The topic of this conference is regional cooperation and regional integration. Regional cooperation is like motherhood--no one is against it. But like the weather, no one seems to be able to do anything about it.

We begin with different approaches to regional cooperation today. If I understand the positions of the three republics, the following is the picture.. Georgia would be happy and willing to see immediately the founding of institutions as the basis for a cooperation and integration system; that is, to take the three states of Georgia, Armenia and Azerbaijan and create a regional organization with various institutions supporting it. Azerbaijan says nothing should be done now, until the Nagorno Karabagh conflict is resolved. Armenia says maybe we should take moderate and concrete steps that are achievable now. These steps, which can have immediate benefits to people today, will contribute to an atmosphere of confidence and trust between states and peoples necessary for the resolution of the conflict. To the extent that many of the outstanding issues--the issues separating Nagorno Karabagh and Azerbaijan--are matters of a lack of confidence and trust, any step that could facilitate the relationship are steps that we think should be taken.

As the presentations this morning made clear, economic benefits are perceived as the driving force of regional cooperation in the South Caucasus. The first item brought forth in that respect is oil and pipelines. Then comes the role of the region in linking East and West, North and South, Europe and Asia; and the complementary of the markets and economies. The economic dimension is followed by the social dimension (health, natural disasters, the fight against terrorism and drug trafficking). The last category is cooperation in the political and security areas.

This brings us to the title of my talk, "The Politics of Promises," which is an attempt to describe the dynamics of the cooperation process: Resolve the Nagorno Karabagh conflict and this region will turn into paradise. This is a message from the World Bank, the IMF, the European Union; this is the promise Turkey makes to us: end the conflict and we will be friends. This is the promise of the oil companies: end the conflict, and see what benefits you will reap. Even Azerbaijan, President Aliyev himself, says: end the conflict and you may get the pipeline. Behind these promises is a set of other promise: a democratic Azerbaijan, some kind of status for Nagorno Karabagh, and of some system of security.

First, let me clarify that while we view the various conflicts in this region in their specificity, they are likened in a number of ways. One link is the principle of blockades or lack of communication, whichever the case--we make a great deal of difference to the Armenian economy. so does the lack of communication through the Georgian-Abkhazian-Russian railroad. If the latter is opened, the significance of the first diminishes. Moreover, the models, formulas and mediators used to resolve successfully one conflict will impact the approach to and provide the momentum to the resolution of the others.

Second, speaking of the Nagorno Karabagh conflict, the issue is not and has never been international law. International law consists of a number of principles some of which were discussed this morning: the territorial integrity of states, the self -determination of peoples, and the peaceful resolution of conflicts. As far as we know, there is no hierarchy of principles. And, if a country or a series of countries--even if 54 of the 55 countries of OSCE--decide that territorial integrity is a higher principle, that is so far a political position and not a legal understanding. To create a hierarchy may or may not be a good idea, I donղt know, but it is not an approach that has the required consensus.

Even for those who place it on a higher plane, the principle of territorial integrity has certainly not been absolute. We have seen many countries, many states collapse and give birth to a larger number of countries: Yugoslavia, the Soviet Union and Czechoslovakia are very recent examples. The international community did not tell Czechoslovakia or the others that they cannot divide up. Some states effectuated a friendly divorce. Their different elements did not get along, they decided to separate.

The international community seems to insist on territorial integrity when there is no happy divorce and the Center decides to use force. There is a danger here that the principle of territorial integrity may degenerate into a justification for the violation of the other principle, which my friend Davit Shahnazarian mentioned this morning - the principle of the peaceful resolution of conflicts. There is a danger that the abuse or misuse of the principle of territorial integrity may degenerate into something worse that what it is now--a denial of the principle of self-determination.

The principle of territorial integrity does not seem to be absolute and higher even for President Aliyev. For those of you who followed his trip to Pakistan, you will remember that he thought that self-determination was the most important principle for the problem of Kashmir.

