“The Caucasus is both a mountain range that physically divides Europe and Asia and a larger region of two parts: the North Caucasus—a region in Russia—and Transcaucasia or the South Caucasus, comprised of Georgia, Armenia, and Azerbaijan.
The countries of the South Caucasus were united for nearly 70 year under “one common political, military, and security system” and “the presence of the strong Soviet Empire” meant that the republics had little to worry about—until this uniting “political phenomenon” vanished with the “collapse of the Soviet Union” and the fledgling republics had to face the world without the capabilities, influence, experience, and structure of the world superpower they were used to living under (Begoyan 2006, 287-88).
Armenia, Azerbaijan, and Georgia have long and rich histories full of conflict and survival. They survived seventy years of communist rule under the Soviet Union, and are still in the infant stages of their independence. Their survival is being tested now as they each are currently facing conflicts that threaten their existence. These three republics have made substantial progress in the twenty years since the collapse of the Soviet Union and the beginning of their independence, yet they still have a long way to go. Each has adopted a constitution and each has amended it to allow for more freedoms. They have adopted democratic forms of government with a president and a parliament. The three states continue to enact reforms that help them more fully integrate into a modern society. Armenia, Azerbaijan, and Georgia have each experienced great economic growth in recent years, as well as slowdowns resulting from the worldwide economic crisis. They seem poised to continue their growth as they overcome their challenges and as the world economy gets running again. The South Caucasus has the attention of many nations around the world especially that of those surrounding the region—Russia, Turkey, and Iran. They play a balancing game with their individual interests and the interests of their neighbors and the major players in the world. They look to these major actors for support and acceptance and they join organizations to help them gain support and validation of their interests. Peace and stability are the main goals for Armenia, Azerbaijan, and Georgia. Although there are gigantic obstacles in their paths, the future has much promise for each country if they can learn from their pasts and work together for the betterment of the region.
Transcaucasia has been an important region throughout history. “The South Caucasus states served historically as a north-south and east-west trade and transport ‘land bridge’ linking Europe to the Middle East and Asia” (Nichol 2011, 1). Because of its location as a crossroads, the region is “one of the most diversely populated in the world” (Bishku 2008). The South Caucasus is surrounded by Russia, Turkey, Iran, and the Black and Caspian seas (Turner 2009). Also because of its location, major empires in history were enticed to take control of the area during their conquests (Nichol 2011, 1). Due to its strategic geographical importance and wealth of natural resources, “the leading political actor in the area, Russia, started imposing its control over it since the 18th century” (Irrera 2008, 2). Under Russian rule, the people were expected to speak Russian instead of their native tongues, but many held on to their nationalism and native culture (Bishku 2008). This nationalism sustained the native Caucasians until the three small nations briefly gained their independence following the fall of the Tsarist Russian Empire to the Bolsheviks in 1918 (Bishku 2008). Armenia, Azerbaijan, and Georgia would face life under another powerful empire when the Red Army invaded in the early 1920s and the countries fell to the Soviets (Nichol 2011, 1). Under Soviet rule, the three nations were originally grouped together as the Transcaucasian Soviet Federal Socialist Republic from 1922 until 1936 when each area was designated as a separate Soviet republic, in part because of their efforts to modernize and adopt European practices and processes in addition to their cooperation with and lack of resistance to the Soviet practices (Bishku 2008; Papazian 2008; Irrera 2008, 2).
The landlocked Republic of Armenia (Hayastani Hanrapetutyun) has an area of 11,484 square miles (29,743 square kilometers) in Southwest Asia (Turner 2009, 110; CIA 2010, 32). Armenia’s population was estimated at around three million in 2010 (CIA 2010, 32). Among those almost ninety-eight percent are ethnic Armenian, and there are approximately seven million diaspora around the world (Turner 2009, 110; CIA 2010, 32). Armenia is the 142nd largest country in terms of area, and the 137th largest in terms of population (CIA 2010, 32). The capital, Yerevan, has over one million residents (Turner 2009, 110). The official language is Armenian, spoken by almost ninety-eight percent of the population, and the state religion is Armenian Apostolic, a Christian denomination, practiced by nearly ninety-five percent of the country (Turner 2009, 110; CIA 2010, 32). Armenia has one of the highest literacy rates in the world with ninety-nine-and-one-half percent of the population literate (Papazian 2008, CIA 2010, 32).
Armenia is one of the oldest civilizations in the world and formerly covered much of the Caucasus region and the Anatolian peninsula. In the year 301 A.D., Armenia was the first nation in the world to officially convert to Christianity (CIA 2010, 31; Turner 2009, 110). The nation historically experienced intermittent and transitory periods of sovereignty, but also fell under the rule of powerful conquerors like the “Roman, Byzantine, Arab, Persian, Ottoman” and Russian empires (CIA 2010, 31; Turner 2009, 110). Armenia declared its independence from Russia in 1918 following the Bolshevik Revolution, but again fell to a powerful empire when the Soviets captured the country in 1920 (CIA 2010, 31; Turner 2009, 110). Currently, Armenia and Azerbaijan are in a heated and unsettled disagreement over the territory of Nagorno-Karabakh—a region within the territory of Azerbaijan that has an overwhelming Armenian population—which was given to Azerbaijan by Stalin and the Soviet Russians in 1922 (CIA 2010, 31; CIA 2010, 45; Papazian 2008). The two countries went to war with each other after Nagorno-Karabakh declared its independence in 1992, and declared a ceasefire—not a resolution—in 1994 (Turner 2009, 159). The Organization for Security and Cooperation in Europe (OSCE) “continues to mediate the dispute” over Nagorno-Karabakh (CIA 2010, 34).
The Republic of Azerbaijan (Azarbaijchan Respublikasy) has a total recognized area of 33,430 square miles (86,600 square kilometers) and a population of approximately 8.3 million, over eighty percent of which are Azeri with the remainder being Armenians, Russians, Georgians, and from other “numerous small ethic groups” (Turner 2009, 160; CIA 2010, 45-46; Mannion 2008). Azerbaijan is the 112th largest country in terms of area, and has the 91st largest population (CIA 2010, 45-46). The capital, Baku, has nearly two million inhabitants (Turner 2009, 160). Azeri is the official language, and they adopted the Latin alphabet after abandoning use of the Cyrillic alphabet in 2001 (Turner 2009, 160). Nearly ninety-nine percent in the country are literate (CIA 2010, 46).
Azerbaijan was settled as early as four hundred thousand years ago and “the location of Azerbaijan has been a factor in its turbulent history” (Mannion 2008). Azerbaijan is a country with a “majority-Turkic and majority-Muslim population” with over ninety percent of Azeris practicing Islam, mainly Shia—but “religious affiliation is still nominal in Azerbaijan” and the percentage “for actual practicing adherents [is] much lower” (CIA 2010, 46; Mannion 2008; Turner 2009, 163). The area had been under the rule of Mannaeans, Medes, Assyrians, Persians, Macedonians, Turks, Arabs, Ottomans, and Russians (Mannion 2008; Turner 2009, 159). The Azerbaijani Democratic Republic became the “first secular state in the Islamic world” in 1918, gaining recognition by the Paris Peace Conference in early 1920 (Mannion 2008). Azerbaijan’s original existence as an independent state was short-lived—from 1918 until the rise of the Soviet Empire in April 1920 (CIA 2010, 45; Mannion 2008). The Soviets had great interest in the oil-rich area, and incorporated Azerbaijan into the Transcaucasian Soviet Federal Socialist Republic in 1922 (Turner 2009, 159). The biggest crisis for Azerbaijan today is the conflict with Armenia and the associated detrimental political and economic effects of war with a neighbor (CIA 2010)
The Republic of Georgia (Sakartvelos Respublika) has a total land area of 26,900 square miles (69,700 square kilometers) and a population of about 4.6 million, over eighty percent are Georgians, but also including Azerbaijanis, Armenians, Russians, and other small groups (Turner 2009, 503; CIA 2010, 246). Georgia is the 120th largest country in both land area and population (CIA 2010, 246). Tbilisi, the capital, has roughly one million inhabitants (Turner 2009, 503). The official language is Georgian, but Russian, Armenian and Azeri can also be heard in the country (Turner 2009, 503). Most Georgians are Orthodox Christian (CIA 2010, 247).
Present day Georgia was created from the territory of the ancient kingdoms of Colchis and Kartli-Iberia (CIA 2010, 246). Jason and the Argonauts are supposed to have gone to Colchis (in Western Georgia) to “steal the Golden Fleece” (Suny 2008). Georgia and Armenia are historically tied together, through common lineage from Noah (through his descendants Hayk, father of the Armenians, and Kartlos, father of the Georgians) and common language (Georgians are claimed to have spoken Armenian up until the Kartuli language was created following the conquest of Alexander the Great) (Suny 2008). Georgia was another historically early state to officially convert to Christianity, they did so in the 330s (CIA 2010, 246; Suny 2008). Also like Armenia and Azerbaijan, Georgia also fell under the rule of the Persian, Arab, Turkish, Ottoman, and Russian empires (CIA 2010, 246). Although conquered, “Georgian kings and princes managed to maintain a degree of local autonomy” under Alexander the Great, Roman, and Islamic rulers (Suny 2008). The nation was united for the first time under Russian rule providing Georgians the ability to receive European educations and develop “a deeper sense of their own national uniqueness and the value of their own culture,” which lead Georgia to becoming the Caucasian state that “most closely resembled early European feudal society” (Suny 2008). With the collapse of the Russian empire, Georgia found three years of independence as a democratic republic (Suny 2008). Georgia, like the other states in the South Caucasus, was absorbed by the Soviet Union in 1921, and remained under Soviet control until the dissolution of the empire 70 years later (CIA 2010, 246). Even though Stalin was from Georgia, his native countrymen were not spared from his brutal administration (Turner 2009, 502). The country grew industrially and culturally under the Soviet rule, but was limited in all aspects by the communist regime (Suny 2008). Georgia currently faces threats to its sovereignty and northern territory; as independence was again realized by Georgia, crisis arose from the Russian-backed separatist regions of Abkhazia and South Ossetia (Suny 2008; Turner 2009, 502).
“All three peoples can point to periods of past autonomy or self-government. After the Russian Empire collapsed in 1917, all three states declared independence, but by early 1921 all had been reconquered by Russia’s Red Army” (Nichol 2011, 1). Armenia, Azerbaijan, and Georgia were separate, official Soviet Socialist Republics from 1936 until the countries became independent again in 1991 (CIA 2010; Mannion 2008; Turner 2009). After the fall of the Soviet Union, each the republics asked for and easily obtained their independence (Irrera 2008, 2). Following the collapse of Communism, “ninety-nine percent of [Armenian] voters supported a breakaway from the Soviet Union” (Turner 2009, 110), and Armenia officially declared its independence on September 21, 1991 (CIA 2010, 31-32). Just prior to the disintegration of the Soviet Union, Azerbaijan had strong nationalistic independence sentiment in 1990 that communist leaders tried, unsuccessfully, to suppress by sending twenty-six thousand troops to the capital, and “On 31 August 1991 the Azerbaijani Parliament adopted a declaration of independence, and an act establishing state independence of the Republic of Azerbaijan was passed on 18 October 1991” (Mannion 2008; CIA 2010, 46). Georgia formally declared its independence on 9 April 1991, and after the collapse of the Soviet Union, each republic was officially recognized internationally as an independent state (Suny 2008; CIA 2010, 247). Now that these states were independent, they each decided to complete the transition from communism and become more politically democratic, yet “the richness of natural resources and the magnitude of its geographical position [let] the South Caucasus be more than a group of transition countries,” they remained important in the world (Irrera 2008, 3-4).
The three countries have adopted similar constitutions and forms of democratic governments with presidents and parliaments. Each of the countries has granted universal suffrage to citizens age eighteen and older (CIA 2010; Turner 2009). Armenia adopted its original constitution in July 1995 (Turner 2009, 110; CIA 2010, 32). Through a national referendum, Armenia “reformed its constitution in 2005 to meet European Union standards” (CIA 2010, 32; Papazian 2008). Azerbaijanis adopted their constitution in November 1995, and reformed it by referendum in August 2002 (Turner 2009, 160; CIA 2010, 46). Georgia’s constitution, adopted in August 1995, “defines Georgia as a presidential republic with federal elements” (Turner 2009, 503; CIA 2010, 247). “In May 2010, the constitutional commission agreed on amendments to slightly reduce the power of the president and increase the powers of the legislature and prime minister” slightly altering the structure and procedure of government beginning with the “next presidential election scheduled for October 2013” (Nichol 2011, 30).
