Dennis Sammut: "We are entering a very decisive period in the Karabakh conflict resolution process"

- How do you see the economic outlook for the South Caucasus in 2009?

The world is passing through the most severe economic crisis for the last seventy years. Because of globalisation and growing inter-dependence the economic downturn has spread across all continents in a very short time. In 2009 the countries of the South Caucasus will also feel the impact of the global economic crisis. This is likely to take the form of reduced property prices, less foreign investment, less remittances from overseas, particularly Russia and slower growth than we have seen so far. There is not at the moment any real risk that any of the three South Caucasus countries will collapse economically, but governments need to be ready to be flexible with their policies and swift in their responses to ensure that their countries come out of the economic crisis not only intact, but actually stronger than before.

For Azerbaijan much also depends on the world energy markets. The volatility of the oil prices in 2008 should teach Azerbaijan the need to be cautious in how it spends its oil revenues. I do not see oil prices falling much more than their present levels, but even if they increase again the Azerbaijan government must have a strict fiscal policy that will ensure economic stability. In all three countries the governments must take steps to protect the most vulnerable parts of society against the economic downturn. Otherwise social tensions will quickly translate into political problems.

- Are the prospects any better as regards conflict resolution in the region in 2009? Does the fact that Russia has recognised Abkhazia and South Ossetia make the settlement of the Karabakh conflict easier than the others?

The Russian recognition of Abkhazia and South Ossetia has not changed the reality that has existed for more than fifteen years, namely that these territories were outside the control of Tbilisi. For the moment the change is more symbolic than real. However the dynamic of the conflict resolution process has changed and we have yet to see if the new dynamic will help the resolution of the conflict or not. With regards to Karabakh the major development in 2008 has been the Moscow Declaration between the two Presidents in November. This is also a symbolic gesture. It will be meaningless unless it is followed soon by a change in the dynamic of the conflict resolution process leading to early changes on the ground. This is the challenge that the Minsk Group co-Chair have in front of them at the moment. Like them I am cautiously optimistic for 2009. I think we are entering a very decisive period in the Karabakh conflict resolution process and the leaderships of the two countries need to remain focused on this issue in 2009. The Karabakh situation is also linked to the economic crisis. A lot of the economic potential of the region remains unused because of the Karabakh conflict. Armenia and Azerbaijan should cash in the peace dividend.

- The United States and Georgia have signed a joined declaration on security co-operation. Will this make it easier for Georgia and other former Soviet Republics to join NATO? Will this declaration contribute towards peace in the South Caucasus?

The declaration is a bilateral statement between the US and Georgia. It seems that both countries felt that after the August War, and the slowing down of the process of NATO membership for Georgia, that such a declaration was necessary. Georgia and any other European country should join NATO when it is ready and if that is what its people want. However NATO membership is not some panacea. It also brings with it a lot of obligations which is why this is a step that needs to be taken carefully. The US-Georgia declaration sends a message of continued American interest in the South Caucasus. I think this is a reality and it is good that we are sometimes reminded of it.

- The year also started with another energy crisis in Europe as a result of the continuing dispute between Russia and Ukraine on gas supplies. Will this dispute strengthen the position of Azerbaijan vis-a-vis the western countries?

I think it will certainly help to remind everybody of the importance of Azerbaijan as an energy producer and energy transit country. However this is only one side of the coin. The other side of the coin is that it should also remind Azerbaijan of the importance of being a reliable, predictable and stable partner in the energy sector. This goes for all the other countries on the Caucasus-Caspian energy corridor as well. If Azerbaijan plays its cards well, and up to know it has, than it should expect to reap the benefit of its increasing importance for Europe. I hope this dividend will be increased integration of Azerbaijan in the European family of nations.

/Day.Az/