Armenia should be smiling. The trend of events in the region might seem at last to be going in the favour of the small, landlocked south Caucasian republic. The short war between Georgia and Russia in August 2008 has humbled its sometimes difficult neighbour while leaving intact its friendship with the northern giant; it maintains control of the disputed territory of Nagorno-Karabakh against any attempts by its hostile neighbour Azerbaijan to reclaim it, with Moscow's victory over Tbilisi helping to counter - for the moment - the threat of renewed war with Baku; and it has hosted without serious incident the president of Turkey, a neighbour from whom it has long been divided by the bitter, unresolved past.

These developments can plausibly be seen as making Armenia more secure than it has been since it gained post-Soviet independence in 1991 (or, more accurately, the restoration of an independence first proclaimed in 1918). Yet to officials in the country's foreign ministry - working in the imposing, russet-stone buildings overlooking Republic Square in Yerevan - the outlook is more sombre than sunny.Among openDemocracy's articles on Armenian politics, including Nagorno-Karabakh and relations with Turkey:

Sabine Freizer, "Armenia's emptying democracy" (30 November 2005)

Hrant Dink, "The water finds its crack: an Armenian in Turkey" (13 December 2005)

Üstün Bilgen-Reinart,"Hrant Dink: forging an Armenian identity in Turkey" (7 February 2006)

Shaun Walker & Daria Vaisman, "Nagorno-Karabakh's referendum" (14 December 2006)

Sabine Freizer, "Nagorno-Karabakh: between vote and reality" (14 December 2006)

Hratch Tchilingirian, "Hrant Dink and Armenians in Turkey" (23 February 2007)

Vicken Cheterian, "Armenia's election: the waiting game" (19 February 2008)

Armine Ishkanian, "Democracy contested: Armenia's fifth presidential elections" (4 March 2008)

The deeper realities of present-day Armenia help explain why. The freedom of manoeuvre of Armenian politicians and officials is as constrained as the country's geopolitical position itself - and the events of August 2008 have also highlighted that fact. The strong relations with Russia to the north and Iran to the south are a given. Both have long displeased the George W Bush administration. An American ambassador has taken up residence in the heavily fortified embassy compound near the airport, but only after an interruption of three years; and it is notable that United States vice-president Dick Cheney failed to include Armenia in his post-war tour through Azerbaijan, Georgia and Ukraine. Indeed, there is no significant public voice in Armenia in favour of entry to Nato or the European Union,

The fallout of war

Yerevan may have been a beneficiary of the Georgia-Russia war, though in fact it has has limited direct interest in their conflict. The economic and political situation in Georgia does affect the approximately 200,000 Armenians who still live in the Javakheti region of southern Georgia, and who were traditionally involved in servicing the former Soviet bases there. They have been hit in recent years both by considerable poverty and by the rise in Georgian nationalist sentiment. At the same time, Armenia faces the world with its frontiers to Azerbaijan and Turkey closed, and reliant for its trading connections on the land-route through Georgia to the port of Poti or the one through Iran to distant Tehran.

As important is that the assertion of Russian power may (according to influential voices in Yerevan) have acted as a deterrent to Armenia’s rival Azerbaijan, whose rising oil-revenues and self-confidence might otherwise have propelled it to try to reoccupy the areas of its country seized by Armenia in the war of 1992-94.

This prospect remains far from unthinkable – and no one expects the Russians to send combat-troops to help Armenia. But there are several thousand Russian soldiers in the country already, in bases along the frontier with Turkey, only 40 kilometres from the capital. Moreover, large quantities of Russian military equipment have been pre-positioned: in the event of a new war with Azerbaijan, the assumption is that these weapons would be made available to the Armenian forces.

There are also signs that the war in Georgia has led to a rethinking of policy in Armenia’s powerful western neighbour, Turkey. Armenians cannot forget the terrible killings, on any normal criteria genocide, of Armenians in Turkey during 1915 and after. Above Yerevan stands the great memorial - named Tsitsernakaberd (“swallow castle”) – commemorating the tragic, defiantly unforgotten event. It consists of a dignified stone esplanade leading to a pointed tower, and to a sunken chamber with an eternal flame. Twelve columns commemorate the provinces of “western Armenia”, today’s eastern Turkey, from which Armenians were expelled in the midst of the great war and its aftermath.

