This paper analyses the political and socio-economic situation in the Southern Caucasus. It reflects on the origins of the conflicts in the region, their current status, and their similarities and differences. This paper contends that there is a single universal principle applicable to the solution of these conflicts: the unacceptability of the use of force to effect changes in internationally recognised and documented borders.

The linkages between economics and politics are discussed from both regional and national perspectives. The correlation exists at both levels, although it is not robust because of distortions caused by natural resources. The author questions beliefs that economic cooperation can succeed in relieving the conflicts and expresses his conviction that conflict resolution is a necessary precondition of effective economic cooperation in the region.

The distinguishing feature of the Caucasus states is that their economic objectives are set to achieve political rather than social targets. The states consider their economic development not as a means of improving the well-being of their people, but rather as a key for the solution of their political problems.