By Thomas de Waal

The south Caucasus—the three nations of Armenia, Azerbaijan and Georgia—have always been the “lands in-between.” Between the Black and Caspian Seas, Europe and Asia, Russia and Iran, Christianity and Islam. And, more recently, between Soviet authoritarianism and European democracy.

In the last few years the positive gloss on the record of these post-Soviet countries is that, with Georgia taking the lead, the region was shrugging off the Russian yoke and making the transition towards democracy and prosperity. All three have posted impressive double-digit economic growth rates. The Baku-Tbilisi-Ceyhan oil pipeline, opened last year, put the region on the map and made it an important transit corridor for Caspian energy resources. Georgia’s peaceful “Rose Revolution” was perceived to have made it a beacon of democracy and an example to its neighbors. If only the South Caucasus could sort out its “frozen conflicts,” the optimists said, the region could become a progressive hub in the emerging greater Black Sea region.

The broken heads and tear-gas canisters on the streets of Georgia this month suggest that the reality is much bleaker. Far from moving forward, the south Caucasus is better seen as being in nowhere land, bogged down in a state of semi-democracy and instability which outsiders are incapable of pulling it out of.

Georgia’s young president, Mikheil Saakashvili, badly tarnished his democratic image Nov. 7, when he sent in riot police to break up peaceful opposition protests with truncheons, tear-gas and water-cannon. He then pulled off the air two pro-opposition television channels—one of them owned by Rupert Murdoch—and imposed a state of emergency, which was eventually lifted last Friday. He subsequently called early presidential elections for January.

The contrast to the way Mr. Saakashvili himself came to power was painful. The “Rose Revolution” that he led in 2003 succeeded because his predecessor, Eduard Shevardnadze, though demonized as an autocrat, showed admirable restraint. Mr. Shevardnadze, facing much bigger protests, decided not to use force or to shut down an opposition television station, and resigned with dignity.

Despite recent events, Georgia is still the most democratic place in the south Caucasus and it is still possible—though unlikely—that Mr. Saakashvili will respond to pressure and form a more pluralistic coalition government in the New Year. The others have retreated further from democracy. Armenia’s main opposition television station, A1+, was closed years ago. Azerbaijani authorities have imprisoned numerous anti-government journalists this year; the latest is Ganimat Zahidov, editor of the leading opposition newspaper Azadliq and a prominent critic of the governing class, who was sentenced to two months’ pre-trial detention on unlikely charges of “hooliganism” on Nov. 11. In both Armenia and Azerbaijan, everyone expects that the ruling elite will do all it can to hang on to power in next year’s presidential elections. The polls will go ahead but the results are pre-ordained: Leaders in the Caucasus have taken to heart Vyacheslav Molotov’s maxim that “the trouble with free elections is that you stand a chance of losing them.”

Strong economic growth figures also fail to give the full picture. Certain social groups in the capitals have done well, while unemployment and rural poverty remain extremely high. The economies of the region are heavily monopolized, with politically-connected cronies reaping most of the rewards. Billions of dollars of oil wealth are beginning to flow into Azerbaijan, but the benefits are so far not trickling down to society as a whole.

Most worryingly, “frozen conflicts” dating back to the chaotic days of the Soviet Union’s collapse in 1991 are far from frozen. All three countries have some of the fastest-growing defense budgets in the world and stubborn intransigence to match. Georgia and Russia are playing irresponsible brinkmanship with the disputes over Abkhazia and South Ossetia, the two breakaway regions of Georgia increasingly under Moscow’s control. Azerbaijan is upping the belligerent rhetoric over its lost territory of Nagorno-Karabakh, while Armenia simply declares the problem solved and says that the Karabakh Armenians have seceded. The chances of some kind of armed flare-up in at least one of these conflict zones in the coming year is disturbingly high. The consequences could be catastrophic.

At least three pockets of turbulence lie ahead that threaten to bring new instability. In December, Kosovo may well declare unilateral independence and be recognized by a number of foreign states. Whatever Western governments choose to say, this will strengthen the confidence of the Caucasian separatist territories that time is on their side and that the facts on the ground will eventually be recognized in perpetuity. In the Georgian case, Moscow will choose to exploit this and give even greater support to Abkhazia and South Ossetia, while Tbilisi may respond foolishly.

Georgia has become an object of detestation amongst the Russian elite, and two sets of elections imminent in Russia will also encourage populist politicians to engage in even more aggressive Georgia-bashing. The Russian military has made at least three covert air incursions into Georgia in the last year, thankfully without any casualties. More overt intervention to provoke the Georgians could trigger a dangerous showdown between the two countries.

The last event on the horizon is the one that worries Russia the most: NATO’s April summit in Bucharest. The United States has been leading the push for Georgia to be given a Membership Action Plan at the summit which could lead to its eventual accession to the alliance. The Georgians see NATO membership as their best guarantee of independence from Russia, while Moscow wants to stop this happening at all cost.

The Georgia-in-NATO issue is deeply political and needs to be handled very carefully. If you tell the Georgians that their country is too turbulent to deserve NATO accession, you virtually hand a carte blanche to Russia to destabilize the situation further and prove the merits of that argument. But to put Georgia on a fast-track into NATO is equally irresponsible. The alliance should not be expected to absorb a country that has two unresolved conflict zones with Russian peacekeepers in them. The danger is that if Georgia joins NATO before the conflicts are resolved, those peacekeepers will simply change their helmets and be re-labeled Russian defenders against “NATO aggression.”

Responsible government, slow public sector reform, dialogue with minorities and oppositions, an open media—all these dull processes are needed to make sure the south Caucasian states make an effective transition to stability and modernity. Yet Western countries lack strong leverage and will to persuade the elites to pursue these goals. The U.S. and Europe have plenty of agendas in these countries—energy security, alliance-building in the face of Russia and Iran, tackling organized crime and terrorism. It also has tactical instruments—in evidence in the last fortnight as Western officials flew into Tbilisi to twist the Georgian president’s arm to get back on democratic track. But it shows no evidence of having an overall strategy for the region or a vision for its future. At best the countries in-between are stuck; at worst they risk slipping into turmoil, let down by their leaders and the competing ambitions of the powers around them.

Mr. de Waal is Caucasus editor with the Institute for War and Peace Reporting and author of “Black Garden: Armenia and Azerbaijan Through Peace and War” (NYU Press, 2003).

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