A second wind for GUAM?

On March 27, the heads of government of Ukraine, Georgia, and Moldova and the Deputy Prime Minister of Azerbaijan met in the Ukrainian capital to discuss political and economic cooperation between their respective countries. The GUAM summit was accompanied by a business forum and a number of working group meetings on issues as diverse as tourism and culture, youth and sports, state statistics, consular services etc.

The GUAM – Organization for Democracy and Economic Development is celebrating its 20th anniversary this year. For those not closely following the post-Soviet space, though, its somewhat odd abbreviated name will rather evoke balmy Pacific beaches than a format for regional cooperation in eastern Europe. Its four member states – Georgia, Ukraine, Azerbaijan, and Moldova, hence “GUAM” –  are united by an aspiration to pursue friendly relations with Western powers and check Russian influence in the region, some say probably more so than by a common commitment to democracy and economic development, which are in evidence to uneven degrees in the member states.

The organization developed out of a late-1990s consultative forum and was established at a summit in Yalta in 2001 under the moniker GUUAM, reflecting the fact that Uzbekistan was actively participating since 1999 as well. However, after Tashkent announced it would withdraw from the organization a year after the Yalta meeting, the grouping reverted to its original name of GUAM.

Arguably, its heyday came in the days after the 2003 Rose Revolution in Georgia and the 2004 Orange Revolution in Ukraine, which brought to power decidedly pro-Western political forces. The member states formed a common front against the Russian Federation in the Commonwealth of Independent States (CIS) on several topics, including the “frozen” conflicts in the South Caucasus and Moldova’s Transnistria region as well as Russia’s import restrictions on agricultural and processed food products from Ukraine, Moldova, and Georgia. GUAM announced plans to invite additional member states, get involved formally in conflict-resolution processes in the region, and even to establish joint peacekeeping forces.

The GUAM – Organization for Democracy and Economic Development celebrates the 20th anniversary of its founding in 2017

For a while, the organization attracted considerable international interest, particularly among eastern European EU member states but also in Turkey and the United States. The Orange and Rose Revolutions as well as Moldova’s pro-EU course raised high hopes of drawing Kiev, Tbilisi, and Chisinau closer to, and perhaps even into, the European Union, facilitating democratization and economic development on the way. Azerbaijan – though with a more shaky commitment to democratic governance – had also oriented itself toward the West, favoring the EU as the primary export market for its Caspian hydrocarbon resources and working closely with NATO in the transit of military equipment and personnel to and from Afghanistan.

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70-kopeck Ukrainian postage stamp commemorating the GUAM Summit held in Kiev, May 22-23, 2006. Photo Yakudza via Wikimedia Commons

For a brief period, it seemed that GUAM had a realistic chance of becoming a gateway for Westernization in eastern Europe and the Caucasus. However, in 2007 the political winds were already turning. Georgia, though still staunchly oriented toward EU and NATO after its August 2008 war with Russia, revered to a more authoritarian practice of government as then-president Mikheil Saakashvili faced domestic opposition and sagging economic growth. In Ukraine, the 2007 parliamentary elections led to a strong showing of the Party of Regions under Viktor Yanukovych, the pro-Russian contender who had had to renounce on the presidency after the Orange Revolution. Political turmoil engulfed Moldova,  where a pro-EU government coalition was struggling with a strong Communist opposition. And in Azerbaijan, the regime of Ilham Aliyev turned ever-more authoritarian, leading to tensions with Brussels.

Thus, GUAM practically ceased to be active on the international scene, even though it continued to hold periodic meetings. Now, however, it appears as though Georgia attempts to breathe new life into the organization. This year, Tbilisi holds the GUAM presidency – under the slogan “Together for a strong GUAM” – and has vowed to open a new chapter in the organization’s development, strengthening political cooperation and advancing agreements on a GUAM Free Trade Area and a GUAM transport corridor. Increased collaboration are also sought in inter-parliamentary collaboration, people-to-people contacts, culture and various other fields.

It seems as though GUAM’s revival is, for now, encouraged by three main factors. First, Tbilisi is keenly interested in an active GUAM presidency. The small South Caucasian country has been a regional front runner in the political and economic reform agenda promoted and sponsored by Western institutions. Despite being located in a somewhat difficult neighborhood, Georgia has generally moved toward democratization, economic liberalization, and military integration with NATO, all part and parcel of its aspirations to one day being accepted fully into the North Atlantic Alliance and European Union.

