South Caucasus

– in Westminster Hall at 1:28 pm on 25th October 2005.

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Photo of Angus Robertson Angus Robertson Shadow SNP Spokesperson (Defence), Shadow SNP Spokesperson (Foreign and Commonwealth Office) 1:28 pm, 25th October 2005

Believe it or not, this is the first parliamentary debate held at Westminster about the south Caucasus. I have no doubt that there have been debates that have covered individual republics in the wider region, but this is the first debate that has been held on the south Caucasus in its own right. I declare an interest in that I was the founder of the all-party group on the south Caucasus during the last Parliament. I am also closely associated with conflict resolution efforts in the region. Those efforts appear in the House Register of Members' Interests.

I am sure that the Minister agrees that it is vital to learn the lesson of history. As an example, I cite the infamous quote from a former UK Prime Minister, who talked about a conflict

"in a far away country between people of whom we know nothing."

It is funny how perceptions shift. Sixty short years later, the country in question—the Czech Republic—is now at the heart of the European Union and does not seem far away from us, and we are quite rightly debating Turkey's possible membership of the European Union. All that means that within a few short years the European Union could be bordering the region containing Armenia, Azerbaijan and Georgia, the three republics that make up the south Caucasus.

Increasingly, that region is not one far away, about which we know nothing. It is increasingly well known in western Europe, and in Scotland the Minister and I share in a growing awareness of those three republics. In cultural terms, we all know of Armenia as the world's oldest Christian country, but it is also famed through the work of composer Aram Katchachurian, whose music is regularly heard during the Edinburgh festival. People from the republics are also well known in the sporting arena; for example, the Georgian footballers Shota Arveladze and Zurab Khizanishvili, who play in the Scottish premier league, to name but two.

In the world of business and trade, Scots regularly commute to Baku. When I fly down from Aberdeen, often the biggest single group at the airport waiting for a connecting flight is flying to Azerbaijan. We have increasing links with that part of the world.

There are other reasons why we know the region: the south Caucasus is going through a difficult transition, as everyone would concede, from communism to democracy. It is important to understand how difficult some of that transition has been and how current it is. Four large-scale violent conflicts occurred in the region during and following the collapse of the Soviet Union in the early 1990s, resulting in a situation of neither peace nor war, leaving populations throughout the region with an uncertain future and undermining political reform and economic development.

The political context across the south Caucasus is volatile, to say the least. In autumn 2003 came the beginning of a series of dramatic political events that have changed the region and the conflict contexts. The death of President Heydar Aliyev in Azerbaijan and the rose revolution in Georgia, which resulted in the departure of Eduard Shevardnadze after nearly 30 years of rule, changed political relationships and redefined assumptions across the region.

The new Georgian President, with a broad political mandate, has launched a massive anti-corruption campaign and made the re-establishment of Georgian control over Abkhazia and south Ossetia a test of the new regime. In Abkhazia, disputes over the results of the de facto presidential elections in October 2004 demonstrated that political processes in that disputed territory are much less predictable than had been previously assumed in the region and by the international community, and that both civil society and some de facto institutions have a real capacity to influence events.

In summer 2004, hostilities resumed between Georgia and south Ossetia, seriously undermining the formal settlement process and harming unofficial relationships built up over the past 10 years between the sides. Elsewhere in the south Caucasus, there is fraught rhetoric but little political development in the frozen conflict between Armenians and Azerbaijanis over the territory of Nagorno Karabakh, and economic insecurity is widespread.

The severe economic situation in the south Caucasus is both a cause and a symptom of its conflicts. Oil extraction in Azerbaijan and the Baku-Tbilisi-Ceyhan pipeline have an important geopolitical influence on the region and thus on its conflicts. The pipeline is important for global oil supply and for narrow interests, given that BP has a 30 per cent. stake in the $3.6 billion project.

We all know that the substantial transit fees will accrue to Georgia and Turkey. They are expected to produce for Georgia about 1.5 per cent. of national income; Azerbaijan expects its own economy to grow by a staggering 18 per cent. as a result of the pipeline. All that could help the region progress to economic stability and success—we hope that it will—or it could bankroll unilateral efforts to right perceived wrongs and lead to massive destabilisation in the region.

That is what is happening specifically in the three republics, but there is a wider geopolitical context. The south Caucasus is the meeting place of Russia, Iran and Turkey, which all have substantial interests in the region. The three large neighbours have also been the subject of considerable diplomatic efforts by the UK Government for one reason or another. That is why is it has been entirely right and proper for the Foreign Office to show the appropriate interest in the region and to play a constructive role, and I think that it has done so. That role has been most keenly felt through the efforts of non-governmental organisations, which have been able to work across disputed boundaries and borders. That would be impossible for state actors.