Armenia is a “presidential republic with a unicameral parliament” (Irrera 2008, 8). Their directly-elected presidents serve five-year terms and they elect a 131 member National Assembly (Azgayin Zhoghov), of which ninety members are “elected by party list and forty-one chosen by direct election” (Turner 2009, 110). The major parties are the Republican Party of Armenia (the party of President Sargsyan, and nearly half of the National Assembly), Prosperous Armenia, Armenian Revolutionary Federation, Rule of Law, and Heritage parties (Turner 2009, 111).
Azerbaijan is also “presidential republic with a unicameral parliament” (Irrera 2008, 8). Their parliament, a 125-member National Assembly (Melli-Majlis), has one hundred members that are elected from regional districts, and the other twenty-five seats distributed proportionally by political party (Turner 2009, 160). Elections are a major challenge in the country and international observers continually report that Azerbaijan’s election results are questionable at best and most likely invalid, repeatedly failing to “meet international standards” (Turner 2009, 160). The major parties in Azerbaijan are the New Azerbaijan (the party of the president and a majority in the parliament), Azerbaijan Hope, Great Order, All-Azerbaijan Popular Front parties; Azerbaijan has many independents in their National Assembly (Turner 2009, 160).
Similar to its bordering South Caucasus states, Georgia is also a “presidential republic with a unicameral parliament” (Irrera 2008, 8). They are governed by a presidential who serves a maximum of two five year terms and a 150-member Supreme Council consisting of “seventy-five members elected in single-seat constituencies and seventy-five by proportional representation” who serve four-year terms (Turner 2009, 503). The major parties are the United National Movement (the party of the president), National Council, New Rights, Christian Democrat, Labor, and Party of Republicans parties; Georgia also has many independents—their Prime Minister, Nika Gilauri, is an independent (Turner 2009, 503).
Armenia held presidential and National Assembly elections after declaring independence and ratifying their constitution, choosing Levon Ter-Petrossian as their first president (Turner 2009, 110). President Ter-Petrossian was reelected in 1996 in disputed elections that had “very serious irregularities” as observed by the OSCE (Turner 2009, 110). Ter-Petrossian resigned in 1998 due to the Nagorno-Karabakh conflict, and Robert Kocharian succeeded him as President (Turner 2009, 110). Nagorno-Karabakh native Serzh Sargsyan, who was Prime Minister under President Kocharian, beat Levon Ter-Petrossian and others in a landslide during the 2008 presidential elections, which were observed to be fair by the OSCE (Turner 2009, 111).
Azerbaijan started their independence with a proverbial rotating door for their first couple presidents. Their first president, Ayaz Mualibov, had to flee the capital in 1992 because of “unrest attributed to his failed domestic policies” (Mannion 2008). Following Mualibov’s departure, the Popular Front of Azerbaijan took control and appointed Abülfaz Elҫibay as president; his short presidency was haunted by the continuation of ethnic strife between Azeris and Armenians, casualties from skirmishes between the two nations, and threat of civil war; Elҫibay fled the country when Azeris rose up against him and Russia withdrew support (Mannion 2008). Then, in mid-1993, the National Assembly appointed popular and progressive Heidar Aliyev, of the New Azerbaijan Party and the respected leader of the autonomous republic of Nakhichevan, as president of Azerbaijan, who was confirmed by a general election later in the year (Turner 2009, 159; Mannion 2008). Aliyev oversaw the signing of a ceasefire in May 1994 between his country and Armenia over the Nagorno-Karabakh conflict (in 1996 Nagorno-Karabakh was accorded autonomy, but remains part of Azerbaijan), the same year an oil deal was struck between Azerbaijan and a consortium of major oil companies (Mannion 2008). Aliyev was reelected president in 1998, in elections that were “criticized by international observers” (Turner 2009, 159; Mannion 2008). Aliyev presided over Azerbaijan until his resignation in 2003 due to health concerns (he died shortly after leaving office), but before leaving office, he appointed his son to replace him (Mannion 2008; Turner 2009, 159). Heidar’s son, Ilham Aliyev officially won the presidency in 2003 in elections that were again criticized by international observers as sub-standard processes, and was reelected in 2008 with nearly ninety percent of the vote due to a boycott of the elections by the major opposition parties (Turner 2009, 159-60; CIA 2010, 46).
The history of Georgia’s presidents extends nearly twenty years back into the reign of the Soviet Union. Eduard Shevardnadze became the leader of the Georgian Communist Party in 1972, and his policies prompted nationalist like Zviad Gamsakhurdia to express their opposition to the communists and “Russification” (Turner 2009, 502). After gaining independence, the Republic of Georgia was first ruled by Zviad Gamsakhurdia, who was the last leader of the Georgian Soviet Socialist Republic (Suny 2008). Gamsakhurdia first won office in multiparty elections in 1990, and then was elected as the first president of the Republic of Georgia in 1991; Gamsakhurdia eventually committed suicide after a failed military campaign to unify the territory (Turner 2009, 502-03). He was replaced by his Soviet predecessor, Eduard Shevardnadze, after a civil war (Suny 2008). Shevardnadze wasn’t immensely popular, and in response to his increasing and obvious corruption and electoral manipulation, he was ousted in the bloodless “Rose Revolution” in 2003 and replaced by Mikhail Saakashvili (Suny 2008; Turner 2009, 503). Saakashvili has worked to curtail corruption, lessen the influence and presence of Russia within the territory, and build ties with the United States (Suny 2008). He was reelected in 2008 (Turner 2009, 503). Georgia, especially under President Saakashvili, has been very pro-western (Begoyan 2006, 294).
The nations of Transcaucasia have made a lot of progress, yet still have a long road ahead of them as attested to by the NGO Freedom House,
In 2010 Armenia and Georgia ranked as ‘partly free,’ while Azerbaijan ranked as ‘not free,’ in terms of political rights and civil liberties. Armenia and Azerbaijan were assessed as having very restricted political rights, where elections have been marred by serious irregularities. Armenia’s government was assessed as slightly better in respecting civil liberties than was Azerbaijan’s, where the media have been severely restricted. Georgia was assessed as improving in civil liberties over the past year due in part to increasing media diversity (Nichol 2011, 24).
The nations have implemented many reforms already. “Armenia, Georgia, and Azerbaijan have ratified new constitutions and promoted electoral reforms, they have accepted to discuss about old territorial disputes and dormant conflicts, they have regularized the military presence on their own territories” (Irrera 2008, 3). They all still need reduce irregularities, address major issues of voter fraud and intimidation, and promote freedom in their national elections (Irrera 2008, 6-7; Nichol 2011, 25-6). While they all still struggle with combating political and economic corruption, Georgia has taken “important steps forward” in fighting corruption and poverty (Irrera 2008, 6-7). Although they have made much progress regarding democratic fairness, the OSCE insists that all three countries need to continue to take action to meet “international standards for democratic elections” (Irrera 2008, 8-9).
A key obstacle for Armenia and Azerbaijan is their territorial conflict. Armenian leaders are focused on the Karabakh problem and the threat of Turkey and Azerbaijan, taking attention away from other important issues and concerns, and “the number one political priority for Azerbaijan is the resolution of the Karabakh problem” (Begoyan 2006, 291). When the two nations are focused on what the other is doing in regards to the Nagorno-Karabakh conflict without attempting to come to a resolution, they are wasting time and energy that could be better spent on other “solvable” problems. Despite the stalemate in the conflict, there is some progress being made. US leaders applaud Armenia’s efforts to improve relations with Turkey and encourage continued “democratization and the establishment of a more inviting business and investment climate” (Nichol 2011, 3). US government officials praise Azerbaijan for its progress in “democratization and respect for human rights since its independence” but concede that they can continue improvements, citing “restrictions on the media and civil society,” and requests that Azerbaijan continue its efforts to further “implement democratic reform and increase protections for human rights” (Nichol 2011, 3). In Georgia, President Saakashvili has “announced new democratization initiatives as a means to strengthen Georgia’s sovereignty and independence and thereby prevent Russia from subverting Georgia’s statehood” (Nichol 2011, 30). In their most recent elections in 2010, the OSCE noted that Georgia had made progress toward meeting international voting standards, but still had “significant remaining shortcomings including deficiencies in the legal framework, its implementation, an uneven playing field, and isolated cases of election-day fraud” (Nichol 2011, 30).
Along with political transformations, the collapse of the Soviet Union and subsequent national independence brought extensive change to the economies of the Transcaucasia. “The economies of all three South Caucasus states greatly declined in the early 1990s, affected by the dislocations caused by the breakup of the Soviet Union, conflicts, trade disruptions, and the lingering effects of the 1988 earthquake in Armenia” and even now the “economies remain fragile” (Nichol 2011, 23). The economies of both Armenia and Azerbaijan have been hurt by their unresolved conflict over Nagorno-Karabakh (CIA 2010, 31; Begoyan 2006, 291).
Armenia is facing a “blockade in the east by Azerbaijan . . . and in the west by Turkey, in support of Azerbaijan” (Papazian 2008). Their economic growth has been hindered as a result of its border with Turkey, a wealthy neighbor, being closed since the end of the Nagorno-Karabakh cease-fire in 1994 (CIA 2010, 31). The lack of official relations with Azerbaijan and Turkey is a “serious danger for [Armenia’s economic] development” because closed borders lead to lower “economic development, inflow of foreign capital, and participation in regional economic projects” (Begoyan 2006, 290). Armenia was a thriving Soviet Socialist Republic—doing “as well as or better than most of the Soviet republics during the period of Communist rule”—with strong industrial, educational and cultural foundations (Papazian 2008). President Ter-Petrossian began economic cooperation with many of the “other Soviet republics and joined the CIS” (Turner 2009, 110). “Despite a scarcity of natural resources other than metals, small territory, and land-locked geographic position,” Armenia’s economy was “one of the fastest growing in the world in recent years,” but due to the worldwide financial crisis, the economy transitioned from double-digit growth to double-digit decline in 2009; however, they expect to “continue above-average economic growth once the main effects of the crisis have passed” (Business and Finance Consulting 2009, 2; CIA 2010, 33).
Around twenty to twenty-five percent of Armenia’s GDP is from agriculture, thirty-five percent from industry, and forty to forty-five percent from services (Turner 2009, 111; CIA 2010, 33). Construction also plays a large role in the country’s economy (Business and Finance Consulting 2009, 3). Around forty-six percent of the labor force is in the agriculture sector, sixteen percent in industry, and thirty-eight percent in services (CIA 2010, 33). Agricultural development is “limited by the small size of most farms and outdated technologies which hinder productivity gains” (Business and Finance Consulting 2009, 4). The official unemployment rate as of 2007 was estimated at just over seven percent (CIA 2010, 33) although “a survey conducted in 2007 by the National Statistical Service of Armenia [using] the methodology of the International Labor Organization” found that the government had been grossly underestimating the real unemployment rate, giving “reason to doubt the accuracy of the official statistics” (Business and Finance Consulting 2009, 6). With aide from the IMF and World Bank, most of the agricultural land and business enterprises have been privatized (Turner 2009, 111). Armenia’s economic strengths are “low-to-moderate inflation” and “rapid GDP growth in recent years”; It’s weaknesses are “falling real output in 2009”, “strong dependence on remittance income and foreign investment”, “falling commodity prices”, the collapse of the housing market and accompanying decline in the construction sector, and “significant trade deficit”; if Turkey and Armenia can reconcile their differences, there would be a great opportunity for “a new export market and cheap imports”; a major threat is the “possibility of severed transport links with Russia in the event of renewed Russian-Georgian conflict” (Business and Finance Consulting 2009, 6-7).
