Rural transcaucasian trade before and after national borders

1216–9803/$ 20.00 © 2011 Akadémiai Kiadó, Budapest

Acta Ethnographica Hungarica, 56 (2), pp. 333–357 (2011)DOI: 10.1556/AEthn.56.2011.2.5

RURAL TRANSCAUCASIAN TRADE BEFORE AND AFTER NATIONAL BORDERS1*

Artak DABAGHYAN

Institute of Archaeology and EthnographyNational Academy of Sciences of Armenia15 Charents Street, Yerevan 0025, Armenia

E-mail: [email protected]

Mkhitar GABRIELYAN

Chair of Archaeology and EthnographyHistory Department of Yerevan State University

52, Abovyan Street, Yerevan 0025, ArmeniaE-mail: [email protected]

Abstract: The post-Soviet period highlighted the patterns of social and economic development of the Caucasian nations since the age of early modernization and urbanizations. The realities of the Sadakhlo/Bagratashen transborder marketplace bear the marks of the postponed economic, political and cultural de-velopments in the pre-Soviet and Soviet periods, as well as the nationalizing present of the neighbouring communities, observed in this paper by means of ethnographic research, adding a few refl ections on the similar processes along the former “Iron Curtain”.

Keywords: Transborder trade, Transcaucasian nations, economic anthropology, socialism and transi-tion, Nagorno-Karabakh confl ict.

BACKGROUND: FROM ECONOMIC NICHE TO NATIONAL BORDER

The border market at the mainly Azeri-populated Sadakhlo village on the Georgian− Armenian border was long known as one of largest post-socialist border markets of the South Caucasus. Among occasional ruminations on its character and functional role, the fact of the Armenian−Azeri composition of the trading community was a special attraction for many years. Before December 2005 the market was located in the Azeri-populated village of Sadakhlo (Sadakhly) on the Georgian side of the border with Armenia. At that period it was at least three times larger than in 2006−2007 – the years of our research visits, when the market had moved to the Armenian bank of Debed river.

1 The authors would like to acknowledge the generous support of the Caucasus Research Resource Cent-ers (CRRC) Armenia, a program of the Eurasia Partnership Foundation (EPF). This project was completed through the CRRC Publication Fellowship Program, with funding from the Carnegie Corporation of New York. The views of this article do not necessarily represent the views of CRRC, EPF or the Carnegie Corpora-tion of New York and are wholly the views of the authors.

04Dabaghyan.indd 33304Dabaghyan.indd 333 2011.11.17. 17:09:172011.11.17. 17:09:17

334 Artak DARAGHYAN–Mkhitar GABRIELYAN

In the specifi c Soviet realities of Transcaucasia, “border trade” was a barely visible component, because, as the anthropologist Nora DUDWICK has observed for the Armenian–Azerbaijani frontiers in the pre-independence period, they “were permeable, administra-tive borders, impeding neither trade nor contact. These borders were thus only very par-tially ethnicized” (DUDWICK 1997: 73). Places of interaction between ethnically divergent groups, which in other ordinary contact areas would be marked as dots of “transborder trade”, existed along the Armenian−Azeri frontiers long before the confl ict. Finding those markets retrospectively is not diffi cult, as they are not far distant in time.

In the Soviet period Sadakhlo served as a small and irregular marketplace for Armenian and Azeri communities in the surrounding area, like many other villages in their rural set-tings.2 Before the escalation of the Armenian−Azeri confl ict, other larger markets had func-tioned in Azerbaijani districts southwards along the republican border and located mainly in Azeri-populated towns – Kazakh, Tauz, Aghdam. When ethnic clashes in late 1980 and the expanding warfare fi nally transformed that border into a frontline, in 1990−1991 Sadakhlo with its adjacent Armenian village Bagratashen came to the fore in rural trade and became a trading community, closely linked to the vast network of Armenian petty-traders inside the country (Fig. 1). The marketplace attracted different interested observers, for whom the issue of cross-border cooperation was a subject of refl ection on the future of the region.

