The Foreign Service Journal, December 2016

34 DECEMBER 2016 | THE FOREIGN SERVICE JOURNAL must be overcome to truly open up the Azeri economy. Georgia has remained resilient despite endemic corruption dating to the Soviet period, a civil war in the 1990s and a brief but costly conflict with Russia in 2008. Despite a small economy and domestic market, Georgia pursued economic reforms for a simple reason: it had no choice. Georgia seeks stronger ties with Europe, as seen in its 2014 Association Agreement with the European Union. And it has improved its World Bank Ease of Doing Busi- ness ranking to 24—ahead of the Netherlands and Switzerland. Georgia’s recent elections received generally good reviews, a posi- tive point for potential foreign investors. The country has proven to be a stable and reliable partner in the East-West energy corridor in exchange for needed revenue and a strong political anchor through direct investment by international oil companies. Armenia and Moldova remain trapped in a geopolitical corner that has limited their economic development. In Armenia, Nago- rno-Karabakh and strong Russian influence in the economy have closed offmost options for diversification. InMoldova, the recal- citrant, so-called Trans-Dniester Republic and ongoing domestic political turmoil have limited reform in what is one of the poorest countries in Europe.These countries have small domesticmarkets and need to capitalize on their strengths in information and com- munication technologies, food processing and spirits. Recognizing the challenge presented by its eastern neighbor, Belarus recently reactivated its long-dormant economic diplo- macy to reconnect with international financial institutions. But the state remains the primary economic actor. Without dedicated economic reform, Belarus is unlikely tomake significant progress. Central Asia: Kazakhstan in the Lead, But… Twenty-five years after independence, economic policy varies widely across the five countries of Central Asia. Their intrare- gional trade is among the lowest in the world, primarily because of poor infrastructure, a large grey economy and a lack of customs cooperation. Despite these challenges, Beijing has elaborated a comprehensive and well-funded “One Belt, One Road” concept that aims to use Central Asia as a land bridge into European and Middle East markets. The region’s longer-term challenge: to add value to the supply chain and not simply become a “drive through” for Asian exports to the West. Kazakhstan has emerged as the undisputed regional leader in economic reform, building on significant petroleumwealth, smart energy transportation decisions and an imperfect, but more or less favorable, approach to private enterprise. Through constant rotation of senior government officials, President Nazarbayev has developed a bureaucratic elite with the knowledge, skills and Commonwealth of Independent States, 1994. CIA