Azerbaijan continues to have and is projected by the World Bank to remain one of the fastest-growing economies in the world—which is greatly attributed to substantial foreign investment, rising prices of several commodities, and flourishing oil production and exports (Turner 2009, 161-62; Business and Finance Consulting 2009, 8-9; CIA 2010, 47). Azerbaijan’s economy is “dominated by industry,” especially petroleum extraction, refining, and petrochemicals; Agriculture is also a large factor, accounting for about one-third of the economy (Mannion 2008). Azerbaijan experienced the “highest GDP growth in the world in 2006 and 2007”, because of the “sharp increase in oil prices and the opening of the new Baku-Tbilisi-Ceyhan pipeline in 2006” (Business and Finance Consulting 2009, 8). High oil prices help to mitigate the effects of the economic crisis on the country (Business and Finance Consulting 2009, 8). One major detriment to its economy is the fact that Azerbaijan has “no trade relations with Armenia” and ships oil around its neighbor instead of through it (Bishku 2008). Azerbaijan took important steps to lower poverty rates and bolster monetary assets that have buffered the effects of the worldwide financial crisis, most importantly they set up a special fund for “accumulating oil revenues for long-term investment projects and keeping them from distorting the economy” (Business and Finance Consulting 2009, 8-10). Because of this fund and their substantial oil production, Azerbaijan did not have to borrow from international financial markets, a huge economic advantage over states that grew their economy by going into (Business and Finance Consulting 2009, 10).
Azerbaijan’s GDP is comprised of about six percent agriculture, sixty percent industry, and thirty-four percent services (CIA 2010, 47). Oil is Azerbaijan’s main export with up to sixty percent of its GDP from oil, but only about one percent of the labor force is employed in the oil sector (Turner 2009, 161; Business and Finance Consulting 2009, 9). Roughly forty percent of Azerbaijanis, a majority of the labor force, are employed in the agriculture sector (Business and Finance Consulting 2009, 11). The unemployment rate is between six and ten percent (Business and Finance Consulting 2009, 11). Azerbaijan’s economic strengths are it has had the “highest GDP growth rates in the world in recent years” and it has a “stable national currency and substantial foreign currency reserves”; its weaknesses are its “high degree of dependence on oil and gas exports”, the “uneven territorial distribution of economic activities”, and a “high level of influence of state in the private sector” combined with “monopolies and cartels in certain industries”; the government could create bright opportunities by investing in “regional development and support for non-energy sectors”; Azerbaijan faces the threat of “decrease of oil prices”, escalation or restoration of conflicts with its neighboring states Armenia and Georgia, and “devaluation of national currency” (Business and Finance Consulting 2009, 12-13).
“Georgia is a small lower-income transition economy. After independence in 1991, civil war and the loss of markets in the former Soviet Union led to economic collapse” (Turner 2009, 505). Among post-Soviet transitional economies, Georgia had the worst declines seeing a ninety percent drop in exports and seventy percent drop in output (Turner 2009, 505). The economy was damaged by bad relations with Russia and other political and socio-economic factors (Turner 2009, 505; CIA 2010, 247). Georgia’s economy is mainly based on agriculture, but some industry was developed under Soviet rule, most notably the Rustavi steelworks” (Suny 2008).
Georgia’s GDP is comprised of about twelve percent agriculture, twenty-six percent industry, and sixty-two percent services (CIA 2010, 248). The unemployment rate is around thirteen percent (CIA 2010, 248; Business and Finance Consulting 2009, 14). The years 2004 to 2009 saw a great increase of foreign investment legitimizing the “efforts of the Saakashvili administration to liberalize the economy” and leading to “strong economic performance over that time period” (Business and Finance Consulting 2009, 14). However, the economy is still “feeling the effects of armed conflict with Russia and the global economic crisis” (Business and Finance Consulting 2009, 14). The agriculture sector continues to decline, even though more than half of the labor force remains employed in that sector (Business and Finance Consulting 2009, 15). Georgia’s economic strengths are “continued support from the international community” and controlled inflation; their weaknesses are a slow recovery from the global recession, “infrastructure damage from the recent war with Russia”, and “heavy dependence on remittances from Russia” combined with an “enormous trade deficit resulting primarily from weak manufacturing and agricultural sectors”; and although warming relations with Russia could lead to better economic opportunities and lessening the trade imbalance, Georgia faces the threat of an uncertain future and expectations of further economic decline (Business and Finance Consulting 2009, 16).
In terms of GDP, the three countries are in around the middle of the pack. Azerbaijan’s GDP rose from $78.71 billion in 2008 to $86 billion in 2009, the third highest growth in the world, resulting in Azerbaijan being the 73rd wealthiest country in the world (CIA 2010, 47). 2009 saw a decline in Georgia’s GDP from $21.82 billion in 2008 to $20.29 billion, making Georgia the 122nd wealthiest country in the world (CIA 2010, 248). Armenia’s GDP also declined in 2009, at $16.18 billion, down from $19 billion in 2008, ranking Armenia at 132nd in the world (CIA 2010, 33).
The area is rich with natural resources, especially oil and natural gas which attract the interest of other countries (Nichol 2011, 1). Azerbaijan is the world’s tenth largest oil extractor and seventh largest oil exporter (Business and Finance Consulting 2009, 8). “Azerbaijan’s economy has benefitted from oil reserves onshore and in the Caspian Sea since the 1870s, when Azerbaijan became one of the first nations to begin oil production” (Mannion 2008). “By the early 20th century half the world’s [oil] production was supplied from Baku,” but that total has dwindled to less than one percent (Turner 2009, 159-62), Azerbaijan’s economy has been bolstered by an increase in oil production following the lowest point of production in the late 1990s, helping the GDP grow over thirty-five percent (Mannion 2008). The capital of Azerbaijan, “Baku is at the center of oil exploration in the Caspian” (Turner 2009, 162) and “ninety percent of the country’s GDP is concentrated in or near Baku, while only fifty percent of the population live in the region” (Business and Finance Consulting 2009, 9). Again proving the extent and importance of the Nagorno-Karabakh conflict, oil exports fell as much as twenty percent during the war with Armenia, and only started rising in the years after the ceasefire of 1994 (Begoyan 2006, 291). “In 1994 the government signed a production sharing agreement” with foreign oil companies in Turkey, Europe, and the United States “to develop oil deposits in the Caspian Sea and transport the oil from Azerbaijan to Turkey via Georgia. . . .” avoiding the cheaper direct route through Armenia (Turner 2009, 161-62). Oil in the region is concentrated in Azerbaijan and the Caspian Sea, in areas controlled by Azerbaijan, which is known to have oil reserves of at least one billion barrels and estimates range as high as seven billion barrels, with “further potential in offshore fields” (Mannion 2008; CIA 2010, 47; Nichol 2011, 37). In addition to its own oil production, Georgia is benefitting from Azerbaijan’s petroleum production through to pipeline that transports oil to Turkey (Turner 2009, 503-05). “Georgia has overcome the chronic energy shortages and gas supply interruptions of the past by renovating hydropower plants and by increasing relying on natural gas imports from Azerbaijan instead of from Russia (CIA 2010, 247). Georgia has estimated oil reserves of thirty-five million barrels (CIA 2010, 248). Armenia has no oil or gas reserves, produces no oil or gas, and must import every barrel of oil and all the natural gas it uses (CIA 2010, 34). Oil is not the only natural resource in the South Caucasus.
Armenia has mineral “deposits of copper, zinc, aluminum, molybdenum, marble, gold, and granite” and forests cover about ten percent of the country (Turner 2009, 112). Azerbaijan produces grain (wheat and barley), fruit, vegetables, cotton, tea, tobacco, and silk (Mannion 2008). It also has mineral deposits of “iron, bauxite, manganese, aluminum, copper ores, lead, zinc, precious metals, sulfur pyrites, nephelene syenites, limestone, salt, cobalt, and iodine-bromine” and forests cover about twelve percent of the land area (Turner 2009, 162).
Georgia has natural deposits of manganese, “barites, clays, gold, diatomite shale, agate, marble, alabaster, iron, other ores, building stone, arsenic, molybdenum, tungsten, and mercury” and forests cover nearly forty percent of the country (Turner 2009, 505).
Industry is a major part of the region’s economies. Armenia’s “chief industries are chemicals, producing mainly synthetic rubber and fertilizers, the extraction and processing of building materials, ginning- and textile-mills, carpet weaving and food processing, including wine-making” (Turner 2009, 112). Crude oil extraction and refining is Azerbaijan’s main industry (Turner 2009, 162). It also produces metals, “cement, chemicals, building materials, timber, synthetic rubber, salt, textiles and food,” especially fish (Turner 2009, 162). Azerbaijan’s non-oil industries—namely construction, service industries, and agriculture—are also growing rapidly (Turner 2009, 161). Georgia’s industry was responsible for about twenty-four percent of its GDP in 2002 (Turner 2009, 505). “There is a metallurgical plant and a motor works” as well as “factories for processing tea, creameries, and breweries” and “textile and silk industries” (Turner 2009, 505-6). Georgia produces “cement, nitrogenous fertilizer, flour, ferroalloys, footwear, alcohol, and cigarettes” (Turner 2009, 506).
Although there are vast riches to be had in the South Caucasus, not everyone is participatory in the spread of wealth. Despite reforms that have produced growth in the economy and allowed them to join the ranks of “middle income countries,” Armenia still has a high poverty rate, around twenty-five percent according to the IMF (Turner 2009, 111; Business and Finance Consulting 2009, 2, 5; CIA 2010, 33). Poverty, along with economic insecurity, is a major cause of Armenians leaving their country (Begoyan 2006, 290). “Fast economic growth” has led to a reduction in the poverty rate in recent years, and the IMF “expects further reduction of the poverty rate to twenty percent by 2012 (down from twenty-five percent in 2008), using the national poverty line of $2.30 per day” (Business and Finance Consulting 2009, 5). The outlook is a little more positive when “using the World Bank’s latest poverty standard of $1.25 per day,” because only about eleven percent of Armenians live below that poverty line (Business and Finance Consulting 2009, 5). “In its newly adopted strategic policy document, ‘Sustainable Development Program’, the [Armenian] government plans to reduce the poverty rate to under seven percent by 2021, and to eradicate extreme poverty by 2015, based on the government’s poverty definitions” (Business and Finance Consulting 2009, 5).
Poverty levels have gone down in Azerbaijan as oil production has risen, but there is still much to be done to spread the wealth (CIA 2010, 45). “Despite vibrant recent economic performance and low debt ratio, [much] of the population remains in poverty and corruption is endemic” (Turner 2009, 162). Official reports show that the poverty rate in Azerbaijan plummeted from nearly fifty percent in 2006 to between eleven and thirteen percent in 2009—mostly due to “rapid economic growth” and “the successful implementation of the national poverty reduction program” (Business and Finance Consulting 2009, 8-11; CIA 2010, 47).
The World Bank reports that over thirteen percent of Georgians live in poverty, earning less than $1.25 per day (as of the 2005 report), but the Georgian government officially lists their poverty rate at fifty-four percent (Business and Finance Consulting 2009, 14-15).
The countries receive a lot of outside help through trade. Armenia mainly imports and exports manufactured goods (Turner 2009, 112). Armenia’s “main import suppliers are Russia, Belgium, United Kingdom, and USA,” and main “export markets are Belgium, Israel, Germany, and Russia” (Turner 2009, 112). Armenia is the benefactor of foreign aid and remittances from the Armenian diaspora (Turner 2009, 111). Armenia benefits from the “balance of interests of the three centers of influence of the European Union, Russia, and the US” (Business and Finance Consulting 2009, 6). Azerbaijan imports mostly “machinery, power, cereals, steel tubes, sugar, and sweets” from mainly “Russia, UK, Turkey, Turkmenistan, and Germany”; although petroleum related products are Azerbaijan’s chief trade item, it also exports “cotton, chemicals, tobacco, beverages, air conditioners, wool, and refrigerators” mainly to the markets of “Italy, France, Israel, Russia, and Turkey” (Turner 2009, 162-3). Azerbaijan receives considerable funds from foreign investors, yet not as much as Armenia or Georgia and, therefore, is more immune to the economic crises of other nations, particularly Russia (Business and Finance Consulting 2009, 10). Although Russia has imposed economic sanctions on Georgia, it remains a major trading partner as most of Georgia’s imports are from “Russia, Turkey, UK, and Azerbaijan” and most of their exports went to “Turkey, Turkmenistan, Russia, and Armenia” (Turner 2009, 505-6).