I will briefly discuss the role of NGOs. What is beyond doubt is that they—not states or members of the Organisation for Security and Co-operation in Europe—have been at the forefront of conciliation, confidence building and peace-supporting efforts. That is not a surprise when one considers that state actors and multilateral organisations such as the OSCE have found it difficult to make significant progress through the likes of the Minsk process to resolve vexed questions in the region.

It is also particularly challenging to work as a Government in disputed regions, because of issues of recognition and legitimacy, but it is a task that many NGOs have been doing with great skill. They have made significant progress on the ground. At present, quite a number of UK-based NGOs are playing a vital role in the development of the south Caucasus. I have seen many of them in action on the ground and I have heard the feedback from local partners and programme participants. They make a big difference.

The project that I know best is the south Caucasus parliamentary initiative, which regularly brings together parliamentarians from Armenia, Azerbaijan and Georgia. For those who understand the dynamics of the region, that fact alone is recognised as a major achievement. I have seen the initiative in action and it is extremely impressive. Three years ago, parliamentarians from the three republics met in my constituency, Moray, in the first peace and reconciliation talks of modern times to be held in Scotland. Since then, I have met the participants in their home republics and, a few months ago at a SCPI meeting in Dublin.

That is the only working forum in the region which brings together decision makers to build trust, find ways forward, reduce tension and, hopefully, to move forward to lasting solutions. It is also a project, like others in the south Caucasus, which has been funded by the UK Government. That support has been significant; it has been constructive and it is money well spent.

However, and here is the rub, over recent months it has become apparent that funding is being squeezed: the UK government are reducing their commitment to peace and reconciliation work in the south Caucasus and elsewhere. Those cuts are happening not because the projects have been completed, because conflict has come to an end or because democracy is on a firm footing, but because the mire of Iraq is seeing resources switched and budgets elsewhere cut.

According to the House of Commons Library, funding from the global conflict prevention pool to the area including the south Caucasus has been halved during the last year from £12.5 million to £6.5 million. Just to remind the Minister, that funding cut decision was made just after a revolution, political violence, a military stand-off between two states and the ongoing threat of full-scale wars owing to frozen conflicts.

There are also significant cuts to the strategy budget allocations of the global conflict prevention pool. They relate to the following: the Balkans; Belize and Guatemala; central and eastern Europe; India, Pakistan and Kashmir; Indonesia and East Timor; middle and north Africa; Nepal; Sri Lanka; and the United Nations. Even Iraq project funding through this pool has been depleted. Even if the case were being made that things are improving in the south Caucasus, surely they are not in all those other parts of the world as well.

According the data provided by the Library, £21 million has been cut from the fund, which amounts to a 20 per cent. drop. I asked the Library to confirm when the Government announced those cuts, and I also asked the whereabouts of the updated glossy brochure that extols the virtues of the conflict prevention strategy. We had that before, when things were going full steam ahead. It was a significant document that outlined all the areas in the world where a difference was being made— something that I and my party, and Members in all parts of the House, support. However, there has not been an update, unsurprisingly perhaps. There has not been an announcement to the House, in either written or oral form, about those developments. There is no updated strategy, or an explanation of reduced commitments.

Instead of focusing on conflict prevention, it would appear that the UK Government are shifting resources to a conflict they started in Iraq, and important projects in the world which are genuinely dealing with conflict prevention are being left to suffer. We should be under no illusion about the impact of the cuts. As an NGO official said to me,

"this will have negative implications for the democratic transformations in the region. Work cannot be carried out with gaps in time; there should be continuity and an ongoing flow of activities that build on past strengths and existing experiences".

Another official mentioned having

"to tap core support and cut back in projects" and said that there are

"obviously other pressures on government spending, but nothing has been made clear as to why the money is gone".

Why is this happening? Is it the Foreign and Commonwealth Office assessment that the south Caucasus will be less volatile in the years ahead? Is this happening because the UK is downgrading its engagement in the region, despite the key direct economic and political interests that exist there, as well as the strategic connections with the wider region and neighbours? Or is it happening simply because the costs of Iraq—and, perhaps, of Afghanistan as well—are sucking resources away?

Who is responsible for this? Page 25, paragraph 64 of a recent report with the FCO stamp on it, entitled "Evaluation of the Conflict Prevention Pools: Portfolio Review", states:

"The central unifying element in the CPPs is at Cabinet level, where a sub-committee on Conflict Prevention sets broad priorities, approves all spending in gross amounts . . . For matters to do with the GCPP"— the fund that covers the south Caucasus—

"the Sub-Committee . . . is chaired by the Secretary for State for Foreign and Commonwealth Affairs."