Our friends sometimes tell us that the international community accepts the use of force and rejects only its excess when insisting on the principle of territorial integrity. I wonder what will happen if Quebec decides to secede from Canada. Think about it for a minute. Will the international community wait and watch Ottawa send its planes and tanks to destroy opts for independence from Canada next time? Just think, is this feasible?

Where is it that the international community accepts the use of force? I am afraid that sometimes that is tied to a kind of racism. That is, the international community will accept the use of force by some states, and the use of force against some peoples, but not others.

The principle of self-determination is not just another principle. It is very much part of the European and world security system which we are trying to sustain through the principle of territorial integrity alone. It is a guarantee that change can take place peacefully. It was not put there as a second thought.

If security systems are to last, they have to have the dimension of being just for all, not just safe for some.

In turn, self-determination does not necessarily mean independence is to deny the essence of self-determination itself. Sometimes, it is just impossible to keep a marriage going. Sometimes differences and antagonisms--historical, religious, ethnic--and experiences may be such that the world would be much safer and more stable if there was separation. Sometimes, there is no escape from it.

But one thing is clear. Wherever self-determination may lead, it has to proceed with the full participation of the people whose fate is in question. That is, when the destiny of a people is being decided, that people have to be part of the decision-making. If the international community finds that it has difficulty with the principle of self -determination leading to full independence for a people and it would like to convince a people--for the sake of the international security system--not to insist on full independence, then the international community has to make that people an offer that latter cannot refuse. There is no other way of reconciling these principles when territorial integrity is used not for the purpose of ensuring normal relations between states but to establish the domination of one people over another, and possible worse.

Attempts to deal with the clash of principles by reducing all such problems to that of "the right of minorities" is not a solution. Armenians in Baku can be described as a minority. Armenians in Nagorno Karabagh constitute a qualitatively different entity.

I should say a word about one argument that came this morning on the criterion of the viability of states. It was a surprising argument that followed the following logic: some people can be denied their right to self determination because they are too small, and small states wet the appetites of bigger states who would then swallow the smaller states, therefore we should satisfy that appetite from the beginning and let the bigger state swallow the smaller state from the start and avoid future problems. While this may be an effective way, it is not the best way to solve the world's problems. There are various countries around the world that are very small and which are doing well. One of the purposes of having international law and international security systems is to protect the small against the larger states. We must be careful not to accept an argument just because it is rational: the problem with many of the tragedies humanity has lived through was not that their initiators lacked rational arguments.

There are some who see the problem from the wider perspective of European security structures. The argument is that there are many Kharabaghs in many countries in Europe and throughout the world, we cannot give Nagorno Karabagh what it needs because that would be destabilizing. Once more we are being asked to sacrifice the legitimate interests and rights of the Armenian people in the name of some higher interests or principle. The last time that happened we ended as the victims of a genocide, yet to be recognized. This conflict should not be vested with so much significance that it makes its just solution impossible.

Let us now deal with the realities of the Nagorno Karabagh conflict. One important characteristic is that although Azerbaijan is willing to sit in a group setting such as the OSCE Minsk group to talk with representatives of Nagorno Karabagh with regard to withdrawals, it is unwilling to sit with the same leaders to discuss the question of the status of the territory. We have to ask. Why? Why could Georgia sit an talk to Abkhazia, Russia could sit and talk to Chechnya, and the list goes on, while Azerbaijan, which claims that Karabaktsis are its citizens, will not talk to them.

Azerbaijan has certainly had enough time to know what to offer. This is the key to the whole negotiating process that will lead to the resolution of the conflict which, in turn, will bring prosperity and happiness for all. We cannot accept that it is a matter of public opinion. Domestic politics is to be based on a compromise, which means that there will not be a party to this conflict where any one of the parties will feel that they received everything they wanted. That much we know.

