Norwegian Institute of International Affairs (NUPI) Fellowship Reports | Posted

Our colleagues at NUPI just held their concluding conference for their first year of fellowships. Fellows hail from both the South Caucasus and Central Asia. A training, including survey design, was held earlier this year in Almaty and met with rave reviews. The concluding conference was held here in Tbilisi. The level of participation and professionalism was excellent and shows that well thought out efforts can help to improve social science in the region. Of particular interest to me were the reports on public investment in Azerbaijan and Chinese migration in Kazakhstan.

More commentary from SSC will be forthcoming. For now, you can download many of the reports from here. You can also find out more about the project.

How does the Caucasus Fare? | Transparency International Releases Global Perceptions Index

The release of the 2007 TI Corruption Perceptions Index (CPI) reminds us of the huge impact which corruption has across the globe and especially how this impact is most often felt in poorer/transition countries. In the Caucasus there are still many problems to overcome and we will start by looking at the scores from across the region, then moving onto the methodological issues behind the CPI. So, what were the results?

Georgia has fared best with a score of 3.4 and is thus ranked 79th out of 179 countries. This is an increase from a score of 2.8 last year and 1.8 before the Rose Revolution. This places it above the 3.0 barrier below which countries are deemed to have a ‘rampant corruption problem’ and 4th in the list of countries of the Former Soviet Union (behind the three Baltic states). Neither Azerbaijan nor Armenia have been able to make any marked difference to their scores in the 2007 table with Azerbaijan rated at 2.1 (down from 2.4 in 2006) and Armenia at 3.0 (up from 2.9 in 2006). This puts them 13th and 5th in the region respectively (see below).

While the CPI provides a seemingly clear and easy point of reference for judging the levels of corruption in a country, certain points should be noted if it is to be used effectively. Firstly, it is tempting to compare rankings rather than scores from year to year. Such an approach is a mistake as rankings can change as countries are added/removed on a yearly basis (2007 saw the addition of 13 more countries) thus affecting all rankings. To a lesser extent we should also be wary of cross-comparing scores from year to year as sampling and methodology changes can affect the ways in which the scores are complied. For example Azerbaijan’s 0.3 point drop in its 2006 score is, according to TI's methodology report, the result of these technical issues.

Finally on the issue of comparisons it is import to note that the CPI does not allow us to identify any global improvements or downturns. This is because those who contribute to the CPI are primarily local experts and thus the information they provide is used to determine one countries performance in the context of others. As a result there exists no possibility to assess absolute improvements across the entire set of data. Now we are forewarned of the possible comparative problems, should we trust the individual country scores themselves?

The answer depends to a large extent on the country in question. In countries that the TI Methodology Report has identified as having a large confidence interval (meaning here the range in we have 80-90% confidence that the true value lies) it may be that the actual CPI score is markedly different from that recorded on the TI table. If we look at the graph of confidence intervals for Georgia, Armenia and Azerbaijan (See p12 of the TI Methodology Report) we can see that while both Armenia and Azerbaijan have relatively small intervals (0.4 and 0.5 respectively), Georgia has a much larger range of 1.4. This highlights the fact that the CPI table alone does not tell the whole story. As confidence intervals remain valid even when data is not a normal distribution, there is the chance that the TI score could be closer to 2.9 (the bottom end of the confidence interval and below the 3.0 level suggesting ‘rampant corruption’) or as high as 4.3 (putting it level with Kuwait and above countries such as Poland and Bulgaria). From this we can see the value of checking the confidence intervals of the countries we are interested in. In the case of Georgia it supports the view that one of the major problems in terms of corruption is uncertainty as to its scope. While in Armenia and Azerbaijan smaller confidence intervals at least suggest we have a relatively accurate picture of the situation in the country even if it is somewhat bleak.

Should all of these things put us off using the CPI?

No. With all of this in mind we should approach the CPI with increased caution but certainly no less respect. In terms of a consolidated point of reference from which to start comparisons on corruption it is invaluable. This is especially true when cross-referenced with other easy to use reports such as the Global Corruption Barometer (2006 available here).

Results from the Georgia IDP Housing Voucher Program

The Urban Institute, with the help of IPM, just finished a summative survey of their "Georgia IDP Voucher Program," funded by the US State Bureau of Population, Refugees and Migration. (N.B. a voucher is a promised subsidy towards the cost of purchasing a home). The Program aimed to resettle IDPs from Abkhazia and provide them with long-term housing solutions. The project was a piloted and carried out in the Kutaisi area. There seems to be some buy-in from the government to continue the program itself.

An interesting result related to family networks emerged from the presentation. The average income of those households who successfully converted their housing vouchers into the purchase of a residence is only 151 Lari a month and over 80% of successful households are unemployed. However, more than 45% of the successful group put in an average of $1,980 on top of the money (averaging $3,750) provided through the grant program to either purchase a more expensive residence or carry out capital improvements. Those who were unsuccessful had substantially lower incomes (much lower than the national IDP average).