The states in the South Caucasus have made incredible economic progress in recent years as they implement reforms and strive to become more business-friendly, and they have reaped wonderful rewards from their efforts. Continuing their efforts and sustaining their progress should give them strength to overcome challenges and foster increased growth. “Following reforms in 2001 to strengthen the business environment and promote exports and investment [Armenia’s] economy experienced five consecutive years of double-digit growth” (Turner 2009, 111). Armenia has “made progress [in the last twenty years] in implementing some economic reforms, including privatization, price reforms, and prudent fiscal policies, but geographic isolation, a narrow export base, and pervasive monopolies in important business sectors” hinder Armenia’s growth and sustainability, especially during the global financial crisis (CIA 2010, 33). “Armenia will need to pursue additional economic reforms in order to regain economic growth and improve economic competitiveness and employment opportunities, especially given its economic isolation from two of its nearest neighbors, Turkey and Azerbaijan” (CIA 2010, 33). Azerbaijan need to find solutions to “some fundamental problems which hinder further economic growth, such as insufficient diversification of output, low degree of economic diversification, high levels of corruption, and the existence of formal and informal monopolies in many economic sectors” (Business and Finance Consulting 2009, 8-10). As evidence of its economic progress, “Azerbaijan was rated the number one business environment ‘reformer’ in 2009 by the World Bank Group’s annual series ‘Doing Business’” due to many business reforms that are getting the attention of many foreign investors (Business and Finance Consulting 2009, 12). Despite their recent successes, Azerbaijan “has made only limited progress on instituting market-based economic reforms. Pervasive public and private sector corruption and structural economic inefficiencies remain a drag on long-term growth, particularly in non-energy sectors” (CIA 2010, 47). Georgia has made huge strides toward privatization of the economy and has made many reforms to quash corruption (Turner 2009, 505). The Georgian government has “reduced the number of taxes, simplified the tax code, reduced the number of licenses required to open a business, and reduced import duties” helping Georgia become one of the “easiest places to do business” according to the World Bank’s 2008 “Doing Business” report (Business and Finance Consulting 2009, 14). Because of these reforms and other efforts to make the country more business-friendly, the World Bank labeled Georgia as “the world’s number one reformer” in 2006 (Turner 2009, 505).
The fall of communism left Armenia, Azerbaijan, and Georgia on their own, they had to look outside for support and assistance. “After the collapse of the Soviet Union in 1991 . . . post-communist states [were] confronted first with the issue of survival as an independent state and then with the choice of strategic orientation” (Begoyan 2006, 293). The “political elites” of the young sovereign states had to make their decision “between these two—pro-Russian- or pro-Western-alternatives for their future foreign policy development. In the case of Azerbaijan and Georgia, the choice is in favor of the West, while in the case of Armenia it is in favor of Russia” (Begoyan 2006, 294-5).
Armenia is using a “complementary policy” balancing “the development of ties with both Russian/CIS security structures and the US/NATO” although the main focus is their relationship with Russia, countering the political and religious influence of Turkey in the region (Begoyan 2006, 289). Armenia has no official relations with Turkey or Azerbaijan (Bishku 2008). In Armenia’s view, Turkey is perceived as a threat to the region; there is a long history of negative relations between Armenia and Turkey, especially due to Turkey’s anti-Armenian and pro-Azerbaijani policies that have left Armenia isolated in the neighborhood (Begoyan 2006, 290). A major factor in Armenian everyday life and decision-making is the fact that “Armenia and Azerbaijan are technically still at war” (Turner 2009, 111). Georgia also knows about conflict and an uneasy relationship with a powerful neighbor—Georgia and Russia have strained relations due to Russia support of the breakaway regions of Abkhazia and South Ossetia (Bishku 2008; Begoyan 2006, 293).
“[R]eliance on external powers does not and, most importantly, cannot create more security and stability in the region in the current state of affairs. Instead, the region gets involved in a larger regional power game and becomes a ‘battle field’ for the external powers competing for more and broader influence in the region” (Begoyan 2006, 288). It is a balancing act for the South Caucasus, building relations with other countries without becoming the rope in a tug-of-war. There is much interest in the region from very powerful and influential countries. “Apart from global powers like the US and the EU, which obviously have strong and direct influence on regional security dynamics, the three neighboring players—Russia, Iran, and Turkey—also have their own roles in and perceptions of the region” (Begoyan 2006, 295).
The nations of Transcaucasia have joined many international organizations in an effort to support their security, stability and national interests. Most notably, each is a member of the United Nations, World Bank, IMF, Council of Europe, OSCE, NATO Partnership for Peace, European Bank for Reconstruction and Development, and the Black Sea Economic Cooperation; Armenia and Georgia are members of the World Trade Organization and the Asian Development Bank; Azerbaijan is a member of the Islamic Development Bank; Armenia and Azerbaijan are members of the Commonwealth of Independent States, while Georgia aims to gain full membership in NATO (Turner 2009; CIA 2010).
In late 1991, most of the former Soviet republics, including Russia, formed an organization known as the Commonwealth of Independent States, or CIS, in order to “coordinate intercommonwealth relations and to provide a mechanism for the orderly dissolution” of the Soviet Union (CIA 2010, 752). Armenia and Azerbaijan are founding members; Georgia eventually joined the CIS is 1993 after originally declining membership, but withdrew in 2009 due to conflict with Russia (Turner 2009; CIA 2010).
As the dominant power in the region, “Russia naturally has vital interests in the Caucasus region” and maintains fragile and complicated relations with the states in the South Caucasus (Begoyan 2006, 295). The policy of Moscow in the immediate post-Soviet era was to maintain “good relationships with the newly independent States” as the self-proposed “immediate and privileged interlocutor” (Irrera 2008, 3). “Russia is interested in mutually advantageous trade and economic relations with the states of the region, as well as the use of their transport capacities. The most important aspect of Russia’s economic interests is, however, the production and shipment of regional energy resources” (Begoyan 2006, 296). Concerning the energy sector, Russia tries “to play a dominant role in future oil and gas production and transportation in the Caspian Sea region” (Nichol 2011, 9). “After Vladimir Putin was elected president in 2000, Russia appeared to place great strategic importance on increasing, or at least maintaining, influence in the South Caucasus region” (Nichol 2011, 6). Russia gets involved with any “unsettled ethnic conflicts” because it shares a border with the region (Begoyan 2006, 296).
“Armenia has close security and economic ties with Russia” (Nichol 2011, 7). There is a Russian military presence in Armenia of over three thousand troops (Turner 2009, 111; Nichol 2011, 7). Armenia is the only state in Transcaucasia that welcomes Russian troops, because they see Russia “as the only power able to prevent Turkish influence in the region” (Begoyan 2006, 290). Russia has promised to ensure Armenia’s national security and supplies “more modern weaponry for Armenia’s armed forces” (Nichol 2011, 7). “Russia, the largest foreign investor and single-country trade partner of Armenia, is interested in deepening established economic ties as well as protecting its interests in the Caucasus” (Business and Finance Consulting 2009, 6). Armenia is very dependent on Russia for commercial and governmental support (CIA 2010, 33).
Azerbaijan signed a “treaty of friendship and co-operation” with Russia in 1997 (Turner 2009, 159). Azerbaijan is leery of the close relationship between Russia and Armenia, and tries to balance their ties to Russia with their distrust of Russia (Nichol 2011, 7). “Azerbaijan was the first Eurasian state to get Russian troops to withdraw” in 1993 (Nichol 2011, 8). Religion is a key factor in Azerbaijan’s relations with Russia, because, even though Azeris are moderate Muslims and extremists aren’t popular in the country, Russia views “Islamic fundamentalism as a growing threat to the region” and does not like the idea of Iran gaining any influence in the world (Nichol 2011, 7).
Georgia is the least friendly to and accepting of Russia out of the three Transcaucasian states. “Georgia has long tried to end the Russian military presence on its soil” (Nichol 2011, 7). Relations between Russia and Georgia are tense due to Russia’s support of the separatist regions of South Ossetia and Abkhazia (Turner 2009, 502; Begoyan 2006, 293; Nichol 2011, 4). President Saakashvili has taken a hard stance against Russian involvement in the regions (Turner 2009, 503). Russia had troops stationed in Georgia proper as late as November 2007, and sent active troops in response to military action against South Ossetia; even after a withdrawal, Russia keeps troops as a “buffer zone” around Abkhazia and South Ossetia (Turner 2009, 503). It is important to Georgia for Russia to remove its military presence from Georgian territory and lessen Russian influence in the area (Begoyan 2006, 293).
America is another global power with interest in the South Caucasus. The United States recognized the independence of all the former Soviet states in 1991 (Nichol 2011, 1). The U.S. created close ties with Armenia and Georgia because of democratic principles and pro-American leaders (Nichol 2011, 1). The United States has pushed for peaceful resolutions to the ethnic conflicts between Armenia and Azerbaijan and between Georgia and the secessionist regions within its territory (Nichol 2011, 2). One possible reason to why the US is involved in the region is the desire to lessen and “contain Russian and Iranian influence” (Nichol 2011, 2). “The United States is the largest bilateral aid donor by far to Armenia and Georgia” (Nichol 2011, 31). Armenia is one of the “biggest recipients of U.S. government aid” (Turner 2009, 111). “The U.S. focuses on promoting democratic and economic development in the region; U.S. policy is strongly influenced by a very effective pro-Armenian lobby in America” (Business and Finance Consulting 2009, 6). U.S. companies have made many investments into the oil production in Azerbaijan (Irrera 2008, 8). Azerbaijan has created political and economic ties with western states who share common interests, especially the United States, in order to create a balance against the partnership of Russia and Armenia (Begoyan 2006, 292). The United States continually affirms that Azerbaijan is an “important bilateral partner of the United States” (Nichol 2011, 3). The U.S. has a strategic partnership with Georgia and states that “our two countries share a vital interest in a strong, independent, sovereign, unified, and democratic Georgia” and supports Georgia’s full integration into the Western culture and organization such as NATO, as well as supporting Georgia’s economic growth and capacities as a state (Nichol 2011, 5). President Obama has “reiterated [his] firm belief that Georgia’s sovereignty and territorial integrity must be respected” (Nichol 2011, 5). The support has also been reciprocal, each state of the South Caucasus pledged support for the United States following the September 11th attacks, and each state has sent troops to Iraq and Afghanistan (Nichol 2011, 4-5). The West is held in high esteem by the three states.
“In terms of political and economic development, all three countries of the South Caucasus have declared their willingness to participate and are very active in the process of European integration” (Begoyan 2006, 295). The “European Parliament appointed an EU Special Representative for the South Caucasus” who is tasked with “assisting Armenia, Azerbaijan, and Georgia in the realization of political and economic reforms, to prevent civil conflict and prepare for the return to peace,” helping with foreign relations, and increasing awareness and significance of the EU in the countries (Irrera 2008, 5). The E.U., like the U.S., is very influential in the region “in terms of aid, trade, exchange, and other ties” and looks to deepen ties, “integrate the area into the West,” and help “it become peaceful, stable, and democratic” (Nichol 2011, 11). The South Caucasus is one of the regions in which the E.U. desires a “stronger and more active interest” according to the European Parliament (Irrera 2008, 5). The E.U. entered into partnership and cooperation agreements with Armenia, Azerbaijan, and Georgia in 1996 (Irrera 2008, 6-7). “The European Union is interested in closer integration with Armenia to protect regional security, safeguard energy supplies, and prevent migration from economically underdeveloped areas” (Business and Finance Consulting 2009, 6). Georgia “seeks more and closer links with the West” and “closer cooperation and integration in European institutions” (Begoyan 2006, 293). According to Georgia’s National Security Council, “the highest priority of Georgian foreign policy is to achieve full integration in the European political, economic, and security structures, thus fulfilling the historical aspirations of the Georgian nation to participate fully in the European community” (Begoyan 2006, 293-4). Georgia’s attraction to Europe, the US, and NATO is seen as a measure to lessen Russia’s importance and influence in the South Caucasus (Begoyan 2006, 294). “The South Caucasus represents one of the most important areas around Europe. It seems to be vital for the EU’s future energy security” (Irrera 2008, 13).