For the time being, however, NATO enlargement in the post-Soviet space is not in the cards. The EU, in its turn, has increasingly retreated on itself, struggling with economic crises in a number of its southern member states, refugee flows from the Middle East-North Africa region, and domestic “EU-fatigue” whipped up by populist political forces. Still, Georgia does not see attractive and politically viable models in its region that could replace its focus on Euro-Atlantic integration. At the same time, Tbilisi is committed to alleviating tensions with Russia in order to prevent a recurrence of outright conflict. It is also pursuing incrementally stronger relations with other emerging actors in the region, such as Iran and China. Georgia is therefore marketing itself as a stable and dependable cooperation partner for Western powers, and one that can promote liberal values in its region.

Secondly, the recent political trajectory of Ukraine creates a favorable environment for a strong Georgia-Ukraine tandem based on shared interests. Relations between Tbilisi and Kiev were very close during the first years after the Rose and Orange Revolutions. However, their interests diverged increasingly after 2007-08. While Georgia left the Russian-dominated CIS after the August 2008 war and cut diplomatic relations with Moscow, Ukraine took a more Russia-friendly course as Viktor Yanukovych was elected president in 2010. By 2014, however, the tables had once again turned: the Georgian Dream government in Tbilisi had abandoned the previous administration’s strident anti-Russian rhetoric and was pursuing a dialogue process with Moscow. Kiev, in turn, had to confront the annexation of the Crimean peninsula by Russia and a Russia-supported rebellion in its eastern Donbas region.

Official Georgia-Ukraine relations reached a low point with the appointment of Mikheil Saakashvili as governor of Odessa region

A low point in bilateral relations was reached when Mikheil Saakashvili, the exiled former president facing criminal charges in Georgia, was appointed governor of Ukraine’s Odessa region in May 2015. Saakashvili had been granted Ukrainian citizenship to take up this position and lost his Georgian citizenship as a result but retained the chairmanship of the United National Movement, the former Georgian governing party. Georgian President Giorgi Margvelashvili protested the “political interference of a Ukrainian official in Georgian politics.” The Georgian government was generally angered by Ukraine’s refusal to extradite Saakashvili and several other high-ranking former Georgian government officials indicted by the Prosecutor’s Office but serving in the Ukrainian government. The relationship became so troubled that Kiev even left vacant the position of its Ambassador to Tbilisi for two years after Valery Tsibenko’s term ended in 2014.

True to his well-known belligerent form, Mikheil Saakashvili soon ended up falling out with Ukrainian President Petro Poroshenko. He stepped down from the governorship of Odessa and by fall 2016 had gone into Ukraine’s political opposition. Thus, with the irritant of Saakashvili out of the way, Tbilisi and Kiev can now once again concentrate on their shared interests. Both countries were granted a visa-free regime with the European Union in early 2017. Together with Moldova, they by and large represent what remains of the EU’s Neighborhood/ Eastern Partnership policy to create a “ring of friendly states” at the Union’s periphery.

Even though these three countries continue to deal with significant deficiencies and domestic debate about the best course of economic and democratic governance, their broad trajectory is leaning toward alignment with Brussels and the deepening of free-market economic liberalism. The “common EU integration agenda” of Ukraine and Georgia was explicitly stressed during Ukrainian Foreign Minister Pavlo Klimkin’s visit to Tbilisi on April 21-22.

Moreover, the three of them all are confronted with separatist quasi-state that have slipped away from central-government control and enjoy Russia’s military, political, and economic support. Kiev, which still faces ongoing armed hostilities in the Donbas, has used its non-permanent membership on the UN Security Council in 2016/2017 to put the issue of Georgia’s break-away Abkhazia and South Ossetia regions on the UNSC agenda. In turn, the Ministry of Foreign Affairs in Tbilisi released a statement condemning Russia’s annexation of Crimea on March 19, the date of the three-year anniversary of a referendum sanctioning Moscow’s move. Georgia’s recent interest in Black Sea security cooperation with NATO also dovetails with Ukraine’s efforts to ensure a minimum of maritime security after it lost 70 percent of its fleet together with political control over Crimea.