SO, where's the money coming from? I asked the Chief of Party whether he thought IDPs who had successfully bought houses were lying about their income data (it's notoriously unreliable in this part of the world and rarely matches expenditure data). He said he had no information to prove or disprove this. However, the survey showed that most respondents claimed that they were receiving money either from relatives either abroad or inside Georgia.

Such a finding makes sense. IDPs will have strong networks outside and inside Georgia, since the population from Abkhazia was dispersed. This means that poor IDPs may often have a rich relative or close friend to ask for help. Additionally, property is often seen as a good investment in Georgia (since most Georgian view most other investments as too unstable) and networks may especially be willing to help with property.

On a small methodological note, one of the problems raised about the survey was that since the program had been run for two years, IDPs had been in their new housing for different amounts of time, yielding different results.

Please contact us for the PowerPoint presentation if you are interested.

International Survey of Think Tanks | Zilch in the Caucasus

The Foreign Policy Research Institute does an international survey of think tanks. Apparently they mailed 3,025 surveys to 126 countries. Of these, 817 responded in 96 countries.

So what is the think-tank landscape in the Caucasus according to this survey? Well, zero in Georgia, zero in Armenia, and Azerbaijan isn't even mentioned.

Sure, partially it is a matter of the periphery not making itself visible, but at the same time it does reflect that these institutions are still in their infancy, even if GFSIS and AIPRG already are around. At any rate, CRRC is planning to contribute to a broader project on reviewing the capacity to undertake public policy analysis in the region. As a first step, we want to do a baseline study, partially summarizing existing work. Second, we'd like to bring the few practitioners together, to see what worked, and what didn't. And this then is meant to yield a meaningful report. Stay tuned.

"The Economic Dynamics of the Countries of the South Caucasus"

Two years ago, Tigran Sargsyan, the Chairman of the Central Bank of Armenia, wrote a brief paper looking at various facets of the economies of the countries of the South Caucasus from four different vantage points including an evaluation of compliance with the Maastricht Treaty, the relationship between each country’s economic processes and the creation of human capital, macroeconomic effectiveness, and the actual sustainability of development.

According to Sargsyan, who confers comical catchphrases to each of the countries (Georgia is the “country of hope,” Azerbaijan the “country of raw resources,” and Armenia the “organized country”), Armenia’s cautious but easily adaptable monetary policies along with coordinated efforts between the Government and the Central Bank have led it to be the best performer in the region. Not a surprising conclusion given the author’s persuasion.

Interestingly, while the measures of the quality of life and wages in the Caucasus indicated similarities, social tensions are considerably more strained in Georgia, where the poverty indicator is much higher.

As for military and defense expenditures, in 2005 Georgia’s budget increased dramatically to $325 million, approximately 21% of the total expenditures of the budget and six percent of GDP. Azerbaijan’s is $650 million, more than quadruple of Armenia’s.

All told, the commonalities in each of the three countries of the South Caucasus are to be expected: high levels of corruption and a robust shadow economy, mutual distrust between the general population and the government, and a serious lack of transparency in industry and corporate governance. Azerbaijan’s escalating military expenditures as a precursor to NATO accession no doubt heighten the security dilemma with Armenia, which may have consequences for the conflict over Nagorno-Karabagh.

It will be interesting to see how Sargsyan reviews his own analysis. We will keep you updated.

Civil Society in Post-Soviet Armenia

The study and analysis of civil society and civic participation is a fundamental way of better understanding a region and its processes of development and democratization. Researcher Babken Babajanian has studied civil society and civic participation in post-Soviet Armenia. He uses these two terms interchangeably but they refer to the ways individuals and groups relate to one another, organize into collectives, and pursue their political and social objectives.

Babajanian asserts that not enough attention or credit has been given to the significance of the role of civil society and that its function is too often contextualized by its relationship to the processes of democratization. Scholars have generally referred to two types of civil society (not necessarily mutually exclusive): the neo-liberal model, and the communal model. In the late 1980s and then in the post-Soviet context, the Western perspective (and especially Western donors with civil society-related programs) defined civil society as a neo-liberal concept associated with modernity, the creation of the nation state, and the people-led promotion of liberal political values. Conversely, others assert a second form of civil society existed throughout the Soviet period, a more inclusive and communal concept rooted in a vast history of traditional cooperation, mutual assistance and localized decision-making. Communal civil society consists of more informal methods of interaction, discourse and collective promotion.

According to Babajanian this communal form civil society better describes civil society in post-Soviet Armenia, which promotes both political and social objectives but is circumscribed by structural inhibitors like poverty and poor (and/or corrupt) governance. Thus the role of civil society is especially important given its role as an alternative mechanism in ensuring services that the state is either unwilling or incapable of providing.

