Tase: Washington is deeply interested in Karabakh conflict peaceful settlement

Azerbaijan is a strategic partner of the United States in the South Caucasus. Washington understands the importance of resolving the Karabakh conflict not only for Azerbaijan and Armenia, which further can affect the situation in the world. Karabakh Conflict 4

AThe population of Armenia no longer believes in fairytales of authorities, since not much has changed since the new people came to power. More experts now see that the major problem of Armenia lies in its unwillingness to resolve the Karabakh issue in a peaceful way.

A complete settlement of the Armenia-Azerbaijan NagornoKarabakh conflict would bring benefits to Armenia in many aspects, including public finances, trade, energy and water management, as well as financial markets, a study conducted by independent economic policy consulting firm Berlin Economics said.

Military expenditures could be reduced by 2 percent of annual GDP in the country to a level comparable with other countries at peace, according to the study.

In addition, Armenia could save annual expenditures of 0.9 percent of GDP for supporting the local economy in Nagorno-Karabakh and 0.1 percent of GDP in interest payments, thus saving 3 percent of GDP every year, the consulting firm believes.

Such large fiscal savings would enable the country to sharply reduce budget deficits and at the same time substantially increase spending in socially useful areas such as education or health by eliminating present budgetary pressures, according to the study.

Very substantial “benefits of peace” could in the long run also be gained in the domain of the energy and water sectors, said Berlin Economics.

“This would mainly benefit Armenia, deferring the need for investment into expensive new power plants as the country could import electricity during the dry season,” said the study.

Capital flows to Armenia are constrained at present to a large extent due to elevated country risk as a consequence of the ongoing conflict, according to Berlin Economics.

The consulting firm believes that Armenia’s ratings would probably improve by one notch.

Increases in the inward FDI stocks due to reduced country risk could significantly and permanently elevate the level of GDP by 3.4 percent to 6 percent of GDP in Armenia, according to the study.

Currently, the level of investments to the country is extremely low. Foreign investors should be convinced that the situation is stable, the economy is developing to make investment. And Armenia lacks this confidence.

Considerable benefits in trade would, however, materialize for Armenia due to an increase of trade with Turkey.

In the long term the share of Turkey in Armenia’s trade would reach a sizeable 13 percent, according to Berlin Economics.

For now, all attempts by Armenia to mend relations with Turkey are doomed to failure. If Armenia really wants to repair relations with Turkey, Yerevan should prove this, first of all, by withdrawing its forces from the occupied Azerbaijani territories. It also proves to be an effective way of getting out of the crisis that is a result of Armenia’s isolation.

The occupation policy of Yerevan has led to the fact that Armenia has been isolated from important regional projects.

Armenian authorities should think better about the future of the citizens, ensure normal economic conditions for them, instead of occupying the neighboring country's territory which Azerbaijan can return by military means.

The conflict between the two South Caucasus countries began in 1988 when Armenia made territorial claims against Azerbaijan. As a result of the ensuing war, in 1992 Armenian armed forces occupied 20 percent of Azerbaijan, including the Nagorno-Karabakh and seven surrounding regions.

The 1994 ceasefire agreement was followed by peace negotiations. Armenia has not yet implemented four UN Security Council resolutions on withdrawal of its armed forces from the Nagorno-Karabakh and the surrounding regions.