The reason for Azerbaijani refusal to negotiate with Nagorno Karabagh is that it is not ready to negotiate seriously. Azerbaijan feels that it does not have to negotiate; that would mean to achieve a compromise, to make concessions. Azerbaijan feels it can have everything, because it has oil, that newly found friends in the international community, "oil diplomacy," will deliver Nagorno Karabagh to Azerbaijan on a plate. If that does not work, either economic strangling or profits from oil will provide, Azerbaijan believes, the military means to undertake and win another war against the Armenian side that would be weakened over the years as a consequence of the blockades. Azerbaijan does not feel that it needs to negotiate seriously, it does not need to sit and resolve the matter on the merits of the case, taking into consideration the legitimacy of the interests of all concerned.

This is where the paradox is.

That which the international community and our friends present us as the source of future prosperity is at the present the source and the basis for Azerbaijani intransigence, inflexibility negotiating and, in fact, its unwillingness to negotiate seriously. What are we to think of that oil?

Foreign Minister Hasanov says this is a war situation. The absence of peace, he says, is war. My good friend, Vafa Gulizade, says oil is, of course, a weapon in this war and Azerbaijan will use it diplomatically and otherwise. Whether Azerbaijani "oil friends" intend to oblige Azerbaijan and act according to that logic remains to be seen. The fact remains Azerbaijan is acting on the basis of that logic, it believes they will do so and has adopted, therefor, a strategy of negotiations emanating from that logic. Azerbaijan is negotiating the status of Nagorno Karabagh with "oil friends" and oil companies, not with the Armenian side, not with the people of Nagorno Karabagh.

That which the international community and many of our friends see as the basis of future prosperity and happiness, oil, has become the main obstacle today to a negotiated solution. for the Karabagh Armenians and for the Armenian citizen oil is certainly not looking like the peace maker or which will bring prosperity. Oil, or rather the role of oil in Azerbaijani strategy, is the main obstacle to peace and prosperity and to regional cooperation.

Azerbaijan has created this obstacle to regional cooperation today and, in fact, pursues a policy of isolating Armenia, because it feels-- I think wrongly and tragically wrongly -- that time is on its side. When one considers that serious investments are unlikely in a region where only a fragile cease-fire exists and serious negotiations are not taking place, the paradox becomes a vicious circle, and Azerbaijan itself may be caught in it, I do not think that time is on anyone's side.

There is a curious, almost incongruous logic the way Azerbaijan has related war and diplomacy.

Azerbaijan believed in 1991 and continues to believe today that it has the right to resolve the question of the status through war. The conflict that began in 1988 was a political one. Azerbaijani first response was the organization of programs against the Armenians of Sumgait. In 1991 it militarized the conflict by using Interior Ministry forces, assisted by the Soviet army, to deport the population of 14 Armenian villages in the north of the then Nagorno Karabagh Autonomous Region. Then it expanded the offensive until it became an all out war--air force, tanks, artillery and all-- against not only Nagorno Karabagh but also Armenia. In other words, it used war as not only a legitimate but also the preferred method to resolve the problem of the status of Nagorno Karabagh.

Then it lost the war. In the process it also lost districts adjacent to Nagorno Karabagh that had been used to destroy Karabagh villages and towns. It also ended up with a large number of internally displaced persons.

As a fragile cease-fire enters its fourth year, Azerbaijan has determined that the war, especially its consequences, had nothing to do with the status problem: it expects occupied territories to be restored to it without any solution to the status or security issues. This would tip the delicate military balance on the ground--the main reason for the maintenance of the cease-fire-in Azerbaijani favor. Azerbaijan is also demanding that the status issue be resolved in substance on the basis of the recognition of Azerbaijan's territorial integrity before it begins serious negotiations.

If Azerbaijan is aiming at having Nagorno Karabagh have some kind of de jure relationship with Azerbaijan, it has to do it either by war or by convincing the people of Nagorno Karabagh. Nothing Azerbaijan has done so far could have inspired Nagorno Karabagh any confidence regarding Azerbaijani attitudes and intentions. Azerbaijan should have negotiated seriously withdrawals and status rather than hijacking the OSCE Lisbon Summit.