Babajanian analyzed qualitative research conducted between 2001 and 2003 that utilized conversational and semi-structured interviews, focus groups and discussions with local government officials and informal leaders within the community. His analysis indicated that mutual assistance (small amounts of cash, labor assistance, psychological support, etc.) is an important resource, despite many individuals stating they knew that reciprocation wasn’t always possible given widespread poverty and pronounced social inequality. In rural areas shops sell goods for credit, and debtors often repay their debt only after they sell their crops, or receive remittances or social assistance. As a sign of solidarity communities will often pitch together and provide voluntary labor for communal infrastructure and environmental maintenance. This, too, is constrained by limited time and resources, so solutions are often only temporary.

This is why the actions of formal authorities on the local level are so essential, because of their potential to mobilize communities and lobby on their behalf to donor agencies, NGOs and the government. Local informal leaders (e.g. school directors) also act as social entrepreneurs when they leverage their personal networks and pursue informal channels to advocate for their communities. This leveraging ability is frequently based on pre-existing forms of patronage (which can also be problematic when bureaucrats and persons with influence are corrupt and take advantage of the lack of rule of law). Many of the study’s respondents expressed the belief that only those who have solid contacts, financial resources and high social status could succeed in private entrepreneurial activities, thus reinforcing a general feeling of helplessness.

In post-Soviet Armenia, local communities do regularly cooperate with one another and initiate solutions in an effort to manage local development. However these actions are frequently limited by pervasive poverty and the institutional legacies of the socialist system. Rural communities rely heavily on area leaders to help facilitate development but as a result this constrains the scope and capacity of citizens’ self-promotion and participation in decision-making processes. Babajanian strongly recommends that donor and development agencies better understand and acknowledge these extant forms of civic participation and tailor their programs correspondingly so as to maximize the effect of their assistance.


The citation for the paper is “Civic Participation in post-Soviet Armenia,” Central Asian Survey 24 No. 3 (September 2005), pp. 261-279.

Free Economic Zones in Georgia

Economic free zones in Georgia are no longer a necessary, helpful, or even relevant option for Georgia’s economic development according to a GFSIS article written by Vladimer Papava. A free economic zone is a discreet area of a country’s economy designated by the government and bestowed with certain benefits and privileges. In general there are two different varieties: a strictly territorial one, and the regime-based variety, which is limited to functional categories such as trade, customs, and scientific and technological zones. Why use free economic zones? Theoretically, low or nonexistent customs duties and the relaxation of barriers to trade can bring in foreign revenue. They can be used as testing grounds for breeding free economy principles within regions as an incremental process, but this can also lead to the harboring of offshore funds and dirty money.

Georgia has implemented a number of free economic zones since independence but their benefits and importance may be declining in light of economic development in the region and the globalization of trade and finance transactions. By way of history, post-independence, Aslan Abashidze (the exiled former leader of Adjara) turned Adjara into a free economic zone with few restrictions on trade, and customs duties and revenues went to the Adjaran government rather than Tbilisi. His economic policies were generally viewed as successful when taken out of context from his authoritarian rule.

Since the Rose Revolution, however, on a macro-level there has been more liberalization with the taxation regime on imports, visa requirements for certain foreigners have been lifted, and the bureaucratic procedures for the establishment of businesses have been relaxed. The manufacturing of goods in a free economic zone necessitates considerable costs, and because of the aforementioned privileges granted only within the free economic zones, the transport of goods from one territory to another in-country territory necessitates the same treatment that is afforded to imports. According to Papava this can lead to a restriction in the movement of the country’s citizens and the possible necessitation of special licensing.

Papava thinks the idea of creating free economic zones within Georgia is “senseless,” and that in this state of Georgia’s development it would more appropriate to create a regime applicable to the whole country. He believes that if the government were to reestablish any free economic zones it would weaken Georgia’s relationship with international financial institutions and may lead to the possible ousting of Georgia from the WTO

The Open Budget Index | Georgia, Azerbaijan and the World

The Open Budget Index, a project of the Center on Budget and Policy Priorities, released the first-ever independent and non-governmental Budget Transparency Ratings in October 2006. The index endeavors to provide the practical information needed to analyze the transparency and accessibility of a government’s budgetary processes—and thus better equip citizens and legislators in lobbying for governmental accountability and targeted, effective policymaking. The 122 multiple-choice question questionnaire, conducted by local experts in 59 participating countries across the world, is available on the Open Budget Index’s website, as is the data from each country’s answers. The survey’s questions target generally accepted public financial management and practices and the availability of certain budgetary documents governments should release to the public over the course of the budgetary year. The Open Budget Index did not evaluate the actual quality of the information provided by the government.

