Economic cooperation acts as a significant driver for regional integration. Strengthening of the economic ties between the three Caucasus states will further deepen mutual trust, supporting the improvement of political relations.
In order to achieve stable economic development and further interconnectedness in the South Caucasus region, within the framework of the Peaceful Neighbourhood Initiative, it is important to: revive existing economic and people-to-people relations among the three South Caucasus countries; ensure the security and competitive nature of energy and transport corridors traversing the region; and encourage multilateral cooperation among said states within the framework of the Eastern Partnership.
Revival of Existing Economic and People-to-People Relations
Naturally, economic security acts as a significant component for overall security in the South Caucasus. Bilateral relations between Georgia and Armenia, and Georgia and Azerbaijan are already close, however, revival of overall relations would boost economic development in the region. It is noteworthy that after a decade-long pause, in 2021, Georgia reinstated meetings as part of the Intergovernmental Economic Commissions with Armenia and Azerbaijan, which would encourage the growth of economic potential in the wider region. Nevertheless, in order to achieve long-term stability, it is necessary to rebuild a political trust between Armenia and Azerbaijan, which would act as a solid basis for the revival of economic ties.
Elevation of people-to-people relations also bears pivotal significance. To that end, simplifying the border-crossing regime among the three South Caucasus states is desirable, providing additional impetus to the strengthening of people-to-people relations, thus, further connecting the region economically. Simultaneously, working on the projects of common interest for Georgian, Armenian, and Azerbaijani societies will facilitate the accumulation of cooperative experiences across various domains, which, in turn, could serve as a solid basis for the execution of larger scale projects in the future.
Security and Attractiveness of Energy and Transport Corridors in the South Caucasus
Strengthening of transit functions of the South Caucasus region, ensuring the security of existing energy and transport corridors, and maintaining their attractiveness, act as a necessary precondition for the long-term stability of the region. Maintenance of security of the aforementioned energy and transport corridors requires the creation of necessary conditions for conflict-resolution and trust-building, which can be achieved through active engagement of international actors and through utilizing multilateral diplomatic formats.
In order to maintain the attractiveness of regional projects it is important to develop projects that are devoid of expansionist geopolitical agendas. The existence of political trust towards all parties involved in said projects acts a necessary precondition for the rise in competitiveness of the region. Another factor concerns the availability of the necessary economic and diplomatic resources for the implementation of the large-scale infrastructure projects. In the modern globalized world, prosperity of the South Caucasus states is closely connected to the Western-led international order, which rests upon the principles of free trade and respect of international law. Active presence and engagement of the West in the South Caucasus acts as a foundation for long-term stability and prosperity for the region.
Cooperation within the Eastern Partnership Format
The EU’s Eastern Partnership Initiative plays a significant role in the development of the South Caucasus. Georgia’s political aspirations in relation to the EU differ from those of its neighbouring Armenia and Azerbaijan, with Tbilisi officially submitting the application for accession into the organization on March 3rd of 2022 and receiving the European Perspective, however this does not hinder the development of the economic and social agenda of the Eastern Partnership Initiative.
By the 10th anniversary of the inauguration of the Eastern Partnership Initiative, the region ranked 10th among EU’s trading partners, with the EU occupying the number one position for Georgia and Azerbaijan in terms of foreign trade; the EU was also among the primary trading partners for Armenia. On the 2021 Eastern Partnership summit, the EU came up with an economic and investment plan, aiming at achieving social and economic reconstruction in the post-Pandemic period and ensuring long-term economic resilience, as well as developing transport infrastructure in the region. The three states of the South Caucasus must translate the benefits received from their interaction with the EU into the well-being of their societies, which would act as a good basis for further regional interconnectedness.
Further engagement of the EU in the region, which is a trusted geopolitical and economic actor, would support the attraction of investments, including through the participation of international financial institutions. Increased investment and implementation of large-scale projects will, in turn, improve economic competitiveness of the region overall, which could act as a solid basis for long-term stability and prosperity in the South Caucasus.