Does Climate Change Matter in the South Caucasus?

The Environment and Security Initiative confirmed that climate change has already negatively impacted the South Caucasus in its 2011 study, “Regional Climate Change Impact Study for the Caucasus Region ”. The issue of climate change was recently given media coverage when a group of approximately 40 people gathered at Turtle Lake in Tbilisi on August 5th to protest the destruction of trees and shrubs in order to construct a new restaurant complex. Their aim was to protect the plants in order to help reduce pollution. This post assesses knowledge of and attitudes about climate change in the South Caucasus. Data from the 2011 Life in Transition survey shows that the general concern for issues related to climate change is higher in Azerbaijan with Georgia being very close and Armenia somewhat behind. However, there is little understanding about what climate change is in all three countries. 

The Life in Transition survey shows that the majority of people in the South Caucasus have a certain degree of concern about climate change. Measured on a scale from 1 (not concerned) to 5 (extremely concerned), the data shows a high degree of indifference in Armenia (33%). Six out of 10 Azerbaijanis express concern (61%), followed by 59% of Georgians, and fewer Armenians (42%). 

However, when asked to assign a relative value to climate change by choosing from a list of serious problems currently facing the world, respondent’s opinions differ from what was expressed in the figure above. 73% of Azerbaijanis view climate change as a very serious problem, followed by Armenians (61%) and Georgians (45%). The answers to the next question, “Which is the most important?”, are consistent; 17% of Azerbaijanis, 13% of Armenians and 7% of Georgians view climate change as the most important issue.

 In your opinion, which of the following do you consider to be a very serious problem currently facing the world? 

And which is the most important?

(Life in transition survey II, 2011)

In order to measure general awareness of climate change, it is important to assess how people feel they understand the causes of this phenomenon. Throughout the region, the majority of people feel they are “not very well informed” or “not at all informed” about the issue. Again, Azerbaijanis show the highest propensity with 48% of them feeling well informed about the topic, Armenians being second (35%) and Georgian third (23%). Thus, the lack of concern may be due to a lack of knowledge.

Finally, respondents were asked if they had personally taken actions aimed at helping to fight climate change. Very few people said they had done so—2% in Armenia, 2.5% in Azerbaijan and 1.6% in Georgia. 

For more information on climate change and the South Caucasus in general, visit the Life in Transition data on the European Bank for Reconstruction and Development’s website.

Levels of trust in the banks in Georgia: Changes over the past two years

Banking is one of the fastest-growing sectors of the Georgian economy, a point which was underlined in a 2009 report from the Ministry of Economic Development of Georgia. But does this development mean that society views banks as trustworthy partners for households (HH) in Georgia?

In fact, from 2008 to 2009, the overall level of trust in banks has decreased in Georgia, especially for the HHs who say they have savings and for those who say they have debts. This could in part be due to the global financial crisis which, according to the European Bank for Reconstruction and Development’s (EBRD) 2010 country strategy report, significantly affected the Georgian economy. The crisis revealed the financial sector’s weaknesses around the world and led to widespread doubt concerning the reliability of banks.

Households & Savings

For the small number of HHs who say they have savings (9 percent in 2008, 6 percent in 2009), the level of trust in banks has significantly decreased. According to the 2008 Caucasus Barometer (CB, previously referred to as the “Data Initiative”), combining the “fully trust” and “somewhat trust” categories shows that 60 percent of HHs with savings said they trusted banks. In 2009, however, this figure fell to 49 percent. As a place to put one’s money and keep it safe, apparently, fewer people view banks in a positive light.

Even for HHs without savings – the majority of the respondents – the level of trust in banks has fallen: in 2008, 53 percent of them had said that they trusted banks, whereas only 42 percent said the same in 2009 (see Figure 1). At the same time, the number of those saying specifically they distrust banks remained the same, hinting at a high degree of uncertainty with regard to banks among the population.



Households & Debts

The level of trust in banks among HHs who reported that they have debts saw an even larger drop. Although these could be debts either to banks or to private persons, without interest, this drop could be linked to the fact that it has become increasingly difficult for HHs to take out loans to help alleviate any debts they have. Overall, 43 percent (2008) and 42 percent (2009) of the HHs claimed to be indebted. Of these HHs, 59 percent said that they trusted banks in 2008, though only 45 percent claimed the same in 2009.