While one might presume that public access to governmental budgetary records and processes is a given in highly developed Western nations, the findings of this study refute this assumption: only six of the 59 countries were found to adequately provide all of the general budgetary documents (the winners were France, New Zealand, Slovenia, South Africa, the UK and the US). Over a third of the surveyed countries- 39%- shared only “minimal” or “scant” information with their citizenry. The study emphasized that the extent of a country’s budget transparency is very much influenced by the willingness of the government to share, and that a lack of capacity is not a legitimate excuse or constraint.

Georgia and Azerbaijan were part of the surveyed lot, and both were found to provide only minimal information to citizens. Their scores were nearly identical, with Georgia barely edging out Azerbaijan’s score of 30% with 33%. Russia fell in a higher category, providing “some” information to citizens with a score of 48%. The findings were presented in a somewhat confusing way, however- when you looked at the individual country summaries, it appeared as though Georgia was far more forthcoming- 6 out of 7 of their budget documents were coded as “Available to the Public,” whereas Azerbaijan had only one budgetary document open to the public, two were not even produced, and four were produced but for internal use only. Azerbaijan’s legislature does not provide public hearings on the budget at all, whereas Georgia makes an attempt but only opens a limited amount of hearings to the public. What may have bumped up Azerbaijan’s score disproportionately was the executive’s budget proposal, as the study scored it a 48 out of a possible 100%, with Georgia attaining only 28 out of a possible 100%.

Fortunately the website includes all of the aggregate scores so one can explore the methodology and results of the survey’s findings. You can check it out here.

Attitudes in the South Caucasus Towards NGOs and International Organizations

CRRC Researcher and Fellow Irakli Sakandelidze recently conducted a study analyzing the attitudes of the local populations toward social institutions and the role of international organizations in the capital cities of the South Caucasus. The researcher used various research methods to analyze the determinants of trust towards non-governmental organizations (NGOs). In Armenia, confidence in NGOs is predominantly determined by age; respondents under 40 display higher levels of trust than older generations. Sex is also a determinant of trust in NGOs as women had higher confidence levels in NGOs than men. Similar to the results of the Armenia study, trust in NGOs in Georgia is mostly determined by age. In contrast, in Azerbaijan, the study results indicated that education is the only determining factor.

On a curious sidenote, it turns out that people working for international organizations are more likely to think that "things in our country are moving in the right direction". Arguably, working for an international outfit really sets people apart from their society. Below a slide from our 2006 Data Initiative, showing Armenian data.

(CRRC Data Initiative, 2006, open for extra resolution)

These discrepancies would merit a little more digging through the dataset, which we may do soon.

World Bank Governance Index, 1996-2006

In a further round comparisons, we have looked at the World Bank's governance index. This index uses six dimensions (voice and political participation, political stability, government effectiveness, rule of law, regulatory environment, control of corruption) to capture the quality of governance. Data run from 1996 to 2006. Armenia, generally, seems to have had the best governance. Georgia, however, is developing dynamically. In Azerbaijan, the index records little movement.

Note the intuitive presentation of the data, where red indicates a ranking in the very low percentiles.


By comparison Azerbaijan is fairly red, although there is progress with the regulatory environment.

Georgia shows a fair amount of development in all sectors.

The interactive website allows users to explore features in much more detail. Below is a map that shows regulatory quality in 2006.



But it's also possible to compare dimensions across countries.



Charts can be downloaded -- a wonderful tool for researchers looking for information. Follow this link if you want to play with the data.

The Economist Intelligence Unit's 2007 Index of Democracy

The Economist Intelligence Unit (EIU) released its 2007 Democracy Index ranking 165 countries and two territories on their degrees of democracy based on a number of indices, scales, and scoring. An index of “democracy,” a broad term sometimes ill defined, can be a tricky task without a universal definition. Indeed, the United States uses "democracy promotion" as a primary component of its foreign policy objectives, but there, too, are internal disagreements about what it actually means.

The Economist Intelligence Unit's measure is a snapshot index of the present state of democracy worldwide. The index offers a range of possible scores: (i) electoral process and pluralism, (ii) the functioning of government, (iii) political participation, (iv) political culture, and (v) civil liberties. There are admittedly simplifications with these rough categorizations, and the EIU acknowledged problems with several of their scoring scales because of the difficulties in devising analogous criteria and guidelines, which can result in what they called "arbitrary, spurious and non-comparable scorings." The scoring can also be potentially unreliable as different experts may rank the same indicators variably. The EIU integrates public opinion surveys into their index, a unique attribute that is lacking in Freedom House's index.

Not surprisingly, hybrid and authoritarian regimes dominate in the countries of the Former Soviet Union. In the South Caucasus, Georgia and Armenia are classified as hybrid regimes, ranked at positions 104 and 110, respectively, out of the total 167 entities surveyed. Azerbaijan is categorized as an authoritarian regime and placed at 129, just after Belarus. Russia actually does better than any country in the Caucasus, being at 102.