We think that before considering the prospects of this case of transborder trade, a more localized perspective is required regarding such aspects of “Soviet socialism” as “informal economy”, “(under)urbanization” and “nationalization”, which were success-fully introduced into anthropological studies of transitional societies from the early 1990s. Unfortunately the tradition of regional fairs in the multiethnic Caucasus is not adequately represented in history or in anthropology. Thus the economic background of the confl ict-rich history of the region was almost neglected. At the end of WWI and before sovietiza-tion of the region, the governments and troops of Caucasian peoples were briefl y engaged in drawing new lines inside the former administrative units of the Russian Empire. And though the ethnic boundaries of three major South Caucasian nations today signifi cantly differ from their internationally recognized state borders, the basic consensus achieved in that same period remained mostly unchallenged during the late-Soviet disturbances.3 Borders between the Soviet socialist republics and autonomous regions of the South Caucasus were drawn in accordance with the “ethnographical” principle. In this decision the Communists were not original – the Austro-Hungarian Empire was transformed into new nation-states in a similar way. But in our case the new ethno-territorial delineations had much less formality than ordinary state borders in European regions of the same pe-

2 This rural place, albeit torn in the two-week Armenian−Georgian war in December 1918, had been the object of unrealized projects like the one we discuss here as early as in 1919–1920, in the period of the fi rst, short-lived independence of the South Caucasian nations. This information was provided by historian Dato Darchiashvili – one of the visitors to the summer school at Sadakhlo village on the Georgian side of the same border, organized by the Centre for Independent Social Research (St. Petersburg) and CRRC in August 2006. For information about the rural trade setting of the same subregion in Soviet times we are in debt to Suren Hobosyan and Hamlet Sargsyan from the Ethnography Department of IAE.

3 The exceptions are well known to the practitioners of confl ict studies: Nagorno-Karabakh, Abkhazia and South Ossetia being the most salient cases. We refer to a few selected publications related to these confl icts below in the text.


Rural Transcaucasian Trade Before and After National Borders 335

Figu

re 1

. Bag

rata

shen

Mar

ket A

rea



riod. The former contacts between the population groups on both sides of these borders were readily resumed, and soon after the rural economies recovered, the fairs along the borders began functioning again.

In 1924−1925 expeditors of the Transcaucasian Federation started visiting these fairs to purchase local carpets for export to Istanbul and further to the west (ОРЛОВ 1925: 318).4 But this revival was the last NEP-age emancipation of local market driving forces, which very soon were channelled into the planned economy and later buried once more under its ruins. Soviet restrictions, imposed on land ownership, labour and nearly everything that might be associated with free trade and market economy, gradually forced the interregional currents into an economic niche often described in post-Soviet studies as a “second econ-omy”. In some opinions, it was even overrepresented in the South Caucasus (KURKCHIYAN 2000; cf. RASANAYAGAM 2003).

The theory of ethnic economic niches, although seemingly obsolete, is quite appli-cable to the relations we observed in immediate reminiscences in Sadakhlo/Bagratashen marketplace, as well as in longer term memories of Armenian villagers living at the now impermeable state border. But the economic niche was at least double-staged, or even triple-staged here, if we attempt to apply the now classical periodization of economic his-tory of the region into pre-socialist, socialist and transitional (modern) phases. We prefer to discuss these stages in the order of their appearance in the national border issues, in con-tinuous capitalist, socialist, then again capitalist modernization of the region’s peasantry and of regional trade affairs.

One of the fi rst attempts to apply the eco-niche approach to the modern state of inter-community relations in the Caucasus can be found in the works of Anatoly Yamskov, a Russian anthropologist who has tried to combine his studies of Azeri nomadic pastoralism with peace projects over the Nagorno-Karabakh confl ict (ЯМСКОВ 1991; 1998).5 But some practical-minded observations on the coexistence of different ethnic and religious com-munities inside the Russian-governed administrative entities of the Caucasus can be found since the second half of the 19th century. The basic ecological differences between the val-ley – subalpine – alpine zones were regarded as related to the economic and ethnic bounda-ries between the Christian and Muslim peasants of the Kazakh uezd as early as in 1886 (ЕРИЦОВ 1886; see also: ВОЛКОВА 1984). Since then these differences have been described not merely in the form of opposition between the settled agriculturalists (Armenians) and transhumance pastoralists (казахские таракяма). Sedentarization of the latter was encour-aged by the tsarist government already in the 1830s and at the end of the 19th century the process was in the fi nal stage (ИСМАИЛ-ЗАДЕ1960). At this period the sedentary nature of the rural Armenian peasantry, living between the lowland winter and highland summer pas-tures of their Turkic-speaking neighbours (future Azeris), and the corresponding increase

4 Two volumes of the “Экспортные товары Закавказья”, published in Tbilisi 1925, were compiled as guidebooks for the emerging state-owned economy and trade facilitators, pointing out what exactly Transcau-casia could contribute into the internal Soviet “market”. The same issue and the “best practices” are elucidated in the journals Экономический вестник … [Economic News], later to be named Народное хозяйство … [People’s Economy] published since 1923 in each of the Transcaucasian SSRs in Tbilisi, Baku and Yerevan.