The argument that the problems of minorities or ethno-territorial units can be resolved without secession through the democratization of states--i.e., elimination through constitutional means of grievances that lead to demands of secession--is valid in the abstract and may apply to some states.

Anyone who believes that Azerbaijan is or will become a democratic country must believe in fairy tales. I do not know of a single state whose economy and politics is based on one single natural export resource that has been able to achieve that. And I certainly have no reason to believe that Azerbaijan will be the first in that category. At any rate the record of the international community taken together and individual states on the matter of placing democracy and human rights above economic interests is so dismal that to believe in the promise of a democratic Azerbaijan washing in oil would continue an act of suicide. The international community and the mediators have been even unable to convince the leader of Azerbaijan to talk to "their citizens," and yet they want us to believe in Azerbaijanian blockades and more bombs and deportations, if not worse, it is hardly relevant whether elections in Azerbaijan take place or not, and whether these are democratic or not when they do take place.

Mr. Herzig stated very aptly this morning that while believing in regional cooperation, Azerbaijan places the issue of Karabagh higher. But what is the issue of Karabagh for Azerbaijan? That is the fundamental problem. Azerbaijan does not see the conflict as involving real people that have universal rights; it does not see a conflict the solution of which requires recognition of the legitimate interests of the other party. Azerbaijani is a medieval concept of reestablishing domination over Nagorno Karabagh.

There has been nothing that I have read or seen or heard over the past five years of negotiations to convince me that Azerbaijan really ascribes the people of Nagorno Karabagh the characteristics of an entity that has any rights; Azerbaijan would deal with the status issue as a medieval ruler, a Sultan, would do: the status will be granted as a favor.

As for the substance of the status, the Azerbaijani leadership visualizes nothing more than a colonial one. A senior Azerbaijani official recently articulated publicly his vision of the territory in Washington, DC, as "the resort area" for oil-rich Azerbaijanis and he was certain Nagorno Karabagh Armenians would be needing nothing more than a chance to benefit from their largesse. In other words, becoming waiters and waitresses should be a strong enough incentive to Nagorno Karabagh Armenians to give up what they have in fact, freedom.

The same official had stated in an earlier interview that Armenians could leave their territory if they do not like what status Azerbaijan has in mind for them. The Azerbaijani thinking is dangerous; it also does not justify the readiness of the mediators to believe in their promises.

The other aspect that is extremely obstructive and dangerous in the Azerbaijani position with regard to this conflict and to regional development is to place the conflict and Azerbaijan-Armenia relations in the context of Cold War mentality. The argument is that Russia is an ally of Armenia and helps Armenia while Azerbaijan is with the West and NATO; that Armenia has good relations with Iran while Azerbaijan is not a friend of Iran and associates with NATO-member Turkey.

Russia has provided arms to both Azerbaijan and Armenia and has taken a position supporting Azerbaijani territorial integrity as a starting point, hardly a pro-Armenian position. The presence of Russian bases in Armenia is through an agreement between two independent states in conformity with their national interests. It is no different than the continuing presence of American and NATO forces in Turkey and it is in view of Turkey's decision not to establish diplomatic relations with Armenia and on occasion making veiled threats to its security.

Solid and healthy Russian-Armenian relations correspond to the national and security interests of Armenia. At a time when NATO and Russia have engaged in a constructive process to develop together European security structures, Azerbaijani charges could only be viewed as an appeal to those elements in the international community that regret the end of the Cold War.

Having normal relations with all the neighbors, including with Iran, is a founding principle of Armenia's foreign policy and representing it as a crime says something about an Azerbaijan that confuses policy with propaganda, not Armenia.

To create imaginary lines, axes of strategic antagonisms when Russia, the US and France have together assumed the co-chairmanship of the Minsk group does not forebode well for the negotiations and is not a good basis for regional cooperation in the future.