Paragraph 65 states:

"Other members of the Sub-Committee . . . include Ministers or junior Ministers from the portfolios concerned: FCO, MOD, DFID and HMT"— the Treasury.

Please can the Minister explain the decision-making dynamics? Are these cuts FCO led or Treasury led? Who made the decision? Was the Foreign Secretary in the chair at that meeting, or was it another Minister? What impact assessment has been made of reduced GCPP spending in the south Caucasus—and in other regions, for that matter? Can the Minister confirm that many NGO projects will have to be wound down or discontinued? Are plans in place to secure bridging finance or other funding sources? What will future GCPP funding be for the south Caucasus? How much will the former Soviet Union budget line be in 2006–07? Why has this matter not been explained fully to the House? The Minister now has an opportunity to do that.

The easiest solution to many of these problems would be to restore funding levels. However, I concede that there are others, and we should look at them, too. For example, the European Union has an emerging new neighbourhood policy which could help to provide an economic and political framework for regional co-operation, but, as everyone in the know knows, its timetable is slipping. Therefore, there is a cut in funding from the UK, and the EU timetable is slipping away, so there will be a problematic gap. What will the FCO do to support new funding partners? In accepting that they are downgrading UK support, will Ministers take up this matter with the Commission and other EU member states to try to secure resources to plug the gap?

In conclusion, the GCPP and NGOs have been a force for good in recent years. I can testify to their work, and I commend the Foreign Office for playing an active and positive role. However, it is deeply ironic that the UK Government are raiding the conflict resolution budgets to fund the gaps in Iraq—and, perhaps, in Afghanistan as well. The south Caucasus is a region that I know better than the others that will be affected by the cuts. I can tell the Minister that the effects will be significant and that the cuts will cause problems for conciliation and peace-building efforts.

The cuts are the result of nothing more than bean counting and penny pinching. When we consider existing and pending Government spending commitments, the cuts are shown in a bad light. This Parliament is expected to vote on a projected replacement cost for the Trident nuclear missile programme of £20 billion. I have been discussing a shortfall of £20 million in the global conflict prevention pool, cast against £20 billion. The priorities are wrong.

I hope that the Minister has listened closely. He may not agree with everything that I said, but I hope that he will fight the corner of NGOs that have been doing such an important job, and I hope that budget lines for the next financial year will be restored to the appropriate level.

Photo of Douglas Alexander Douglas Alexander Minister of State (Europe) 1:45 pm, 25th October 2005

I congratulate Angus Robertson on securing this debate. As the founder of the all-party group on the south Caucasus, he has a particular interest in the region. Notwithstanding what I would charge was a somewhat partial account of the events under discussion, I pay tribute to his efforts in recent years on behalf of the south Caucasus, which is of considerable strategic importance for international security and stability, bordering as it does on Russia, Iran and Turkey.

Let me begin by placing an emphasis on the European Union, which the hon. Gentleman came to only at the end of his speech. To have dealt with it earlier might have got in the way of some of the points that he was keen to make at the beginning of his remarks.

As part of the near neighbourhood of the European Union, the three countries in the region—Armenia, Azerbaijan and Georgia—have been invited to enter the European neighbourhood policy. The ENP is a key instrument for the EU in developing relationships with our nearest neighbours on the basis of shared common values and effective implementation of political, economic and institutional reforms. The ENP action plans will offer the three countries a closer relationship with the EU in return for progress on internal reform. They will also encourage greater regional and cross-border co-operation and, most importantly in the context of this debate, progress on conflict prevention and resolution.

The UK and European interests in the region include the security of energy supplies. The Caspian basin resources are a vital source of supply for western markets. BP's largest overseas investment, some $22 billion, is in Azerbaijan.

The south Caucasus states have undergone considerable reform during the 15 years since the turbulent collapse of the Soviet Union, but they still face major challenges. As we heard, the "frozen conflicts" over the Georgian separatist regions of Abkhazia and south Ossetia, and between Armenia and Azerbaijan over Nagorno Karabakh are a serious impediment to regional stability and economic development.

I remind the House that the global conflict prevention pool, which featured prominently in the hon. Gentleman's remarks, was established precisely to help countries such as Georgia, Armenia and Azerbaijan to resolve the conflicts that are holding back their development. GCPP funds are invested in projects that we hope will help to prevent conflict and to promote peace and stability by improving governance, expanding democracy and increasing regional and economic co-operation.