5 The appearances of the semi-rustic nature of the Caucasian internal relations are more frequent in con-fl ict studies or descriptions of violence and intolerance in the Caucasus (cf. DERLUGIAN 2007).



in population density of both groups was a factor not only in the increase in interethnic vio-lence, but strikingly marked their residential areas as ethnically homogeneous and rarely interspersed. Thus, the borders between Armenians and Azeris were formed in the period of extensive growth and expanding populations, accompanied by the massive entrance of both ethnic groups into the new capitalist market relations. Details of this border formation process were affected by the ethnic clashes of 1905−1906 and 1918−1920, but the border-lines of Armenia, Nakhchevan, NKAO and Azerbaijan (including Kurdistan autonomy in 1926−1930) as the results of this process were not without economic antecedent and reason. Notwithstanding administrative barriers to the penetration of Azeri peasants into the mid-dle to subalpine zone of the region in Soviet times (which, in fact, were much milder than represented in the literature of the post-confl ict period), the presence of an extensive and expanding Armenian element, backed by the infl ow of hundreds of thousands of refugees from the other Armenian-populated areas of the Caucasus and West Armenia in the 1920s, fi nally reserved the subalpine belt after the Armenians. Intensive settlement of Azeris in the vicinities of their winter lowland pastures was thus preconditioned by the absence of an uninterrupted medium between alpine summer pastures and the Kura river.

Soviet governments of Transcaucasian republics were obviously inclined to freeze the existing borders and, in general, they succeeded. Their political and ideological ef-forts were substantially backed by the economic realities of the late tsarist period. From this point of view, striking similarities can be found between the economic processes that followed sovietization of the region and the scenario predicted by an Armenian economist in one of the early Soviet publications (ЕРИЦЯН 1923). The author simply foresaw not the ethnic borders, already being formed inside the region, but the results that the natural resource management would have within those given borders during the then expected intensifi cation of agriculture, in view of its importance for the mostly peasant population. The intensifi cation of cotton-growing, market gardening and cultivation of other Russia-oriented crops and vegetables, coupled with extensive water management projects in the Kura river basin fi nalized the previous processes of ethnic divergence. Although today it seems obvious that the “fi nal” nationalization in ethno-economic terms was postponed to the end of the common state in the 1990s, the history of the region demonstrates how the ecological-cum-cultural traits had substantially challenged the unifying patterns of the Soviet planned economy. In particular, such moves may be observed in economic devel-opments, usually seen as Soviet-type urbanization and industrialization, which actually decreased the need for summer pastures among the Azeri peasants.6 It is noteworthy that this process was not linear: the socialist barriers to intensive agriculture and especially cat-tle breeding, simultaneous urbanization processes, moving people from villages to towns, ethnic sentiments attached to the long-populated areas must all be taken into account when examining this complicated period. Below we give a brief description of the ethnicity and modernization-related aspects of the urbanizing peasant populations of the region in their transborder behaviour and relations.

6 This point is contrary to some basic conclusions of A. Yamskov, who constructed his NK confl ict resolution theory on disparities in land tenure of Armenians and Azeris as actively and passively urbanizing communities (1998: 647−660).



“KOLKHOZ MARKETS” AND UNDER-URBANIZATION

Unlike the other Armenian–Azeri contact zones, which in the view of historians have always been theatres of fi erce fi ghting in the years of unrest in the Caucasus, the Armenian north-west and the Azeri north-east have demonstrated lower intensity in mutual enmity. The communities of the biethnic Kazakh uezd, for instance, remained in a state of armed neutrality in 1918−1920 – a rare case if compared with the events in other territories of interspersed settlement (VIRABYAN 2003: 232−233). Armenian communities of Tavush (the Armenian-populated part of the Kazakh uezd) were radically opposed to the Yerevan-based nationalist government in 1918−1920. The village borders in this area were transformed into the national border without signifi cant clashes. Though the region has extensive relationships with the Azeri neighbours, a part of this same territory – the Berd (formerly Shamshadin) district of Soviet Armenia was the only district without a single Azeri settlement.

This relative amity allows us to note that rural transborder trade, although the living generation of Armenians now states that it was overseen by Azeris, in fact was a part of a temporarily limited equilibrium model, in which Armenians immediately appeared in “brackets” after the early Soviet decades. Armenian peasants were part of the more urban-ized Armenian nation, and at the same time, they had a controlling position in the use of summer pastures, which were still of vital interest for their Azeri counterparts. Decreasing density of population in Armenian−Azeri rural border districts, albeit affecting both groups, had led to a certain infl ow of Azeris as sheep breeders, mainly to be employed in Armenian sovkhozes, as shown in ЯМСКОВ (1998: 175−187). Avoiding nationalist speculations on this issue, we should qualify the intensity of this process as the decreasing presence of Azeris in the territory of Armenia and as only a faint memory of transhumance pastoralism. In fact, the proportion of sheep-breeding in local agriculture, which determined the intensity of this occupation, was much lower than during regular seasonal transhumance breeding in the 19th century. The opening of Mingechaur reservoir and hydro-power station on Kura river in the late 1950s may be tentatively suggested as a breakpoint in the process of Soviet type “intensive” agriculturalization of the Azeri peasantry of the region. As we shall see later, this modernization was accompanied by intensifi cation of their transborder trading occupations to a scale which was regarded by their neighbours as dominance.