In summary, the same economic dimension that is supposed to be the basis, the driving force, for the future happiness of this region is at the present time an obstacle for the resolution of that conflict. This is the paradox of that situation. The argument that a few more dollars will keep Karabagh Armenians happy or that the lack of it will make them unhappy should be known to be false to anyone who has studied the process of colonization and decolonization. It is up to Nagorno Karabagh to decide whether they want to exchange freedom for prosperity, even if that is a choice they have to make. At any rate, the politics of endless, and as it turns out empty, promises for economic prosperity will not convince Nagorno Karabagh to recognize Azerbaijan's territorial integrity.

As a matter of fact, no promise may convince Nagorno Karabagh to accept Azerbaijani territorial integrity, because what Azerbaijan understands by it so far is Azerbaijani domination over Nagorno Karabagh. The principle of territorial integrity is accepted as part of the management of relations between states; the principle of self-determination is a part of the management of relations between peoples on the one hand and between peoples and states on the other. Azerbaijani understanding of territorial integrity, reflected in its negotiating position--or rather in its position not to negotiate--has turned the principle of territorial integrity into a license to kill and has made a mockery of international law.

We all agree that the conflicts are an obstacle to prosperity, we agree that economic cooperation is absolutely necessary. I do not think that anyone disagrees that it is necessary that the states of this region must work together and develop common outlooks, even a common security system or that states have a responsibility to create conditions for their citizens to lead better lives. Armenia and Nagorno Karabagh are ready yet to engage in neither.

We also know that the economic dimension has been critical in making future conflict difficult, if not impossible, between traditional enemies--such as France and Germany, when a just and equitable set of political principles have been accepted by the contending parties. Coal and steel became contributing factors to European integration when the parties accepted a political settlement following World War II. Neither France nor Germany tried to use coal or steel could have contributed to European cooperation or integration; and the use of coal or steel by one or the other as a means to settle the conflict would only have contributed to the continuation and deepening of the conflict. Oil and pipelines cannot be ascribed a different function in this conflict.

The politics of promises at this time is only legitimizing and strengthening the inflexible position of Azerbaijan. I am not saying there should not be oil exploration, oil extraction or oil pipelines. But to link these two until such time as there is a political settlement is to make them an obstacle rather than a contributing factor to peace, which will make regional development and cooperation possible.

Oil and pipelines will, no doubt, be strong incentives to the preservation of peace and, eventually, to the development of a collective and Nagorno Karabagh and then disengage from the economic warfare which that linkage is introducing in the region.

Since independence, each of the republics has come a long way and has done it more or less alone. The three republics were once brought together, ideological justification. Now they are independent and no hegemony should return to this region, whether on the basis of ideology, security, or oil.

To resolve the conflict, we need new, imaginative solutions, unorthodox solutions based on the merits and arguments of the legitimate interests of the parties to the conflict. Of course, the solution will be based on a compromise: and time will not change the nature of that compromise. Time is on no one's side. But the more we connect issues which are complex in and by themselves, such as oil and pipelines, to a conflict which itself is complex enough, the chances are that we multiply geometrically the complexity to the point where neither problem will be solved.

The solution to the conflict must also have a strong security dimension. History has shown that most security systems that are imposed without due regard to the legitimate interests and the basic identity of the subjects involved and solutions which do not address the real concerns of real people end up exploding or imploding.

We know there must be a compromise somewhere that is acceptable to everyone. We know Azerbaijan knows the same. We also know, at this point, that Azerbaijan is not ready to accept to a compromise because it thinks that it can leverage its yet unrealized potential oil profits to get more than what it thinks it can get today if a compromise was to be reached today. That difference, Azerbaijan believes, time will deliver through "friends in oil," or through the economic strangling of Nagorno Karabagh and Armenia, or through another war. To gain that difference, Azerbaijan is willing to play a waiting game: a very, very dangerous game for all concerned. The question is what role, if any, the international community will be playing in that game, wittingly or unwittingly.