The GCPP was set up in 2001 to improve the co-ordination and effectiveness of the Government's international conflict prevention work. Teams from the three Departments that jointly fund the pool—the Foreign and Commonwealth Office, the Ministry of Defence and the Department for International Development—closely work together to achieve a more strategic and cost-effective approach to conflict prevention.

The GCPP has a unique funding arrangement specifically voted by Parliament. For 2005–06, the figure for the global pool is £74 million, which is shared among 15 regional and thematic strategies including Iraq, Afghanistan and Afghan counter-narcotics. The Russia and Commonwealth of Independent States GCPP strategy received £6.5 million, or almost 9 per cent. of the total GCPP budget, this financial year. The south Caucasus region is a top priority of the strategy.

One of the initiatives funded by the Russia-CIS strategy was the appointment in 2002 of Sir Brian Fall, a former British ambassador to Moscow, as the UK special representative to Georgia. I met that gentleman only recently. In 2003, his remit was extended to cover the whole of the south Caucasus. I assure the House that the region is of continuing interest and importance to the Foreign and Commonwealth Office and the British Government.

Sir Brian's work in the region gives the Government added diplomatic weight in international attempts to resolve the region's "frozen conflicts". He is the UK's senior representative in the UN Secretary-General's Group of Friends, which is working with the Government of Georgia and Abkhaz leaders to try to resolve the Abkhazia dispute.

"The Friends", as they are called, met for a fourth round of talks in Geneva earlier this year where some progress was made. They restated their commitment to finding a peaceful settlement to the dispute. They also welcomed an offer of a UN conference on economic confidence-building measures, and agreed in principle on a strategic paper presented by the United Nations High Commissioner for Refugees on the problem of internally displaced people in the region.

The situation in south Ossetia is more volatile. As I am sure the hon. Gentleman is aware, in the summer of 2004, some 30 to 40 people were killed in an outbreak of hostilities in the region. South Ossetia remains tense following recent kidnappings, shootings and general lawlessness, which included the shelling of a south Ossetian village earlier this month. We are monitoring the situation closely through our embassies and through the regular dialogue we and Sir Brian Fall have with the parties to the dispute.

I am, however, particularly encouraged by signs that the Georgia-Russia relationship is improving. The agreement earlier this year on Russian base withdrawal from Georgian territory was a positive step. I discussed the conflicts with the then Foreign Minister, Mrs. Zourabishvili, in London on 11 October, and I encouraged the Georgian Government to continue to seek a peaceful resolution to the conflicts in south Ossetia and Abkhazia.

I mentioned the ongoing conflict over Nagorno Karabakh. The UK strongly supports the work of the Organisation for Security and Co-operation in Europe's Minsk group, which was mentioned in the hon. Gentleman's contribution, and the framework for facilitating negotiations on Nagorno Karabakh. Although not a member of the group, Sir Brian Fall remains in close contact with the co-chairmen from the United States, France and Russia. There are clear signs of progress there, too.

The Armenian and Azerbaijani Foreign Ministers have met on several occasions this year and their Presidents met in Warsaw in May and again at the CIS summit in Kazan, Russia in August. The Azerbaijani Foreign Minister, Mr. Mammadyarov, was optimistic about the possibility of progress when I discussed it with him in September in the margins of the UN General Assembly meeting in New York. Encouraging greater democracy is vital to long-term efforts to promote peace and stability in conflict-ridden countries.

Through the GCPP, we are funding an OSCE election observation mission for the Azerbaijan parliamentary elections on 6 November. The UK is providing 50 short-term and three long-term observers, making us one of the largest contributors to the mission. The GCPP is also supporting other south Caucasus OSCE missions and leading NGOs that are working to resolve conflict and to build trust and understanding between divided communities in the region. It is important to place those observations on record to balance other observations that we heard recently.

The hon. Gentleman specifically raised the SCPI— "skippy", as it is commonly pronounced. That project was launched by British NGO LINKS—the London Information Network on Conflicts and State Building—in 2001. The project forms part of a wider regional project called the consortium initiative. The consortium initiative is a coalition of four NGOs and it has been funded from the Russia-CIS GCPP strategy over three years to the tune of £2 million.

SCPI provides a framework for dialogue, contacts, exchange of views and joint analysis between the Parliaments of the three south Caucasus countries. The objective of the project is to improve prospects for a permanent settlement to the Nagorno Karabakh conflict by encouraging dialogue at political, parliamentary, media and grass-roots levels.