To get a better look, let's disaggregate: with "functioning of government", Azerbaijan does very badly at 0.79, Georgia is also poor with 1.79 (implying that territorrial integrity factors here), Russia and Armenia are doing much better at 3.21.

Georgia by far had the highest ranking in regards to a fair and free electoral processes at 7.92, as compared to Armenia’s 4.33 and Azerbaijan’s 3.08. (Armenia was on the negative watch list prior to the parliamentary elections this May for fear of flawed elections and likely there will be disagreements on how to evaluate the recent elections.)

Georgia scores 6.74 on civil liberties, Armenia has 6.18, Russia and Azerbaijan rate at 5.59.

Somewhat implausibly, policitical participation is rated at similar levels: Azerbaijan and Georgia with 3.33, Armenia at 3.89 (Russia is at 5.56). Surely, that is not plausible. According to our 2007 data, interest in politics (which surely is a reasonable proxy) certainly is not that homogenous across the three countries.

Even on an anecdotal level there are fundamental differences with political participation. So we would be curious how exactly the EIU comes up with this data. Maybe some adjustments are necessary.

For further reading, the full article can be found here.

ICG: new report on South Ossetia

The International Crisis Group (ICG) recently released an analysis of the current situation in South Ossetia. Although we normally focus on social sciences, we are happy to offer a quick summary.

ICG asserts that the conflict has entered a new phase, and not necessarily for the better. ICG believes Tbilisi is escalating tensions by refusing to engage with the de facto government in Tskhinvali and not allowing negotiations to continue without South Ossetia explicitly recognizing that it is territorially part of Georgia. According to ICG, Tbilisi’s actions, while not violent, are being imposed aggressively and unilaterally and as a result are estranging the South Ossetians.

ICG suggests Tbilisi engage with Tskhinvali and validate Ossetian ambitions and concerns rather than conditioning the negotiations on South Ossetia’s declaring it is part of Georgia. The South Ossetians have rejected Tbilisi’s discussions of territorial status but have cooperated on development and rehabilitation, confidence building, and demilitarization.

By way of background, South Ossetia has sought either independence from Georgia or reunification with North Ossetia, located within Russia, since 1990. After the Rose Revolution President Saakashvili made the restoration of Georgia’s territorial integrity a major priority of his new administration. Tensions peaked in the summer of 2004 and armed conflict erupted. Two rival governments emerged in November 2006 after there were parallel presidential elections and status referenda.

The de facto South Ossetian government of Eduard Kokoity is backed by Russia. The Georgian government is dismissive of Kokoity and is attempting to delegitimize him by declaring him a criminal. Kokoity’s administration on the other hand is suspicious of any Georgian peace initiative and believes it is only an attempt to appease the international community.

Tbilisi has endorsed the establishment of a temporary administration unit run by Dmitri Sanakoev who now has wide support from and leads the Georgian-controlled areas of South Ossetia. According to ICG, however, his actions have disaffected the South Ossetians. Sanakoev pledged allegiance to Tbilisi, and the Georgian government believes Sanakoev breaks Kokoity's monopoly and can therefore help to "unfreeze" the conflict.

In the zone of the conflict, the Tskhinvali district, villages inhabited by ethnic Georgians and Ossetian-inhabited villages are intermingled in nearby proximity of one another. What is worthy of note is that there is, however, no actual agreement on clear lines of delineation of control over the extended areas. The report shows two very different maps. The first is by the Joint Peacekeeping Force’s (a peacekeeping force of Georgian, Russian and Ossetian troops) map.



By contrast, the Georgian government’s map indicates a much larger swath of land under Georgian control. It is also much more cohesive.




Again, maps themselves tell the story of two very different views colliding with each other.

New World Bank Study: From Red to Gray

On Thursday, CRRC Georgia participated in the presentation of a new World Bank study on the impact of aging in the former Soviet Union. The authors of this study call this the "third transition", the one from From Red to Gray.


The particular challenge is that aging hits most transition countries while they still are poor (so-called "aging late reformers"). By contrast, many Western European countries age when they are fairly well off, and have fairly mature market institutions.


Yet, the authors argue, early action can make this a smooth transition. In particular, they advocate (and here we are quoting practically verbatim):

• increasing the labor supply (by raising the retirement age, creating more flexible work conditions, and improving health of older workers, as well as allowing migration)
• increasing productivity (investing into education and lifelong learning, completing the restructuring agenda/integrating with competitive markets)

Moreover, they argue that sensible pension systems and health financing can curtail costs to manageable levels. Illustrating this with a salient example, Mukesh Chawla, one of the lead authors, points out that the largest part of spending on health is in the last two years of life, so that an extension of life does not mean proportionally larger spending on health.