Iran and Turkey, two emerging regional powers, also have “keen interest” and pursuits in the South Caucasus (Begoyan 2006, 296). Iran wishes to regain influence and rebuild cultural relationships in former Persian territory (Begoyan 2006, 296). There is a gas pipeline between Iran and Armenia, through which Iran exports natural gas into Armenia to help “satisfy Armenia’s consumption needs” as well as “to generate electricity for Iran and Georgia” (CIA 2010, 33; Nichol 2011, 40). “Iran’s goals in the South Caucasus include discouraging Western powers such as Turkey and the US from gaining influence, ending regional instability that might threaten its own territorial integrity, and building economic links” (Nichol 2011, 10). Turkey also aims to lessen the influence of Russia and the west in the region (Begoyan 2006, 292). Turkey enjoys having a “gateway to Central Asia—the Turkic world previously closed to Turkey” through the states of Transcaucasia (Begoyan 2006, 297). Turkey looks to the “independence and territorial integrity” of the South Caucasus as vital to the “security and stability” of the whole region and Central Asia (Begoyan 2006, 297). Azerbaijan and Turkey have strong relations with each other stemming from common culture, language, and religion (Begoyan 2006, 292). “Turkey seeks good relations with Azerbaijan and Georgia and some contacts with Armenia, while trying to limit Russian and Iranian influence” (Nichol 2011, 9). Azerbaijan views Turkey as an ally and a balance to “Armenia’s ties with Russia” (Nichol 2011, 9). Georgia keeps open relationships with both Turkey and Iran because of the substantial number of Georgians living in those countries, and also because Turkey is an important trade partner, especially regarding the oil and gas pipelines that run through their countries (Nichol 2011, 9). Regarding the Nagorno-Karabakh conflict, Turkey and Armenia have showed signs of progressing toward a mutual resolution, but talks continue to stall as both side posture and balk at any real solutions (Nichol 2011, 10). “Iran and Turkey see potential new markets for their exports, potential suppliers of raw materials for their industries, and generally potential partners in economic cooperation of all kinds, particularly in the energy sector” although “these opportunities are limited: in the case of Turkey, by its uneasy relations with Armenia and continuing economic and political blockade of the country; and in the case of Iran, by its anti-Western policies and US economic and political suppression of Iran” (Begoyan 2006, 297).
“The area is the nexus between East and West and is a place of interest for the most important regional actors like Russia, Iran, and Turkey. It is, at the same time, the core of several global threats like Islamic radicalism, separatisms, drug trafficking, and instability” (Irrera 2008, 13). “Transport and communications obstructions and stoppages have severely affected economic development in the South Caucasus and stymied the region’s emergence as an East-West and North-South corridor” (Nichol 2011, 23).
Armenia is blocking Azerbaijan from Nakhichevan, Russia is restricting trade and ties with Georgia, as well as limiting Azerbaijan’s access to world shipping channels, Russia sometimes cuts off gas to Georgia and blocked their trade route with Armenia during the 2008 conflict, Turkey closed its border with Armenia in 1993 and limits Armenia’s ability to import vital energy and raw materials (Nichol 2011, 23-4).
Armenia began the twenty-first century as the most stable nation of Transcaucasia, with the fastest growing economy of the three states (Papazian 2008). “Armenia’s future progress depends on settlement of the Nagorno-Karabakh conflict and the lifting of the Turkish and Azerbaijani blockades” (Papazian 2008).
“The loss of the Soviet yoke and newfound independence paved the way for a resurgence of Islam” (Mannion 2008). Although Azerbaijanis have openly accepted the Islamic faith, Iran has helped increase the influence of the fundamentalist Islam movement, including the training of Islamic militant groups (Mannion 2008). There are some other fundamentalist groups who wish to form a separate state, and others wish to create an Azerbaijani Islamic state (Mannion 2008). There are many other obstacles in Azerbaijan’s path, including “the need for stepped-up foreign investment in the non-energy sector and the continuing conflict with Armenia over the Nagorno-Karabakh region (CIA 2010, 47). As Azerbaijan advances, they downplay and actually lessen the importance of trading with the former Soviet republics, while building economic and political ties with Turkey and Europe; Azerbaijan’s “long-term prospects will depend on world oil prices, the location of new oil and gas pipelines in the region, and [their] ability to manage [their] energy wealth to promote sustainable growth in non-energy sectors of the economy and spur employment” (CIA 2010, 47).
Georgia faces many challenges. Georgia struggles with “an internal ethnic conflict with the Autonomous Republics of Abkhazia and South Ossetia” (Begoyan 2006, 293). Their tax base has “eroded” which led to a “decline in the budget surplus and an increase in public borrowing needs” (CIA 2010, 248).
The states in the region will continue to have obstacles; their histories are full of hardships, conquering armies, political and economic strife, and ethnic conflict. Their histories are also filled with stories of survival and overcoming their obstacles.
Considering the fact that the South Caucasus is a region where the ‘state-to-nation asymmetry’, as Benjamin Miller calls it, is particularly strong, the region will always be vulnerable to conflicts. ‘The state-to-nation imbalance provides an underlying motivation for war and, therefore, makes certain regions more war-prone than others. The state-to-nation imbalance refers to the degree of compatibility between the existing division to territorial states and the national aspirations and political identification of the people. . . . Considering the size (territory, population, economy, military power, and political influences internationally) of the regional states in comparison with the size of external players, it is not difficult to see that the regional entities have very little power to influence the policies of external players and instead are being manipulated into bigger security games” (Begoyan 2006, 298-99).
Because of ethnic and other conflicts, the states of the South Caucasus haven’t fully partaken in “peace, stability, and economic development since the Soviet collapse in 1991. The countries are faced with ongoing budgetary burdens of arms races and caring for refugees and displaced persons” (Nichol 2011, 12). With histories full of conflict and survival, it is reasonable to suspect that the countries of the South Caucasus may never see peace, but may also survive whatever comes their way.
There are many problems in the region. Corruption is a problem, Armenia and Georgia have high levels of corruption and Azerbaijan’s levels are very high (Irrera 2008, 8-9). Conflicts are rampant. The nations have to focus on “closer regional integration and cooperation” (Begoyan 2006, 288). Armenia and Azerbaijan have to resolve their conflicts. Georgia has to resolve its territorial issues. Georgia looks for resolution by pledging to use peaceful means and to not use force, except for self-defense (Nichol 2011, 21-22). “All sides made mistakes and miscalculations” but we must focus on the future (Nichol 2011, 23). Security comes from defining your territory (Begoyan 2006, 288; Begoyan 2006, 293). The Karabakh problem threatens the “internal stability” of both Armenia and Azerbaijan (Begoyan 2006, 292). “Only a peaceful, negotiated settlement can bring the prospect of a better, more certain future to the people who used to live in the territories and those who live there now” (Nichol 2011, 15).
It is vitally important to keep the balance between Russia and the West (Begoyan 2006, 295). Cooperation “should come not only after conflicts are resolved, it should rather serve as a way to resolve them” (Begoyan 2006, 301). The relationships are complex, but the states will survive.
Reference List
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http://web.ebscohost.com.ezproxy.uvu.edu/ehost/pdfviewer/pdfviewer?vid=3&hid=107&
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Irrera, Daniella. 2008. Enlarging the ring of friends: Lessons from the European neighborhood
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Monday, November 28, 2011
Monday, September 19, 2011
NFL Playoff Predictions
Okay, this is a little late, but I wanted to do it anyway. Disclaimer - I am a Patriots fan and probably overestimate their chances, but hey, they are truly amazing. I wish they would go back to their old uniforms
AFC
1. Patriots - good additions on both sides of the field make them scary, and no one will outscore them
2. Ravens - seems like they improved their offense and their defense is always their bread and butter
3. Texans - Manning out= it's finally Houston's turn
4. Chargers - someone has to win the division
5. Steelers - they could win the North, I label them 1b in their division, always tough on defense and good offense
6. Jets - I hate to put them in, but they have proved to be a good, solid team, I need to see some kind of fall before counting them out
Most Improved - Browns - I doubt they ever win the division, but it seems like they have a solid base to build around
NFC
1. Packers - they are the defending champs and getting all their weapons healthy only makes them more dangerous
2. Buccaneers - my sleeper pick, they are ready to break through and win the South after coming so close last year
3. Cowboys - forget the hype in previous seasons, I think they are for real this year and poised for a big season
4. 49ers - they seem to be the most solid in the division
5. Saints - I like Reggie Bush, but maybe they are better without him?
6. Bears - I like the Bears to sneak in if Cutler can stay on his feet
Most Improved - Lions - I think they just miss the playoffs, not bad in the shadows of an 0-fer season
Wildcard Games
Jets over Texans
Steelers over Chargers
Cowboys over Bears
Saints over 49ers
Divisional Games
Patriots beat the Jets again
Steelers get revenge against the Ravens in defensive slugfest
Packers beat rival Bears
Saints' experience outlasts Buccaneers
How's that for divisional rematches? It wasn't planned.
Conference Championships
Patriots are too much for the Steelers
Saints improved game takes out Packers
Super Bowl
Patriots win again in Indianapolis, digging up memories of their domination in that city, especially since Peyton Manning isn't suited up
Patriots 45 - Saints 27
AFC
1. Patriots - good additions on both sides of the field make them scary, and no one will outscore them
2. Ravens - seems like they improved their offense and their defense is always their bread and butter
3. Texans - Manning out= it's finally Houston's turn
4. Chargers - someone has to win the division
5. Steelers - they could win the North, I label them 1b in their division, always tough on defense and good offense
6. Jets - I hate to put them in, but they have proved to be a good, solid team, I need to see some kind of fall before counting them out
Most Improved - Browns - I doubt they ever win the division, but it seems like they have a solid base to build around
NFC
1. Packers - they are the defending champs and getting all their weapons healthy only makes them more dangerous
2. Buccaneers - my sleeper pick, they are ready to break through and win the South after coming so close last year
3. Cowboys - forget the hype in previous seasons, I think they are for real this year and poised for a big season
4. 49ers - they seem to be the most solid in the division
5. Saints - I like Reggie Bush, but maybe they are better without him?
6. Bears - I like the Bears to sneak in if Cutler can stay on his feet
Most Improved - Lions - I think they just miss the playoffs, not bad in the shadows of an 0-fer season
Wildcard Games
Jets over Texans
Steelers over Chargers
Cowboys over Bears
Saints over 49ers
Divisional Games
Patriots beat the Jets again
Steelers get revenge against the Ravens in defensive slugfest
Packers beat rival Bears
Saints' experience outlasts Buccaneers
How's that for divisional rematches? It wasn't planned.
Conference Championships
Patriots are too much for the Steelers
Saints improved game takes out Packers
Super Bowl
Patriots win again in Indianapolis, digging up memories of their domination in that city, especially since Peyton Manning isn't suited up
Patriots 45 - Saints 27
Thursday, April 8, 2010
Paper on Employee Privacy
Employee Privacy v. Employer Rights
Introduction
One survey reports that employees waste one hour and fifty-two minutes each day at work on activities unrelated to their jobs, resulting in an estimated loss of $500 billion for employers (Miller and Wells, 2007). If employers are to curb this trend, the must monitor the activities of their employees. This brings into question the balance of obligations of employers and employees rights to privacy. The Constitution of the United States does not contain the word “privacy,” though Americans still expect respect for their human dignity and personal space (Miller and Wells, 2007) and the U.S. Supreme Court has “recognized an implied right to privacy” (Lenckus, 2007, p. 29) granting limited protection “from unreasonable intrusion into their private affairs” (Everett, Wong and Paynter, 2004, p. 295, and Shumaker, 2003). The courts and Congress have set privacy standards for employees in the United States successfully granting some protection from employer intrusion. Even with these legally sanctioned boundaries, employees still cannot expect complete privacy in the workplace or with employers (Genova, 2009, Miller and Wells, 2007, and “Surveillance Activities,” 2007).
Privacy is a complicated ethical issue; an issue that may never be fully resolved. There is a fine line between employee privacy and employer concerns (e.g., loss of productivity or legal liability following misconduct); it is considered a “fundamental moral obligation to respect [an] individual’s right to privacy and the legitimate requirements of employers to monitor the performance of their employees . . .” (Everett, Wong and Paynter, 2004, p. 296). In the aftermath of the New Jersey appellate court decision in Doe v. XYC Corp. in 2005, businesses are being held liable for employees’ illegal and unethical actions with the internet and other technologies, giving them more reason to “intrude” on employees’ privacy (Miller and Wells, 2007, and Lenckus, 2007). Many people would agree that employers should give some leeway when it comes to employees using company property (computers, phones, internet, etc.) for personal purposes in return for employees reasonably limiting such use (Davies, 2003). The question remains, where is the line between asserting employer rights and invading the privacy of employees?
