sian na­tional in­ter­ests.

“So, we would rather see Mercedes cars rid­ing across the South Cau­ca­sus than F-16 fly­ing in its skies,” the of­fi­cials in Moscow must have thought.

In this con­text, the in­ter­ests of Ger­many and Rus­sia co­in­cide. Merkel was faster than oth­ers to see the fu­til­ity of the pol­icy that the West has been wag­ing to­wards Rus­sia, and pro­posed to re­vise the rules of the game, not for­get­ting about the in­ter­ests of the Ger­man na­tion.

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