The issue of the Turkish refusal to acknowledge the genocide has long poisoned, and will probably continue to poison, Armenian-Turkish relations. My impression in Yerevan is that since the victims of the genocide were part of what is now the Republic of Turkey - hence the ancestors of today’s diaspora in Europe, the United States, and parts of the Arab world - a settlement that is not acceptable to these descendants would not pass in Yerevan. But there is some movement on both sides. For those in Turkey, Armenia and the diaspora who wish to arrive at a considered and shared historical judgement - admittedly still few, though their number is growing - the materials for arriving at a reasoned judgment are there.

A more immediate concern is the blockade to which Turkey has submitted Armenia since the early 1990s war with Azerbaijan. Armenia desperately needs to open its frontiers to expand its trade links. Some recent developments – among them the announcement by Ankara of a new South Caucasus Initiative, and the historic visit of Turkey’s president on 6 September 2008 to watch an Armenian-Turkish football match in Yerevan – suggest that some shift in attitudes may be occurring (see "Friends and neighbours", Economist, 25 September 2008). But the lesson of other conflicts (such as the Arab-Israeli dispute) is that broad declarations and symbolic gestures are not enough: it is not clear (so my interlocutors at Armenia’s foreign ministry told me) that Abdullah Gül’s expression of goodwill is being translated into policy detail lower down the bureaucratic scale. For anyone familiar with the contemporary state of public opinion in Armenia and Turkey, the changes of a major breakthrough still appear slim.

Fred Halliday is ICREA research professor at the Barcelona Institute of International Studies (IBEI). His many books include Islam and the Myth of Confrontation (IB Tauris, 2003), 100 Myths About the Middle East (Saqi, 2005), and The Middle East in International Relations: Power, Politics and Ideology (Cambridge University Press, 2005)

Fred Halliday's "global politics" column includes: 

"The mysteries of the US empire" (30 November 2007)

"Islam, law and finance: the elusive divine" (12 February 2008)

"Stolen Wealth Funds: fantasies of control" (4 March 2008)

"Two feminist pioneers: Iranian, Lebanese, universal" (18 April 2008)

"Tibet, Palestine and the politics of failure" (9 May 2008)

"1968: the global legacy" (11 June 2008)

"Mediterranean mirage: Europe's sunken politics" (29 July 2008)

"The miscalculation of small nations" (24 August 2008)The Armenians shared the surprise of the rest of the world about the August 2008 events. The summary judgment of one informed observer sums up the reaction: “Misha blew it”. No one I met believes the Russian (and one-eyed anti-American) claim that Washington encouraged Tbilisi to attack South Ossetia and Abkhazia; but most voiced severe criticism of Nato’s vague and apparently open-ended commitment to Georgia. 

An astute Mediterranean expert and veteran of backchannel regional negotiations remarked that Saakashvili had probably been deluded by his earlier successes, including the recovery of the less-noticed separatist enclave of Adzharia in southeast Georgia in his first months in office. The Georgian president’s pattern of rule, he went on, casts retrospective light on the overthrow of Eduard Shevardnadze in 2003-04: how much was this a “revolution” and how much a near-accidental power-grab whose triumph deluded Saakashvili about the opportunities in store? 

But my Armenian hosts were puzzled – even alarmed - by Russia’s decision to recognise the full independence of the two breakaway entities. Yerevan’s orientation (like the central Asian republics allied to Moscow) may be pro-Russian, but it is not prepared to follow on this one. Armenia has its own interests to consider, and one is the flow of remittances from its diaspora in Russia on which it so much depends. The accelerating capital-flight from Russia – in part a consequence of the global fallout of the financial crash, but in part a response to political sensitivities – has tough implications for a small trading economy.

A consolidated elite

In a longer-term perspective, however, the Russian-Georgian war has done little to alleviate (far less resolve) the major problems Armenia faces. They centre on the power of the new elite and the dramatic effects of social inequality, poverty and exclusion.

The enduring poverty of the country is evident to any visitor who leaves the central area of Yerevan with its modern buildings, restaurants and hotels. Much of the population lives in deprivation; corruption pervades all areas of government; and an astounding proportion of the population (almost half by some estimates – many from its most educated and enterprising groups) have left the country, for Russia or the west.