Generally, this looks like an exciting study (the website, to advertise it again, is excellent) and the authors, quoting Longfellow, have chosen a good pitch by suggesting that there is as much opportunity in aging as in youth itself. However, at the risk of sounding like a broken record, part of the problem is that early action requires a constructive, sophisticated debate around these issues and much needs to be done to generate the climate in which this debate can take place in the South Caucasus. So far these are niche issues, and we don't even have much data to describe generational change in the region (although we are currently funding one study on this topic) . These presentations seem like a happening at an oasis, when what we need is a much bigger eco-system.

CRRC Georgia did extract a couple of slides from our Data Initiative for our panel presentation. They show that generational change seems less pronounced in Azerbaijan than in the other countries. However, these are just a few snapshots. We're happy to make these available upon request (as well as the Red to Gray book, which we have at CRRC).

The Georgian Tax System in the Context of the European Neighborhood Policy (ENP)

Eurasia Foundation and the Heinrich Böll Stiftung are sponsoring three roundtables on Georgian compliance with the European Neighborhood Policy (ENP), the results of which will be disseminated to Georgian policymakers in the form of an action plan. The most recent roundtable surrounded the lagging updates to the Georgian tax scheme and the major problems plaguing the current system. As it stands currently, there is a 12% income tax and 20% social tax, but Saakashvili claims he will lower the combined tax to 25% in the upcoming year.

According to the roundtable participants, the Georgian tax code as it currently stands is fundamentally flawed and easily lends itself to abuse and manipulation. In the Western context, taxpayers enter into a contract with the government whereby their tax contributions are expected to bear fruit in the forms of social services and infrastructure upkeep. The taxpaying scheme should be a mutually beneficial endeavor. This vision, panel participants argued, has not yet fully arrived in Georgia. Taxpayers still distrust the state and often are unsure where these tax revenues go and tax-dodge by concealing their income streams. To their credit, the Ministry of Finance created a Revenue Office to control the process of tax code reform and the performance of the newly established tax department but their independence and capabilities are questionable.

A major concern of the EU is Georgia’s policy of double taxation. Extra taxes - above and beyond the normal tax percentage - are levied for cleaning up garbage and other miscellaneous governmental responsibilities. It is unclear to many citizens why these services aren’t covered by the initial tax.

Additional complaints center around surprise extrajudicial visits to “audit” private organizations and charge fees for “illegal actions” or fraud without disclosing the details of their investigation. When organizations or individuals appeal to the Revenue Office for clarification over the “investigation” or ambiguous rules, they often don’t get a clear answer. While the tax department is investigating, it will freeze the organizations’ bank accounts indefinitely, effectively paralyzing their operations for no discernable reason. To add insult to injury these organizations are then charged for the tax agencies’ time regardless of whether or not any fraud occurred. All of these behaviors are worsened by governmental intrusion on the tax paying process.

Roundtable participants felt that as long as the Ministry of Finance has the authority to interpret the tax code as they see fit, the human factor and susceptibility to corruption will perpetuate the current inadequacies of the system.

Roundtables Held in Armenia and Nagorno Karabakh on Possible Options for Conflict Resolution

The International Center for Human Development, sponsored by the British Embassy in Yerevan, coordinated a series of town hall meetings to provide a venue for participants to explore possible options for compromise in resolving the conflict over Nagorno Karabakh. There were two roundtables, one held in Armenia and held in Nagorno Karabakh.

Over four hundred people participated from four towns in the Armenian roundtable. The demographics were spread out relatively evenly between men and women and with people from the NGO sector, the public and private sectors, students, the cultural sector, military servants, war participants, pensioners, the education sector, the unemployed and an “other” category. There were smaller numbers of war participants and military servants represented (3% for both as opposed to an approximately 10% representation for the other categories).

For the Armenian roundtables, ICHD designated possible scenarios for the participants to choose from, presented as follows (verbatim):

Scenario I: Status quo
Scenario II: NKR a part of Azerbaijan
Scenario III: NKR: Independent or a part of Armenia
Scenario IV: The issue of status to be discussed in future
Scenario V: Procrastinated resolution- certain warrants
And lastly, “Against all.”

Scenario III appears a bit problematic given that it merges two distinct options (regardless of their respective likelihoods). It is also unclear as to what the difference is between “status quo” and “the issue of status to be discussed in the future,” which implies a status quo.

The data presentation for Armenia is somewhat confusing. While the average percentage for Scenario I (status quo) was about 29%, almost no participants chose Scenario IV (the issue of status to be discussed in the future). To be expected, no one felt that Nagorno Karabakh should become a part of Azerbaijan. The data indicated the following breakdowns (voting results split up by sector or gender were not provided): Scenario I 37%; Scenario II 0%; Scenario III 18%; Scenario IV 0.2%; Scenario V 25% and “Against all” 19%. The fact that 19% chose "against all" brings up the question as to what other scenario is realistically possible? Or is that that "against all" merely represents a deep ambivalence about the future. Your comments are welcome on this.