Finally, wider geopolitical realignments affecting the Eastern Europe-Caucasus region also make GUAM a potentially interesting format for cooperation. China, which has long given the region only low priority in its foreign and trade policy, has recently reinforced its economic investments in Azerbaijan and Georgia with a view to potentially integrate both countries in its “One Belt, One Road” (OBOR) development framework. This strategy alludes to the ancient Silk Road and features a massive maritime and land infrastructure network spanning Eurasia, complete with Chinese investment in production and logistics hubs capacity along the way. The initiative is bolstered by the establishment of the Asian Infrastructure Investment Bank (AIIB), which China leverages to provide loans for the rebuilding and upscaling of inter-regional transport and energy infrastructure. Recent examples: an AIIB loan of USD 600 million, its biggest so far, for the TANAP gas pipeline linking Azerbaijan to Turkey and onward to southern Europe; and USD 114 million to a loan agreement with Georgia and the Asian Development Bank to construct the Batumi bypass road.

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Illustration via Mercator Institute for China Studies (Merics) Berlin

Similarly, the Joint Comprehensive Plan of Action agreed between Iran, the United States, Great Britain, France, China, Russia, and Germany in 2015 allows for the partial lifting of UN, EU and U.S. economic sanctions on Tehran. This presages greater regional significance for Iran in the Caucasus as a potential investor and trade partner. Recently, Iran has made overtures to Georgia, Azerbaijan, and Armenia with a view to creating north-south transport corridors that can link the Persian Gulf to the Black Sea and thus allow Tehran to diversify its export routes and markets.

In light of these developments, the GUAM members would profit from a harmonization of their trade, investment, customs and transport regimes – all of which are suggested in the strategic document outlining the objectives of Georgia’s GUAM presidency. Indeed, Ukrainian Prime Minister Vladimir Groysman has voiced hopes that the GUAM Free Trade Area could be implemented already in the course of 2017.

This might be an attractive GUAM feature also for Azerbaijan, the only state of the South Caucasus that is not a member in any of the regional free trade regimes sponsored by either the EU (the Deep and Comprehensive Free Trade Area segment of its association agenda with Moldova, Georgia, and Ukraine) or Russia (the Eurasian Economic Community including, inter alia, Azerbaijan’s neighbor and nemesis Armenia). Based on its importance as a source of hydrocarbon resources for the European market, Baku has launched negotiations on a strategic partnership agreement with the EU to replace its membership in the Eastern Partnership. At the same time, Azerbaijan has to face up to the reality of continued low oil prices and the eventual depletion of its own Caspian oil and gas fields.

In the long term, the government in Baku will thus have to increasingly focus on economic diversification and attraction of foreign direct investment into the non-oil and gas sector, while at the same time leveraging its position as a transit country for hydrocarbon resources from producer countries across the Caspian Sea (Turkmenistan, Kazakhstan) and, potentially, Iran. While Azerbaijan has consolidated its authoritarian regime internally and therefore remains less than lukewarm on any democratization agenda stipulated by GUAM, its interest in economic cooperation still remains.

In sum, current conditions look largely favorable for a revival of GUAM as a format for cooperation and integration in Eastern Europe and the South Caucasus. In this perspective, ongoing dynamics, such as the emergence of new economic actors simultaneous with sustained – if decreased – regional involvement of the EU and U.S., suggest the Georgian presidency’s strategy of banking on trade and transport cooperation are sound. Recent history, however, as illustrated by the ups and downs of Georgian-Ukrainian relations over the past fifteen years, proves that these favorable conditions may be subject to short-term change. This raises the question whether an organization based purely on transactional interests – as opposed to any transformation alvalues – will in the longer term be able to withstand the strong and shifting winds buffeting the regional balance of political and economic power.

Featured image: Ukrainian President Petro Poroshenko with Georgian Prime Minister Giorgi Kvirikashvili, Moldovan Prime Minister Pavel Filip, and Deputy Prime Minister of Azerbaijan Ismet Abasov at the GUAM summit in Kiev, March 27, 2017. Photo courtesy of the Office of the President of Ukraine.


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