On money and memory: Political economy of cross-border engagement on the politically divided Armenia-Turkey frontier

Complicated historical memories and mutual distrust coupled with decades of Cold War separation have prevented the Iron Curtain from lifting on the border between Turkey and Armenia. Indeed the end of the Cold War has seen tension between these two countries escalate further over the conflict between the Armenian population of Nagorno-Karabakh and the republic of Azerbaijan. Turkey, having allied itself with Azerbaijan in this dispute, has made diplomatic engagement with Armenia conditional on the settlement of this conflict. Paradoxically, despite a trade and transport blockade imposed on Armenia by Turkey and Azerbaijan, economic ties in the region have not disappeared. This discrepancy between the political and diplomatic rhetoric and the economic and developmental realities on the ground motivates the present study. Drawing from the Armenian context the study illustrates how the tension between political interests and business interests are manifested and managed in Armenia. Generalising from this study, the work presented here maintains that weak cross-border governance capacities in the developing world can influence abilities to utilise, leverage and manage globalisation and, further, in politically divided regions they can undermine prospects of constructive engagement between the conflicting sides. It argues that the promotion of liberal statehood in developing countries characterised by small governments does little to assist the development of cross-sectoral links between the public and private sectors within a region, such cross-sectoral links being important ingredients in the promotion of cross-border regionalism.