As for the Nagorno-Karabakh roundtables, unfortunately ICHD’s website did not post any of the data so the makeup of the participants and the outcomes are unknown. Approximately 300 people participated and the roundtables took place in three different towns around Nagorno Karabakh. Scenarios discussed included “Status Quo,” “NKR as an Independent State,” “NKR as Part of Armenia,” “The Issue of Status to be Discussed in the Future: NKR Under International Surveillance,” and “Procrastinated Resolution- Certain Warrants.” Hopefully ICHD will post this data as it would be both useful and interesting to compare the two roundtables’ outcomes.

Gender, Georgia and the “F” Word

Georgian women have a significant history of being politically active and engaged. In fact, more women than men died in the April 1989 massacre by Soviet forces in Tbilisi. During Georgia’s nationalist movement, and indeed through many of its transitions, issues of gender equality were viewed as peripheral, if not irrelevant. Tamar Sabedashvili, commissioned by the Heinrich Böll Foundation, took a retroactive look at Georgia’s democratic developments from 1991-2003 with an emphasis on the post-Rose Revolution period. She sought to explore how these transitions have affected women, if women have an increased presence in politics, or if a robust women’s movement has been spurred.

Much of Sabedashvili’s commentary is predictable. It is not shocking that Georgian women have not made large strides in representation in politics or increased wages and job opportunities. Georgia has de jure gender equality, which is convenient while on the books, but largely immaterial in practice. She articulates two major reasons for this stagnation, one being that women’s groups do not articulate their needs well, and a general lack of political will.

What was particularly interesting was Sabedashvili’s review of the actual wording in the Georgian Constitution, which is replete with institutionalized paternalism. Women are mentioned only twice in the Constitution, in the same class as minors, and contextualized by their roles as mothers and spouses. The Constitution confers responsibility on the state as guarantor of gender equality but the quality of legislation is sorely lacking, and legislation itself is not sufficient to uproot such deeply entrenched attitudes as on the competency of women in politics (a poll found that in general men were believed to be “better politicians” than women) and the traditionalist influence of the Church. The Constitution uses gender-neutral terminology such as “citizen,” “person,” and “individual,” as though it is unnecessary to differentiate citizens on the basis of sex; Sabedashvili reminds us that the “history of legal thought” regarded men as the subjects of law, so terminology should be changed to read “men and women” instead of just “persons.”

Georgian Constitutional Article 6, Paragraph 2 declares that international law – both treaty-based and customary- takes precedence over domestic normative acts. International law however needs first to be implemented in the form of domestic legislation. Georgia cannot complete its treaty obligations on gender equality without first implementing operational corresponding legislation- and then applying that legislation.

In exploring the problems associated with guaranteeing human rights, Sabedashvili referenced the “possession paradox,” the problem that arises when a person has the right to something without the corresponding right (and actual practice) to enforcement of said right.

Sabedashvili’s article brings up many interesting and varied questions on the relevance of Western feminist thought, cultural relativism, and gender equality in Georgia, which can be expanded to include many developing countries and the general international discourse. The influence of the Church in Georgia is immeasurable, and is a great contributing factor in conservative and paternalistic attitudes towards women in Georgia. The passage of October 2000’s UN Security Council Resolution 1325 on women, peace and security put a female representative in the Georgia’s Office of the State Minister for Conflict Resolution but women as of yet not been invited to the formal conflict resolution process.

One of the key propositions Sabedashvili gives is for Georgian women’s groups to identify roadblocks and create strategies to cooperate with each other and better influence policymakers. International development organizations can consult and disseminate aid until there is none left to give, but without an authentic grassroots movement and a targeted Georgian approach to these problems, their actions and roles in Georgian society will be limited.

Sabedashvili's paper can be found here.

Corruption in Education in Armenia

It is not a secret that corruption negatively affects virtually all aspects of political, economic and social life. A recent study conducted by Bagrat Harutyunyan within the framework of CRRC 2005 Fellowship program focused on the problem of corruption in the Armenian education system. The fellow used qualitative methods (expert interviews and focus groups) to gather data on perceptions of corruption and manifestations of corrupt behavior in schools and universities, as well as on the graduate level. The study aimed to identify the main reasons behind corrupt behavior in educational institutions, the structure of corrupt relations and to create a typology of students and lecturers. According to the study, degrees of corruption vary largely depending on universities and faculties within each academic institution.