History
The internet is an amazing invention with many benefits, and some drawbacks. Although the internet has made life easier in many ways, it has also provided more opportunity to be unproductive and unethical while on company time. Employers have the inherent right to monitor the workplace and internet use on company property, especially to promote safety, to minimize legal liability, to increase productivity and integrity, and to protect proprietary information (Genova, 2009, Lenckus, 2007, and Sotto and McCarthy, 2007). Although there aren’t laws that overtly and strictly define or protect it, privacy has been a key issue between employers and employees. Employers have experienced both extremes of the privacy spectrum, total privacy for employees and no privacy for employees. Companies have found that both ends of the scale provide potential problems and that there are great perils in mishandling employee privacy: lower profits, “lost revenue, [lower] productivity, legal or regulatory actions, declines in brand value and shareholder value, and recruiting and retention problems” (Krell, 2010, p. 44). The financial losses can be quite substantial. The FBI reported that, in 2005, businesses lost nearly $70 billion in computer crimes; their figures didn’t take into account costs of lost productivity, civil litigation or electronic pests like viruses and clogged networks (Miller and Wells, 2007). Effective monitoring programs and privacy policies could reduce that number. This FBI report and others like it prompt companies to monitor their employees and their actions. The surveillance of employees and the monitoring of their actions and work can border on invasion of privacy and sometimes cross the line. Companies that flirt with or cross the privacy line risk losing valuable employees, and if they receive a bad reputation regarding their privacy policies, they miss out on the best and most promising candidates for open positions. “Monitoring activities might protect the corporation from disruptive, illegal or deviant actions but can also challenge society’s notion of basic civil rights (Miller and Wells, 2007, p. 322). Civil rights are those guaranteed to all citizens because they are citizens; but is privacy a civil right? Has privacy ever been guaranteed in the workplace? Privacy expert Lewis Maltby, president and founder of the National Workrights Institute, says that “employees have virtually no privacy in e-mail communications, text messages or web sites that they visit at work” (Krell, 2010, p. 45). Some things are valued above privacy. Rand Corp. organized a study authored by senior social scientist Tora Bikson that “suggests that security and public safety trump personal privacy” (Privacy Issues, 2005, p. 9), but it is imperative to find equilibrium between employee privacy and employer/public safety and rights (Everett, Wong and Paynter, 2004).
Laws
Although some laws and regulations have been enacted and put in place to help find the privacy equilibrium, there isn’t one authoritative law regarding privacy in the United States (Sotto and McCarthy, 2007). There are about 30 state and federal statutes that, along with many judicial decisions, define privacy rights in the United States (Miller and Wells, 2007). The Supreme Court has interpreted the Fourth Amendment to the U.S. Constitution as protecting personal privacy in the public sector, and personal privacy in the private sector is protected by many statutes, case law and public policy (Everett, Wong and Paynter, 2004). U.S. employers are clearly given the legal right to monitor employee behavior to protect corporate interests (there are few state or federal statutes that restrict the monitoring or surveillance of employees) because it is simply and principally an issue of ownership (Miller and Wells, 2007). Congress began taking a hard look at privacy in the 1960s, the same time they began addressing civil rights. The Federal Omnibus Crime, Control and Safe Streets Act of 1968, aka the Federal Wiretapping Law, set rules regarding wire communications, prohibiting the interception of wire communications without consent, expressed or implied, by at least one party involved in the communication (Sotto and McCarthy, 2007). In 1970, Congress passed the Fair Credit Reporting Act (FCRA) establishing national standards for consumer reporting agencies that provide businesses with consumer reports, and requiring that businesses inform applicants that they are obtaining a consumer report outlining the applicants “character, general reputation, personal characteristics, and mode of living” from a variety of specified sources to check the applicants’ backgrounds (Sotto and McCarthy, 2007, p. 2). The FCRA was amended in 2003 through the Fair and Accurate Credit Transactions Act (FACTA), which prescribed the legal process of handling investigations into employee misconduct without the permission of the employee; FACTA allows employers to re-check employees’ backgrounds and at least look at private matters involving employee actions that may result in disciplinary actions or termination (Sotto and McCarthy, 2007). Although Congress addresses privacy from time to time, “the U.S. government has not passed a sweeping privacy law since the Electronic Communications Privacy Act (ECPA) of 1986” (Krell, 2010, p. 44). The ECPA, modified by the Stored Communications Act the same year, extends the Federal Wiretapping Law and regulates electronic communications, how they are obtained, used and disclosed. Under these acts, employers are still allowed to monitor employee email because the companies are considered to be the internet service providers, but it leaves questions about stored emails and if they are free to be monitored (Sotto and McCarthy, 2007, and “Employee Privacy,” 2002). Privacy concerns can accompany disabilities, so the Americans with Disabilities Act of 1990 sets standards of confidentiality and privacy in the application and employment processes (Krell, 2010).
One of the biggest problems facing employers has been the disparate laws and practices of the various legal jurisdictions, whether it is dissimilar laws from state to state or nation to nation. A step toward international uniformity was taken in 1997 when the International Labor Office proposed a nonbinding “Code of Practices on the Protection of Workers’ Personal Data” that outlines a fundamental right to privacy and sets guideline for lawmakers and administrators to follow (Everett, Wong and Paynter, 2004). This code is completely voluntary, but it is at least a model that can be followed and adapted by any government.
Health and Labor privacy were big questions in the 90’s. In regards to health issues, the Health Insurance Portability and Accountability Act of 1996 (HIPAA), enforced by the Department of Health and Human Services (HHS), protects the security and privacy of employees’ health information (Krell, 2010, and Sotto and McCarthy, 2007). HIPAA is one of the most serious privacy laws in the United States; employees’ health status and information are tightly protected. There are many circumstances that require special attention to privacy issues, organized labor being one of those situations. Concerning employers who use union labor, the National Labor Relations Board (NLRB) declared that employees could not be prohibited from using computers in employee “work areas” for personal emails (Sotto and McCarthy, 2007). The definition of work areas varies based upon work environment.
Today’s world is experiencing many problems regarding individual and national safety [which trump individual privacy (Privacy Issues, 2005)]. Following the attacks at the World Trade Center in 2001 and the international war on terror, the USA PATRIOT Act was enacted, giving more power and authority to the federal government to monitor electronic communications (“Employee Privacy,” 2002). Another problem related to privacy that individuals are encountering is the protection of their identities. The Federal Trade commission, in response to increasing numbers of identity theft cases, issued requirements in 2004 that employers take reasonable measures regarding the disposal of consumer report records for individuals (Sotto and McCarthy, 2007) meaning that employers can be held responsible for carelessly disposing of employees’ private information. Social Security numbers are especially vulnerable, and by 2006, at least 25 States had laws on the books that confine the utilization of Social Security numbers (Sotto and McCarthy, 2007). Employers can check backgrounds, find information about employees, monitor the employees and keep records, but they have to record and dispose of those records responsibly. Medical records (regulated by HIPAA) may be available to employers conducting background checks, yet the Genetic Information Nondiscrimination Act of 2008 “prevents employers from using genetic information, including family medical histories, in staffing decisions” (Krell, 2010, p. 44-45).
The United States has addressed privacy issues over the years, as has the rest of the developed world although the United States is more conservative in its view of employee privacy (tending to protect the safety and rights of businesses over the privacy of individuals). Compared to the United States, the European Union and Canada have passed more stringent laws concerning privacy. Europeans are guaranteed the right to privacy under the European Convention on Human Rights (Davies, 2003). They consider monitoring employees to be “an unacceptable invasion of [employee] privacy” under most circumstances (Miller and Wells, 2007). Europeans almost seem to consider their privacy to be sacred, and typically do whatever is necessary to protect the sanctity of that individual right.
Privacy Today
In the United States, why are employees more willing to cede some of their privacy at work? Companies are buying the time and energy of their employees and can reasonably expect a productive return on their investment, and reserve the right to monitor that investment as it pertains to the company (Everett, Wong and Paynter, 2004). Employees understand that there is a trade-off or an exchange, and as long as the issues and privacy policies are clear, they are willing to accept that trade. HR plays an important role in this privacy management and many companies are employing a chief privacy officer who’s “position reflects the growing importance of corporate privacy management” and who is responsible for communicating the company’s privacy policy to the employees (Krell, 2010, p. 44). Employers are implementing privacy policies and adapting them as technology advances. They are finding that these policies have to be clear and expressed for legal protection and employee motivation and understanding (underscoring the role of the privacy officers); some employees may view being monitored as a practice of an Orwellian Big Brother, even though the primary reasons for surveillance are protection of proprietary information and defense against hackers, viruses and service disruptions (Miller and Wells, 2007). Employers and HR departments are tasked with determining the employees’ “reasonable expectation of privacy” and extrapolating that when “employees do not expect privacy, they are not entitled to it in most cases.” according to John Barber, an attorney for Risk & Management Society Inc (Lenckus, 2007, p. 29). It is safe to develop privacy and monitoring policies that are comprehensive and clearly written, and understood by the informed employees—proven by a signed statement (Sotto and McCarthy, 2007). When employees have a clear understanding of their privacy rights at work, they are more willing to accept these conditions and less likely to sue their employers if they are terminated after inappropriate actions that were caught during monitoring or surveillance (Shumaker, 2003).
Future Implications
As markets and businesses expand across the globe, privacy issues will become more complicated. They will remain complicated as long as privacy laws vary from State to State and internationally remain dissimilar and sometimes contradictory (Schramm, 2005, and Everett, Wong and Paynter, 2004). Adapting to the guidelines offered by the International Labor Office would be a great first stride toward uniformity, and having the courts set sound and consistent precedent would be another productive step. Difficult and complex court cases at the state and federal levels are setting such precedents that continually affect and shape privacy policies (Miller and Wells, 2007). The internet has opened up another proverbial “can of worms” for privacy issues. As more people use online social networks (OSNs)—roughly fifty OSNs had more than one million registered users as of a November 2008 worldwide survey, with Facebook leading all OSNs with around 125 million users (Cardon, 2009)—and blogs, the questions of privacy extend outside the traditional workplace. “[Regarding OSNs] many postulate that they do have an expectation of and indeed a right to privacy, especially in arenas used to express personal freedoms and exercise individualism that has no bearing on their workplace” even if these internet postings “might not be considered job-appropriate by their employer” (Genova, 2009, p. 97). There will be many future court decisions that will shape the realm of privacy on the internet.
Families are also shaping privacy policies as traditional families are becoming untraditional. More families than ever are having two breadwinners with both parents spending increasing amounts of time at work. Because of the decrease in personal time, workplace facilities are seeing increased use for personal activities. Businesses are feeling the need to find a balance between their security and rights and the desire of their employees for privacy (Miller and Wells, 2007, and “Surveillance Activities,” 2007). “Ideally future innovation will provide more sophisticated security tools that can differentiate between corporate and personal data. This would allow corporations to provide adequate protection for corporate assets without unduly invading employee privacy. Future change will occur at a faster rate, requiring re-evaluation of the corporate security-privacy tradeoff, as technology and society continue to evolve” (Miller and Wells, 2007, p. 327).
Summary
“As our concept of privacy in the marketplace evolves, HR professionals are going to have to step up. . .and get themselves educated on, and aware of, these issues” (Krell, 2010, p. 45). Everyone, not only HR professionals, should be aware of their rights and responsibilities regarding privacy. They should know the laws that have been passed that limit employees’ privacy and employers’ rights. Knowing the laws and regulations, regardless of how disparate they may be, is half the battle. Americans do expect a degree of privacy and employers need to respect that. Employers expect professionalism and productivity and, as long as it remains legal and ethical, they should monitor their employees (which employees should also expect) and adapt their policies as technology and laws progress. No matter how much technology advances, it remains true that an ounce of prevention is worth a pound of cure—whether that prevention be the act of monitoring employees to prevent the liability that stems from misconduct or the implementation of a good monitoring program and privacy policy to prevent claims of invasion of privacy (Shumaker, 2003). The most important part of a privacy policy is finding the balance between the privacy of the employees and the rights of the employer. There are great benefits to a clear and expressed privacy policy. Employees are more willing to give up some privacy if they are aware that monitoring and surveillance are occurring and what their purposes are. Employers are then protected from legal action and can be more productive and profitable. Each company has to find the policy that works best for them and their employees, keeping in mind the balance of employee privacy and the needs of the company. The key is finding that fine line—the balance—and making sure that everyone knows where it is.