Armenia is not a bloody dictatorship, but nor is it a democracy: like its two south Caucasian neighbours (with which it has much more in common, politically, and culturally, than nationalist pride would admit) it is ruled by a post-communist elite some of whose members operate in legal grey areas for purposes of enrichment and power-accumulation. The appropriation of assets from two sources - those of the Soviet period, and a significant part of the $1.3 billion that sent back by Armenia’s diaspora – play a vital role in consolidating the elite’s power and enhancing its lifestyle.

This elite is led by former president Robert Kocharian (still the country’s strongman), and many members of it also come from Nagorno-Karbakh. They have shown that they are prepared to intimidate, censor, and manipulate to suit their ends. The press and media are controlled, when not by the state than by rightwing nationalists based in California. The penalties may not involve being arrested or shot, but they can be severe: if you criticise the government too overtly, you may lose your commercial licence (if you are in business) or your job (if you work for the government). 

The ruling network is also prepared to resort to the gun: as in October 1999 (when a gunman with some official protection assassinated the prime minister, the speaker, and six other officials in parliament), in September 2001 (when bodyguards of the president beat Poghos Poghosian to death in the Aragast [Poplavok] jazz cafe in Yerevan), and in March 2008 (when the president sent police to beat up a crowd of opposition supporters protesting the election outcome, an assault in which nine were killed). No one will ever know exactly what happened on 1 March, but there are credible rumours that the police planted guns among the sleeping protesters. What does seem certain – and was confirmed to me by one western diplomat who has attended the proceedings – is that the trials of the protesters have been rigged.

A frozen politics

The unresolved conflict with Azerbaijan over Nagorno-Karabakh is a shadow over all the events, regional and domestic, in which Armenia is embroiled. This contested region of around 140,000 was – notwithstanding its ethnic-Armenian majority - allocated to Azerbaijan by Moscow in the 1920s: a small part of the broader reassignment of peoples and territories across Europe after the great war and the Bolshevik revolution.

The loosening of political controls during the Mikhail Gorbachev-era perestroika in the late 1980s enabled an immense nationalist mobilisation in Armenia and Nagarno-Karabakh itself in favour of the latter’s incorporation in the former. The tensions with Azerbaijan grew; war erupted in 1992 between the by-then post-Soviet independent states of Armenia and Azerbaijan, which concluded in 1994 with the Armenians in control of Nagorno-Karabakh and a swathe of Azeri territory (including the “Lachin corridor”). Yerevan has since 1990 professed a belief that Nagorno-Karabakh should become an independent state rather than be annexed to Armenia; thus the region joins Abkhazia and South Ossetia in limbo-land, while Armenia’s territorial gains provide it with a bargaining-chip in any negotiations.

Many international negotiators have over the years sought to find a solution to this problem. Indeed, a negotiated settlement of the problem is the common aim of the United States and Europe in the Organisation for Security and Cooperation in Europe (OSCE’s) “Minsk process” - one shared too by Armenia’s close - if understated - ally, the Islamic Republic of Iran. On the ground and on both sides, however (the Azeri even more than the Armenian), nationalist rhetoric and intransigence prevail; though a readiness at least to meet at official level offers some grounds for belief that in time this may change.

In effect, the current Armenian political leadership - deeply influenced by its origins in Nagorno-Karabakh - and the powerful military and financial interests that have arisen from the war have sequestered Armenia as a whole; the inflow of money and the reinforcement of nationalist sentiment from the diaspora form the third leg of this unholy trinity. The results of the Moscow-Tbilisi war show every sign of confirming this ruling pattern. 

There may, however, be another lesson which the events of this summer should draw to the attention of politicians and officials in Yerevan: namely that for all the advantages they now think they have in their dispute with Azerbaijan, and for all the nationalist sentiment attached to this issue, the danger of another war with Azerbaijan cannot be excluded. Azerbaijan is getting richer and stronger; its clearly fixed elections of 16 October 2008 are conducted with barely a peep of protest from its western investors; and the new generation there, with no memory of coexistence with Armenian neighbours or fellow-citizens, is in key respects more militant than its predecessors. A wise Armenian academic observer in Yerevan put it to me thus: “The one thing you learn from living in the south Caucasus is that there are no such things as ‘frozen conflicts’.”