Armenian male students more often than females prefer to resort to corruption. It is worrisome that only about 20% of focus group and interview participants recognized their behavior as corruption as such. Thus, often academic fraud, use of personal connections, misuse of public property or patronage were not considered a corrupt behavior by respondents. Interestingly, friends and relatives of students and faculty, who are not part of education system, are the main mediators of corruption in academic life.The final report and two scholarly articles in Armenian are available on CRRC-Armenia website here. You can also email CRRC-Armenia for more information.

Bagrat Harutyunyan went a step forward and used the data collected within CRRC Fellowship program to further his PhD thesis defense on the topic of corruption in modern Armenian society will take place on June 13 at 14:00 in the Yerevan State University building.

The World Economic Forum's Tourism Index in the South Caucasus

The Soviet Union was replete with traveler horror stories. So, more than a decade and a half down the road how have the countries of the Caucasus developed when it comes to tourism? The World Economic Form (WEF) has now developed the first comprehensive index to measure travel and tourism competitiveness. The WEF states that its index is not a "beauty contest" but concretely measures the attractiveness of developing a tourism industry in any given country. The scores are based on 15 variables grouped into three major categories -- regulatory framework, business environment and infrastructure, and human, cultural and natural resources. Each variable is ranked from 1-7. A country profile is also developed for each country to attractively display the data.

With a score of 4.13, Georgia ranks 66th in the world but number one in the CIS region -- though it is far outstripped by Estonia, which currently ranks 28th. Armenia and Azerbaijan follow closely on Georgian heels at 74th (3.93) and 75th (3.92) respectively. Tajikistan, not surprisingly, comes in last in the CIS region at 110th.

In the Caucasus, all countries do very well on the availability of human resources and none of the countries score particularly high on their natural and cultural resources (Armenia 78th, Georgia 81st, Azerbaijan 116th). Clearly, the authors of the report have not spent enough time in the region. Either that, or the indicators need to be adapted.

In the Georgia country profile (pdf), Georgia ranks low on all forms of infrastructure and somewhat better on the regulatory framework. Azerbaijan (pdf) does better on infrastructure, but worse on the regulatory framework, as expected. Armenia (pdf) splits the difference in the countries in terms of both infrastructure and regulatory framework issues.

Trends in the Social and Economic Standing of Georgian Households

CRRC Fellow Dr. Alex Sarishvili recently used the 2004-2005 CRRC Data Initiative (DI) to identify and categorize three distinct groups of Georgian households sharing similar social and economic attributes based on household expenditure and income-related questions. One of Sarishvili's main findings is three clusters of household groups.

• Household Group 1, 11% of the sample, consisted of at least two adults bringing in roughly the same income. The income of the second largest earner was equal to the average household income in Georgia. These families are considerably wealthier, healthier and better educated than the average Georgian household.
• In Household Group 2 (13% of households), the largest income earners earned almost the entirety of the family budget, with other household members making only small contributions. These families are worse off than Group 1 but better off then Group 3.
  
• Household Group 3 represents the overwhelming majority of Georgian households (76%). In these households, both the first and second largest income earners have lower-than-average incomes, and accordingly are most afflicted by poverty and also suffer from lower levels of health.
  

The report in English and a presentation are available on the CRRC-Georgia website.

Social Capital in Armenia | Babken Babajanian

The lack of social capital is often seen as one of the main factors holding back political, social and economic development in the South Caucasus. Social capital here refers to the trust that makes cooperation possible. Without cooperation, commentators note, few ventures can succeed: successful farming relies on sharing experience, seeds, marketing channels; party-based (as opposed to personality-led) politics calls for striving towards shared political goals; even corporations require some social glue if they are to succeed.

So how does one build social capital? One response is the social investment fund model. Favored by the World Bank, the idea is that communities receive funds for investment into their infrastructure (school windows and heating; that one bridge that connects you to the highway; irrigation for the fields; or even just water for the households), but only if they cooperate successfully, and display initiative and community-based bottom-up decision-making. Babken Babajanian, an LSE-based scholar, has examined how these programs worked in Armenia. He relied primarily on qualitative interviews throughout 12 communities.

His finding is that although the infrastructure improved, the process got stuck somewhere between top-down and bottom-up. Ultimately, the success of all of the projects relied on the mayors. Where mayors were "developmental", the community became energized. In other cases, make-do mayors just used social investment funds as an additional source of revenue.

Babajanian argues that ultimately the larger political context often remains stronger than local projects. He seems to suggest that maybe more of a political mobilization is required to change old habits of interaction. The paper provides an excellent overview of the literature. We would have been curious to hear more about how exactly interventions impacted on the views and attitudes of the community, specifically whether they at least helped to create a sense that cooperation is a desirable goal. Arguably such a transformative experience can be beneficial.

The paper, "Promoting community development in post-Soviet Armenia: The social fund model." Social policy and administration 39, no. 4 (2005), pp. 448- 462, can be made available in CRRC libraries.