On the other hand, the level of trust remained broadly similar in those HHs who say they do not have debts. Forty-nine percent of them had said that they trusted banks in 2008, while 42 percent said the same in 2009.




Conclusion

The 2008 Caucasus Barometer was carried out from the second half of October to the middle of November, and these figures offer a snapshot of how the global financial crisis may have taken its toll on HHs’ trust in banks in Georgia. Still, there are certainly other factors which play a role, and further research and commentary are needed. We invite you to access the 2008 CB dataset to make your own comparisons here.

Life in Transition Results | Region Comparison

The EBRD Life in Transition Survey, as we at the CRRC blog previously mentioned, is available for download. The survey, measuring attitudes and values amongst 28 transitional countries divided in to three sub-regions, is one of the most extensive and impressive survey efforts conducted and encompasses all the post-socialist countries (plus Turkey). The three sub-regions are as following:

- Central Eastern Europe and the Baltic States (CEB)

- South-Eastern Europe (SEE)

- The Commonwealth of Independent States and Mongolia (CIS, which includes the South Caucasus)

The CRRC blog has often presented cross-comparisons of the Caucasian countries on a wide variety of subjects based on data from our own Data Initiative (DI). The EBRD report, sharing some of the variables from our DI, allows for a broader comparison of the attitudes, values and material standards between the former socialist countries. While the survey was conducted in 2006/2007, much of the data remains relevant.

Some noteworthy comparative data:

-The general agreement between the three sub-regions is that the level of trust between people has declined after the fall of communism. The CIS region had, according to 72 % of its respondents, societies where people could be trusted before 1989. Today, only 34 % shares this assertion. But, in comparison to CEB (31%) and SEE (25 %), the CIS sticks out as the region where people's trust in other individuals is the highest.

- 40 % in the CIS and CEB agree that the economic situation is better today than before 1989. The SEE, on the other hand, is showing a severely pessimistic stance in this regard since only 20 % of its respondents agreed to this assertion.

- According to the survey, corruption has thrived with the transition. Only 19 % in the CIS thinks that corruption has been reduced in their country since 1989. For CEB only 12 %, and in SEE only 9 % believe that corruption has reduced since 1989.

- Also the view on the political situation is rather gloomy in all three regions. As little as 25 % believe that the political situation is better today than before 1989 in the SEE region. The CIS proves more optimistic with 40 % of its respondents agreeing to this assertion.

- However, despite the negative responses on contemporary trust in society, corruption, politics and economics, the three sub-regions show a marked preference for democracy and market economy. This could be partly explained by the high optimism that the respondents in the three sub-regions hold about the future. The CIS, holding the most optimistic respondents, had 60 % of its respondents agreeing to the claim that children who are born today will have a better life than their own generation. (Or is maybe an issue that people are less hesitant to complain in CEB and SEE?)

Preferences for political and economic systems

This is just a small pick from the report Life in Transition – A Survey of People’s Experiences and Attitudes from the EBRD. The full report includes data on topics, such as, Material Well-Being, Views on Transition, Values/Priorities and Corruption/Trust, separately for each of the transitional countries. A fantastic resource for researchers!

Follow this link to access the EBRD report, its questionnaires and data.

Caucasus Currencies against the US Dollar

How have Caucasus currencies developed against the dollar? This question is not entirely trivial, since significant parts of the local economy are dollarised. Some colleagues, for example, have their salaries denominated in dollars.


As the above chart shows, the Armenian currency appreciated quite sharply against the dollar. The other currencies also appreciated, but remained a little more stable. How to interpret this? We turn to EBRD's 2008 Transition Report.

With Azerbaijan, the report tells us that in "an attempt to slow imported inflation and reduce the impact of the weaker dollar on domestic inflation, the NBA [National Bank of Azerbaijan] switched the targeted currency from the US dollar (effective peg) to a currency basket that currently comprises 70% US dollars and 30% euros." (p. 101)

Georgia, the Transition Report notes, has also pegged and defended its currency, trying to keep it stable; as a result "international reserves fell from 1.5 billion USD to 1.04 billion USD at end-September 2008" (p. 129). The EBRD report does not note anything on Armenian exchange rates, except for a continuing consumer price inflation of just below 12%, annually (August 2008).