References
(2007). Are Surveillance Activities Violating Employee Privacy?. HR Focus, 84(8), 9. Retrieved from Business Source Premier database. (25830532)
Cardon, P. (2009). Online Social Networks. Business Communication Quarterly, 72(1), 96-97. Retrieved from Business Source Premier database. (36366004)
Davies, J. (2003). Human Rights and the Workplace. Credit Management, 41-42. Retrieved from ABI/INFORM Global. (465786161)
(2002). Employee Privacy: Computer-Use Monitoring Practices and Policies of Selected Companies: GAO-02-717. GAO Reports, 1. Retrieved from Military & Government Collection database. (18198280)
Everett, A., Wong, Y., & Paynter, J. (2004). Balancing Employee and Employer Rights: An International Comparison of E-Mail Privacy In The Workplace. Journal of Individual Employment Rights, 11(4), 291-311. Retrieved from Business Source Premier database. (21782457)
Genova, G. (2009). No Place To Play: Current Employee Privacy Rights In Social Networking Sites. Business Communication Quarterly, 72(1), 97-101. Retrieved from Business Source Premier database. (36366007)
Krell, E. (2010). Privacy Matters. HRMagazine, 55(2), 42-46. Retrieved from Business Source Premier database. (48155398)
Lenckus, D. (2007). Be Clear and Document Employee Privacy Restrictions. Business
Insurance, 41(20), 29. Retrieved from ABI/INFORM Global. (1277386531)
Miller, C., & Wells, F. (2007). Balancing Security and Privacy in the Digital Workplace. Journal of Change Management, 7(3/4), 315-328. Retrieved from Business Source Premier database. (28698642)
(2005). Privacy Issues Surface About the Use of RFIDs on the Job. HR Focus, 82(6), 9. Retrieved from Business Source Premier database. (17077034)
Schramm, J. (2005). Privacy at Work. HRMagazine, 50(4), 176. Retrieved from ABI/INFORM Global. (819064851)
Shumaker, T. (2003). Employee Privacy Versus Employer Rights. Nursing Homes: Long Term Care Management, 52(11), 60-63. Retrieved from Vocational and Career Collection
database. (11422523)
Sotto, L., & McCarthy, E. (2007). An Employer's Guide to US Workplace Privacy Issues. Computer & Internet Lawyer, 24(1), 1-13. Retrieved from Business Source Premier database. (23502454)
Introduction
One survey reports that employees waste one hour and fifty-two minutes each day at work on activities unrelated to their jobs, resulting in an estimated loss of $500 billion for employers (Miller and Wells, 2007). If employers are to curb this trend, the must monitor the activities of their employees. This brings into question the balance of obligations of employers and employees rights to privacy. The Constitution of the United States does not contain the word “privacy,” though Americans still expect respect for their human dignity and personal space (Miller and Wells, 2007) and the U.S. Supreme Court has “recognized an implied right to privacy” (Lenckus, 2007, p. 29) granting limited protection “from unreasonable intrusion into their private affairs” (Everett, Wong and Paynter, 2004, p. 295, and Shumaker, 2003). The courts and Congress have set privacy standards for employees in the United States successfully granting some protection from employer intrusion. Even with these legally sanctioned boundaries, employees still cannot expect complete privacy in the workplace or with employers (Genova, 2009, Miller and Wells, 2007, and “Surveillance Activities,” 2007).
Privacy is a complicated ethical issue; an issue that may never be fully resolved. There is a fine line between employee privacy and employer concerns (e.g., loss of productivity or legal liability following misconduct); it is considered a “fundamental moral obligation to respect [an] individual’s right to privacy and the legitimate requirements of employers to monitor the performance of their employees . . .” (Everett, Wong and Paynter, 2004, p. 296). In the aftermath of the New Jersey appellate court decision in Doe v. XYC Corp. in 2005, businesses are being held liable for employees’ illegal and unethical actions with the internet and other technologies, giving them more reason to “intrude” on employees’ privacy (Miller and Wells, 2007, and Lenckus, 2007). Many people would agree that employers should give some leeway when it comes to employees using company property (computers, phones, internet, etc.) for personal purposes in return for employees reasonably limiting such use (Davies, 2003). The question remains, where is the line between asserting employer rights and invading the privacy of employees?
History
The internet is an amazing invention with many benefits, and some drawbacks. Although the internet has made life easier in many ways, it has also provided more opportunity to be unproductive and unethical while on company time. Employers have the inherent right to monitor the workplace and internet use on company property, especially to promote safety, to minimize legal liability, to increase productivity and integrity, and to protect proprietary information (Genova, 2009, Lenckus, 2007, and Sotto and McCarthy, 2007). Although there aren’t laws that overtly and strictly define or protect it, privacy has been a key issue between employers and employees. Employers have experienced both extremes of the privacy spectrum, total privacy for employees and no privacy for employees. Companies have found that both ends of the scale provide potential problems and that there are great perils in mishandling employee privacy: lower profits, “lost revenue, [lower] productivity, legal or regulatory actions, declines in brand value and shareholder value, and recruiting and retention problems” (Krell, 2010, p. 44). The financial losses can be quite substantial. The FBI reported that, in 2005, businesses lost nearly $70 billion in computer crimes; their figures didn’t take into account costs of lost productivity, civil litigation or electronic pests like viruses and clogged networks (Miller and Wells, 2007). Effective monitoring programs and privacy policies could reduce that number. This FBI report and others like it prompt companies to monitor their employees and their actions. The surveillance of employees and the monitoring of their actions and work can border on invasion of privacy and sometimes cross the line. Companies that flirt with or cross the privacy line risk losing valuable employees, and if they receive a bad reputation regarding their privacy policies, they miss out on the best and most promising candidates for open positions. “Monitoring activities might protect the corporation from disruptive, illegal or deviant actions but can also challenge society’s notion of basic civil rights (Miller and Wells, 2007, p. 322). Civil rights are those guaranteed to all citizens because they are citizens; but is privacy a civil right? Has privacy ever been guaranteed in the workplace? Privacy expert Lewis Maltby, president and founder of the National Workrights Institute, says that “employees have virtually no privacy in e-mail communications, text messages or web sites that they visit at work” (Krell, 2010, p. 45). Some things are valued above privacy. Rand Corp. organized a study authored by senior social scientist Tora Bikson that “suggests that security and public safety trump personal privacy” (Privacy Issues, 2005, p. 9), but it is imperative to find equilibrium between employee privacy and employer/public safety and rights (Everett, Wong and Paynter, 2004).
Laws
Although some laws and regulations have been enacted and put in place to help find the privacy equilibrium, there isn’t one authoritative law regarding privacy in the United States (Sotto and McCarthy, 2007). There are about 30 state and federal statutes that, along with many judicial decisions, define privacy rights in the United States (Miller and Wells, 2007). The Supreme Court has interpreted the Fourth Amendment to the U.S. Constitution as protecting personal privacy in the public sector, and personal privacy in the private sector is protected by many statutes, case law and public policy (Everett, Wong and Paynter, 2004). U.S. employers are clearly given the legal right to monitor employee behavior to protect corporate interests (there are few state or federal statutes that restrict the monitoring or surveillance of employees) because it is simply and principally an issue of ownership (Miller and Wells, 2007). Congress began taking a hard look at privacy in the 1960s, the same time they began addressing civil rights. The Federal Omnibus Crime, Control and Safe Streets Act of 1968, aka the Federal Wiretapping Law, set rules regarding wire communications, prohibiting the interception of wire communications without consent, expressed or implied, by at least one party involved in the communication (Sotto and McCarthy, 2007). In 1970, Congress passed the Fair Credit Reporting Act (FCRA) establishing national standards for consumer reporting agencies that provide businesses with consumer reports, and requiring that businesses inform applicants that they are obtaining a consumer report outlining the applicants “character, general reputation, personal characteristics, and mode of living” from a variety of specified sources to check the applicants’ backgrounds (Sotto and McCarthy, 2007, p. 2). The FCRA was amended in 2003 through the Fair and Accurate Credit Transactions Act (FACTA), which prescribed the legal process of handling investigations into employee misconduct without the permission of the employee; FACTA allows employers to re-check employees’ backgrounds and at least look at private matters involving employee actions that may result in disciplinary actions or termination (Sotto and McCarthy, 2007). Although Congress addresses privacy from time to time, “the U.S. government has not passed a sweeping privacy law since the Electronic Communications Privacy Act (ECPA) of 1986” (Krell, 2010, p. 44). The ECPA, modified by the Stored Communications Act the same year, extends the Federal Wiretapping Law and regulates electronic communications, how they are obtained, used and disclosed. Under these acts, employers are still allowed to monitor employee email because the companies are considered to be the internet service providers, but it leaves questions about stored emails and if they are free to be monitored (Sotto and McCarthy, 2007, and “Employee Privacy,” 2002). Privacy concerns can accompany disabilities, so the Americans with Disabilities Act of 1990 sets standards of confidentiality and privacy in the application and employment processes (Krell, 2010).
One of the biggest problems facing employers has been the disparate laws and practices of the various legal jurisdictions, whether it is dissimilar laws from state to state or nation to nation. A step toward international uniformity was taken in 1997 when the International Labor Office proposed a nonbinding “Code of Practices on the Protection of Workers’ Personal Data” that outlines a fundamental right to privacy and sets guideline for lawmakers and administrators to follow (Everett, Wong and Paynter, 2004). This code is completely voluntary, but it is at least a model that can be followed and adapted by any government.
Health and Labor privacy were big questions in the 90’s. In regards to health issues, the Health Insurance Portability and Accountability Act of 1996 (HIPAA), enforced by the Department of Health and Human Services (HHS), protects the security and privacy of employees’ health information (Krell, 2010, and Sotto and McCarthy, 2007). HIPAA is one of the most serious privacy laws in the United States; employees’ health status and information are tightly protected. There are many circumstances that require special attention to privacy issues, organized labor being one of those situations. Concerning employers who use union labor, the National Labor Relations Board (NLRB) declared that employees could not be prohibited from using computers in employee “work areas” for personal emails (Sotto and McCarthy, 2007). The definition of work areas varies based upon work environment.
Today’s world is experiencing many problems regarding individual and national safety [which trump individual privacy (Privacy Issues, 2005)]. Following the attacks at the World Trade Center in 2001 and the international war on terror, the USA PATRIOT Act was enacted, giving more power and authority to the federal government to monitor electronic communications (“Employee Privacy,” 2002). Another problem related to privacy that individuals are encountering is the protection of their identities. The Federal Trade commission, in response to increasing numbers of identity theft cases, issued requirements in 2004 that employers take reasonable measures regarding the disposal of consumer report records for individuals (Sotto and McCarthy, 2007) meaning that employers can be held responsible for carelessly disposing of employees’ private information. Social Security numbers are especially vulnerable, and by 2006, at least 25 States had laws on the books that confine the utilization of Social Security numbers (Sotto and McCarthy, 2007). Employers can check backgrounds, find information about employees, monitor the employees and keep records, but they have to record and dispose of those records responsibly. Medical records (regulated by HIPAA) may be available to employers conducting background checks, yet the Genetic Information Nondiscrimination Act of 2008 “prevents employers from using genetic information, including family medical histories, in staffing decisions” (Krell, 2010, p. 44-45).
The United States has addressed privacy issues over the years, as has the rest of the developed world although the United States is more conservative in its view of employee privacy (tending to protect the safety and rights of businesses over the privacy of individuals). Compared to the United States, the European Union and Canada have passed more stringent laws concerning privacy. Europeans are guaranteed the right to privacy under the European Convention on Human Rights (Davies, 2003). They consider monitoring employees to be “an unacceptable invasion of [employee] privacy” under most circumstances (Miller and Wells, 2007). Europeans almost seem to consider their privacy to be sacred, and typically do whatever is necessary to protect the sanctity of that individual right.