I am grateful to the hon. Gentleman for his important and excellent work in chairing the first half-yearly plenary assembly of SCPI in Scotland at the end of 2003, and for his active involvement and interest in the initiative subsequently. As he knows, the GCPP funding arrangement for SCPI ended in June of this year. However, I am glad to say that the UK Government have contributed a further £65,000 from other budgets to enable the SCPI project to continue to the end of this year. That should be sufficient to keep the secretariat of SCPI open, and to hold a plenary session in the south Caucasus at the end of the year. The work of SCPI has been greatly valued not only by the British Government, but by other bilateral and multilateral donors, including the EU.

The British Government hope that, from next year, other donors will step in to support the initiative and that the south Caucasus Governments themselves will start to take more ownership of the initiative. We have been lobbying the European Commission to provide financial support for SCPI. It was also at the United Kingdom's instigation that the first drafts of the south Caucasus country action plans made specific reference to the importance of co-operation within the parliamentary sphere, in the context of enhanced regional co-operation.

The Government are keen that SCPI should continue for as long as there is a need. I am pleased that the United Kingdom has been able to support the successful initiative in its first three years. As for the hon. Gentleman's specific queries about funding, a distinction must be drawn between the sources of funding for a specific initiative and who should rightfully bear the burden of responsibility for continuing that funding in future, and broader questions about the British Government's commitment to the south Caucasus. It is right and reasonable that we should look to the European Commission and to the Governments of the nations in question to take responsibility after what has rightfully been acknowledged as a successful British initiative.

Photo of Angus Robertson Angus Robertson Shadow SNP Spokesperson (Defence), Shadow SNP Spokesperson (Foreign and Commonwealth Office)

May I have the chance to confirm some facts? Funding for the former Soviet Union budget line has been cut by 50 per cent. last year to this year and funding in the global conflict prevention pool strategy budget allocation has been cut by 20 per cent. last year to this year. Where is that money going?

Photo of Douglas Alexander Douglas Alexander Minister of State (Europe)

It is the case that we assess where the global conflict prevention fund resources should be allocated, according to the circumstances at the time. It seems a curious argument to say that, because funding was previously allocated to one area, that should be the base line for funding for all time and in perpetuity. If that were the hon. Gentleman's approach to public expenditure, I would be intrigued because it would not sit comfortably with the claim of the Scottish National party in other circumstances that different priorities should secure funding.

I have some understanding of the hon. Gentleman's argument, not least on the basis of his personal interest in the south Caucasus, but it is neither the right nor responsible approach of the Government to say that, in all circumstances, when a level of allocation of funding is agreed, it should continue for all time. It is the case that there have been changes in light of the continuing pressures facing the Foreign Office, whether in relation to Afghanistan, Iraq or other conflicts in Africa. It therefore ill behoves others who criticise us for our judgments not to recognise that the responsible course is to allocate resources on the basis of where we judge they can be most effectively deployed.

If the hon. Gentleman is maintaining that the benchmark in perpetuity should be the level of funding that was previously allocated, I shall give him the opportunity to confirm that. However, does he accept my argument that we should be able to review where resources, which will necessarily always be limited depending on the broader fiscal pressures that the Government face, should be allocated on the basis of changing circumstances?

Photo of Angus Robertson Angus Robertson Shadow SNP Spokesperson (Defence), Shadow SNP Spokesperson (Foreign and Commonwealth Office)

Is the Minister confirming that the 50 per cent. cut from the former Soviet Union budget line has gone to Iraq, Afghanistan and Africa?

Photo of Douglas Alexander Douglas Alexander Minister of State (Europe)

I note with interest that the hon. Gentleman has resisted answering my question. What does he recommend? The fundamental question is whether the Foreign Office should retain the right to allocate resources according to what it judges to be pressing priorities depending on the inherently changing nature of foreign affairs. Given the hon. Gentleman's strong and understandable attachment to the south Caucasus, does he believe that any requirement on the part of the Government to review how expenditure is allocated should give way to an historic commitment to previous budget lines? I disagree with him on the basis of that approach.

We hope and wish that other EU partners will now come in behind the efforts being made by the British Government to enable the Governments and Parliaments of the three south Caucasus countries to build on what has been achieved. However, that is the responsibility not solely of the British Government, as I am sure that the hon. Gentleman's deliberations with the representatives of those countries has reflected, but of the international community and the countries themselves.

Question put and agreed to.

Adjourned accordingly at one minute to Two o'clock.

I

Isn't it an aim of the UK presidency of the EU to find a global solution to energy? A European solution, in the form of a common energy policy, would be a start. At present we seem obliged to spend public money, unilaterally, to ensure energy supplies from the Caspian reach the global market. No wonder the Minister shows signs of exasperation.

Submitted by I J