Over the next few months, exchange rates are going to be one of the issues to watch. Large fluctuations could make life more difficult. In Azerbaijan, the EBRD suggests that "real exchange rate appreciation (through either nominal depreciation or higher inflation, or both) is inevitable. A tighter fiscal policy will be necessary to control inflation of the medium-term." (p. 101)

And on Georgia: "Given the still high level of dollarisation in the banking sector (more than 60% of lending is in foreign currency), a possible depreciation of the currency would affect the quality of banks' portfolios as the repayment capacity of unhedged corporates [sic] and retail clients weakens." (p. 128)

The Armenian economy seems less dollarised, but, as the report notes, its real estate boom was heavily dependent on remittances. As those decrease, one would expect some impact on the currency as well.

Remittances in the Caucasus: EBRD Releases Results

EBRD has released the results of its study on remittances in Azerbaijan, Georgia and Moldova. A
unique aspect of the study in Post-Soviet territory is that it not only surveys migrants in Georgia, Azerbaijan and Armenia, but it also carried out interviews with migrants themselves in Russia.
Many results, at first glance replicate findings from other studies as well as the Global Development Network study we are currently working on (stay tuned for more).

• Remittance money sent is generally only spent on basic needs.
• Migrants to Russia tend to be younger and male.
• Most migrants use the banking sector to transfer money (though many don’t have bank accounts) – but there is an extensive courier trade for remittances.
• Few migrants are interested in business or economic development in their countries of origin.
  

These findings have significant policy implications, not least because it shows that Caucasus migration varies from, say, Latin American patterns. Your comments on possible policy implications are welcome.

Bendixen & Associates, renowned for their polling of Latinos in the United States and the across Spanish-speaking world, carried out the study. Undoubtedly, B&A won the bid as the result of their expertise in carrying out remittance studies in Latin America. However, some facts of the study are curious and we would like to find out more than the scant information on methodology available online (particularly compared to EBRD’s amazingly documented Life in Transition Survey).

1. There is no mention of the sampling frame used in any of the countries. What strategy did B&A use to find households? Census lists are extremely outdated in both Georgia and Azerbaijan.
2. The report mentions a wide variety of interview languages employed for the study in Azerbaijan – including Tat and Farsi. B&A says, however, that all interviews were conducted in Georgian in Georgia. We find this surprising, since non-Russian speaking minorities in Azerbaijan are a very small percentage of the population and linguistically well integrated. This is not the case in Georgia were sizable ethnically homogeneous communities do not speak the titular language (Georgian). As the study specifically mentions the particular status of Armenian families in Samtskhe-Javekheti, it would be interesting to find out how the interviewers communicated with these households.
   
3. The Azerbaijan sample provides statistics based on regions. However, four regions out of eleven appear to be omitted. Guba-Khachmaz, which is in Northern Azerbaijan; Naxcivan, Azerbaijan’s exclave, which borders Turkey, and Kalbajar-Lachin and Dagliq Qarabag, which are both currently partially occupied – though there are regions under Azerbaijani control. If there was no sampling done in these regions, it should be stated, as the sample may then have certain biases in the national remitances picture. Naxcivan has distinct migration patterns with Turkey and many non-ethnic Azerbaijanis live in Guba-Khachmaz.
   
4. On the follow up study in Russia, B&A’s explanation of the sampling frame is also opaque. It states in one of the reports posted on the Internet that it got its information from the Federal State Statistics Service and that this information was updated. In another report, it claims that the data on households was gleaned from household surveys. Either way they report the following numbers: 903,000 Azerbaijanis, 344,000 Moldovans and 283,000 Georgians. There may be a confounding factors in these counterintutive numbers. Many migrants, as the study notes, are already citizens of Russia. Yet many of those who migrate to Russia and now have citizenship were ethnic Russians, who themselves may have been born in Russia and migrated to the Caucasus during Soviet times. Furthermore, many ethnic Armenians from Azerbaijan fled not to Armenia but to Russia after the Nagorno-Karabakh conflict. Many of these ethnic Russian and Armenian families may have fewer (or no) connections with their former country of residence and this may yield very different dynamics. Again, some information on this would also be interesting.

We hope that the EBRD will release more information soon and even the data. So stay tuned for further updates.