Privacy Today
In the United States, why are employees more willing to cede some of their privacy at work? Companies are buying the time and energy of their employees and can reasonably expect a productive return on their investment, and reserve the right to monitor that investment as it pertains to the company (Everett, Wong and Paynter, 2004). Employees understand that there is a trade-off or an exchange, and as long as the issues and privacy policies are clear, they are willing to accept that trade. HR plays an important role in this privacy management and many companies are employing a chief privacy officer who’s “position reflects the growing importance of corporate privacy management” and who is responsible for communicating the company’s privacy policy to the employees (Krell, 2010, p. 44). Employers are implementing privacy policies and adapting them as technology advances. They are finding that these policies have to be clear and expressed for legal protection and employee motivation and understanding (underscoring the role of the privacy officers); some employees may view being monitored as a practice of an Orwellian Big Brother, even though the primary reasons for surveillance are protection of proprietary information and defense against hackers, viruses and service disruptions (Miller and Wells, 2007). Employers and HR departments are tasked with determining the employees’ “reasonable expectation of privacy” and extrapolating that when “employees do not expect privacy, they are not entitled to it in most cases.” according to John Barber, an attorney for Risk & Management Society Inc (Lenckus, 2007, p. 29). It is safe to develop privacy and monitoring policies that are comprehensive and clearly written, and understood by the informed employees—proven by a signed statement (Sotto and McCarthy, 2007). When employees have a clear understanding of their privacy rights at work, they are more willing to accept these conditions and less likely to sue their employers if they are terminated after inappropriate actions that were caught during monitoring or surveillance (Shumaker, 2003).
Future Implications
As markets and businesses expand across the globe, privacy issues will become more complicated. They will remain complicated as long as privacy laws vary from State to State and internationally remain dissimilar and sometimes contradictory (Schramm, 2005, and Everett, Wong and Paynter, 2004). Adapting to the guidelines offered by the International Labor Office would be a great first stride toward uniformity, and having the courts set sound and consistent precedent would be another productive step. Difficult and complex court cases at the state and federal levels are setting such precedents that continually affect and shape privacy policies (Miller and Wells, 2007). The internet has opened up another proverbial “can of worms” for privacy issues. As more people use online social networks (OSNs)—roughly fifty OSNs had more than one million registered users as of a November 2008 worldwide survey, with Facebook leading all OSNs with around 125 million users (Cardon, 2009)—and blogs, the questions of privacy extend outside the traditional workplace. “[Regarding OSNs] many postulate that they do have an expectation of and indeed a right to privacy, especially in arenas used to express personal freedoms and exercise individualism that has no bearing on their workplace” even if these internet postings “might not be considered job-appropriate by their employer” (Genova, 2009, p. 97). There will be many future court decisions that will shape the realm of privacy on the internet.
Families are also shaping privacy policies as traditional families are becoming untraditional. More families than ever are having two breadwinners with both parents spending increasing amounts of time at work. Because of the decrease in personal time, workplace facilities are seeing increased use for personal activities. Businesses are feeling the need to find a balance between their security and rights and the desire of their employees for privacy (Miller and Wells, 2007, and “Surveillance Activities,” 2007). “Ideally future innovation will provide more sophisticated security tools that can differentiate between corporate and personal data. This would allow corporations to provide adequate protection for corporate assets without unduly invading employee privacy. Future change will occur at a faster rate, requiring re-evaluation of the corporate security-privacy tradeoff, as technology and society continue to evolve” (Miller and Wells, 2007, p. 327).
Summary
“As our concept of privacy in the marketplace evolves, HR professionals are going to have to step up. . .and get themselves educated on, and aware of, these issues” (Krell, 2010, p. 45). Everyone, not only HR professionals, should be aware of their rights and responsibilities regarding privacy. They should know the laws that have been passed that limit employees’ privacy and employers’ rights. Knowing the laws and regulations, regardless of how disparate they may be, is half the battle. Americans do expect a degree of privacy and employers need to respect that. Employers expect professionalism and productivity and, as long as it remains legal and ethical, they should monitor their employees (which employees should also expect) and adapt their policies as technology and laws progress. No matter how much technology advances, it remains true that an ounce of prevention is worth a pound of cure—whether that prevention be the act of monitoring employees to prevent the liability that stems from misconduct or the implementation of a good monitoring program and privacy policy to prevent claims of invasion of privacy (Shumaker, 2003). The most important part of a privacy policy is finding the balance between the privacy of the employees and the rights of the employer. There are great benefits to a clear and expressed privacy policy. Employees are more willing to give up some privacy if they are aware that monitoring and surveillance are occurring and what their purposes are. Employers are then protected from legal action and can be more productive and profitable. Each company has to find the policy that works best for them and their employees, keeping in mind the balance of employee privacy and the needs of the company. The key is finding that fine line—the balance—and making sure that everyone knows where it is.
References
(2007). Are Surveillance Activities Violating Employee Privacy?. HR Focus, 84(8), 9. Retrieved from Business Source Premier database. (25830532)
Cardon, P. (2009). Online Social Networks. Business Communication Quarterly, 72(1), 96-97. Retrieved from Business Source Premier database. (36366004)
Davies, J. (2003). Human Rights and the Workplace. Credit Management, 41-42. Retrieved from ABI/INFORM Global. (465786161)
(2002). Employee Privacy: Computer-Use Monitoring Practices and Policies of Selected Companies: GAO-02-717. GAO Reports, 1. Retrieved from Military & Government Collection database. (18198280)
Everett, A., Wong, Y., & Paynter, J. (2004). Balancing Employee and Employer Rights: An International Comparison of E-Mail Privacy In The Workplace. Journal of Individual Employment Rights, 11(4), 291-311. Retrieved from Business Source Premier database. (21782457)
Genova, G. (2009). No Place To Play: Current Employee Privacy Rights In Social Networking Sites. Business Communication Quarterly, 72(1), 97-101. Retrieved from Business Source Premier database. (36366007)
Krell, E. (2010). Privacy Matters. HRMagazine, 55(2), 42-46. Retrieved from Business Source Premier database. (48155398)
Lenckus, D. (2007). Be Clear and Document Employee Privacy Restrictions. Business
Insurance, 41(20), 29. Retrieved from ABI/INFORM Global. (1277386531)
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Tuesday, February 2, 2010
2009 REMIX
Music is a very important part of many people's lives. Does music mirror society and the economy? 2009 was a year of so many downs. I noticed that in DJ Earthworms mashup mix "Blame it on the Pop," many of the top hits of 2009 prominently included the word "down." Previous years' mashups have been more positive, including the 2007 and 2008 Billboard Top 25 Mashups in the "United States of Pop". At first, this was a bit depressing, but then the compilation brings out an enlightening message. In an upbeat style, "Blame it on the Pop" seemingly takes all the bad of 2009 and musically provides an optimistic outlook for America.
We want the good (music, dance, fun) to extend into the future. We as Americans shouldn't worry about the future as long as we are actively creating it. When the sky falls down, when we get knocked down or stumble, Americans get back up. It is in our blood. It is who we are. The foundation of our great country is littered with "failures" and falling. The cement that holds us together is perseverance. We put a smile on our face and grow and move forward. We move past obstacles and adversity and come out better people, more united and better off. There is the danger of too much polarization. WE THE PEOPLE should always remember that we are the UNITED States of America, and will remain strong as long as we stay united (reference Aesop and Lincoln). We need to remember God. We need to look into our hearts and keep them pure. We need to live our lives based on the principles of being American, and create a brighter future. We have fallen down before, but we have always gotten back up. It will be a challenge. Can we do it? Stand up and say "Yes!"
http://www.youtube.com/watch?v=iNzrwh2Z2hQ
Above is a link to the music video for "Blame it on the Pop"
We want the good (music, dance, fun) to extend into the future. We as Americans shouldn't worry about the future as long as we are actively creating it. When the sky falls down, when we get knocked down or stumble, Americans get back up. It is in our blood. It is who we are. The foundation of our great country is littered with "failures" and falling. The cement that holds us together is perseverance. We put a smile on our face and grow and move forward. We move past obstacles and adversity and come out better people, more united and better off. There is the danger of too much polarization. WE THE PEOPLE should always remember that we are the UNITED States of America, and will remain strong as long as we stay united (reference Aesop and Lincoln). We need to remember God. We need to look into our hearts and keep them pure. We need to live our lives based on the principles of being American, and create a brighter future. We have fallen down before, but we have always gotten back up. It will be a challenge. Can we do it? Stand up and say "Yes!"
http://www.youtube.com/watch?v=iNzrwh2Z2hQ
Above is a link to the music video for "Blame it on the Pop"
Thursday, January 28, 2010
Words are Hollow
The President of the United States made some comments about why people distrust those in Washington. The American Dream can be reinvigorated. America can become less polarized. America is a great nation and can rise above any challenge. It starts with each one of us. We have to be attentive and hold our leaders responsible. It is up to us to build America the way we want it built. Words are hollow, we need to act if we want our leaders to respond and act.
Our President is a very charismatic speaker. He can say the things that (some) people want to hear. I can agree with many of the principles he spoke about--unity and bipartisanship, putting Americans first, keeping our country safe. I cannot disagree more on many of his interpretations of those principles. It baffles me to think that some people actually believe some of the processed garbage that keeps coming out of the "public servants." I agree that things need to be fixed, but how can you propose the same things, worded differently, and expect different results. If it is trust that Washington wants, they can have it. They'll just have to earn it back.
Our nation will begin trusting the Washington crowd . . .
when our leaders cut spending as well as taxes.
when politicians stop complaining about the processes they create and actually start to make a difference.
when they stop talking and start doing.
when they say "America is great," without saying that we need to change everything.
when we can trust that our hands are the only ones reaching in our pockets.
if Washington will allow Americans to freely enter the market and not punish them for being successful.
when Washington truly "encourages American innovation."
when Presidents stop blaming their problems on previous administrations. No one is forcing the Presidency on anyone.
when representatives remember who they represent and why they are currently employed.
when promises start to mean something.
when public opinions matter more than public opinion.
when government starts to shrink.
when politicians know when to walk away.
when Congressmen who become President stop acting like this is the first time they have had any chance to deal with the "problems" they talk about.
when the nation comes before reelection.
when the letters that matter most after your name stand for the state you're from, not the party.
when separation of powers is obeyed.
when politicians are willing to point fingers at themselves.
Basically, the trust will come when actions start backing up words.
Our President is a very charismatic speaker. He can say the things that (some) people want to hear. I can agree with many of the principles he spoke about--unity and bipartisanship, putting Americans first, keeping our country safe. I cannot disagree more on many of his interpretations of those principles. It baffles me to think that some people actually believe some of the processed garbage that keeps coming out of the "public servants." I agree that things need to be fixed, but how can you propose the same things, worded differently, and expect different results. If it is trust that Washington wants, they can have it. They'll just have to earn it back.
Our nation will begin trusting the Washington crowd . . .
when our leaders cut spending as well as taxes.
when politicians stop complaining about the processes they create and actually start to make a difference.
when they stop talking and start doing.
when they say "America is great," without saying that we need to change everything.
when we can trust that our hands are the only ones reaching in our pockets.
if Washington will allow Americans to freely enter the market and not punish them for being successful.
when Washington truly "encourages American innovation."
when Presidents stop blaming their problems on previous administrations. No one is forcing the Presidency on anyone.
when representatives remember who they represent and why they are currently employed.
when promises start to mean something.
when public opinions matter more than public opinion.
when government starts to shrink.
when politicians know when to walk away.
when Congressmen who become President stop acting like this is the first time they have had any chance to deal with the "problems" they talk about.
when the nation comes before reelection.
when the letters that matter most after your name stand for the state you're from, not the party.
when separation of powers is obeyed.
when politicians are willing to point fingers at themselves.
Basically, the trust will come when actions start backing up words.
Friday, August 7, 2009
How is anyone ever supposed to read bills when they are like this?
http://docs.house.gov/edlabor/AAHCA-BillText-071409.pdf
The Health Care Reform Bill, or the bill "To provide affordable, quality health care for all Americans and reduce the growth in health care spending, and for other purposes." What are the "other purposes"?
P.S. Thanks for the link, Liz.
http://docs.house.gov/edlabor/AAHCA-BillText-071409.pdf
The Health Care Reform Bill, or the bill "To provide affordable, quality health care for all Americans and reduce the growth in health care spending, and for other purposes." What are the "other purposes"?
P.S. Thanks for the link, Liz.
Thursday, July 30, 2009
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