The greatest input into modernization of the Soviet peasantry of the region was after the urbanization and social development projects. Apart from the fact that these processes were often inadequate and have specifi c features for each of the nations, the changes were based on the now seemingly ancient ties of Transcaucasian agriculture with Russia as a market and as a metropolitan consumer, which has shaped the local agriculture and econ-omy in many details for about two centuries. Or to put it another way, the economy of the Caucasus was and still remains Russia-centred. About two hundred years of this orienta-tion are moreover important as they fall into two distinct economic ages of capitalism and socialism. The local traditional economic divisions of the late 19th century formed the base for the second stage of the niches we describe below.7

7 Our knowledge of the latter would be greater, if economic anthropology had been a part of local social science in the Soviet period. Unfortunately, nothing except the cultural nuances was dear to the majority of



The living generation of local social scientists should remember such a neglected unit of Soviet economy, as колхозный рынок (kolkhoz market).8 They existed in large cities and small towns, following pathways of urbanization and being located in spatial niches inside “industrial” spaces of the Soviet Caucasus. The “market” in the whole of the USSR was associated with “kolkhoz market” as its most typical form. So it is not absolutely correct to insist on the absence of market relations, or to assign them to the “second economy” sector. In capital cities of the Transcaucasus several “kolkhoz markets” or simply “bazaars” were legal, covered or open-air, sometimes with additional buildings. Their spatial distribution inside the cities refl ected a logic, comparable to that of school or kindergarten distribution. In other words, the markets inside the Soviet cities were subjects of local urban planning.

The issue of urbanization and “kolkhoz market” merits special studies, more local-ized and less sensitive towards the regional defi ciencies of this or that “southern” fruit or vegetable. But at the same time, through the entire Soviet era there were signifi cant differ-ences between the “kolkhoz markets” north and south of the Rostov (on Don) – Orenburg line. Thus the “soft underbelly” of Russia was different not only quantitatively, as a “sub-sidized”, less urbanized, much more plural and even densely populated region, but it was distinct in a way that is often recognized as “Oriental”: the “Orient” for Russia was the “South”. Therefore the “kolkhoz markets” of mid-Soviet type as an installation fed from the six sotkas, kolkhoz tochkas and cooperative setkas, though partially introduced to the southern urbanizing regions as well, was more alien for local societies than for central Russian regions where special exigencies had laid the foundations for this infrastructure by the end of the Soviet Union. We must also note that in market–to–market line, which was semi-legal or illegal in view of the Soviet total control over long-distance transactions, the southern goods, including fl owers for March 8, were regularly supplied to Moscow and other large cities which have airports and substantive “purchasing power” to admit “gifts” from the South.9 The “kolkhoz markets” of the Caucasus were distinct fi rst of all as markets of different geographical location and scope.10

The word базар and its vernacular equivalents were successfully applied to “kolkhoz markets” even in the capital cities of the South Caucasus. In Yerevan, which is the latest densely and regularly built among the capital cities, the former bazаars were refashioned to a smaller size, but better furnished places to sell ordinary agricultural products from ad-jacent rural areas. The assortment was not very rich: fresh vegetables and fruit, homemade

local ethnographers for three generations. Economic studies also declined soon after the command venture be-gan combining the old imperial system with important elements of the early modern market agriculture into the industrial Soviet socialist monster. This economic curve was responsible for many social anomalies, now stud-ied in detail with important sociological and anthropological dimensions (cf. ВОЛКОВА 1984; РАДАЕВ 2004).

8 Cf. A Western researcher’s statement: “From our vantage point today, it is sometimes diffi cult to grasp that even in the mid-19th century market by itself often referred primarily to a specifi c physical location where particular types of goods were stored and traded” (EDELMAN 2005: 332).

9 They were also widely practised in exchange for favours, but in the view of “gift”-givers and takers that exchange was more a “policy” than an economy.

10 The same is true for the Central Asian markets, but until the late 1970s the local demand restricted their links with Russian urban markets, thus leaving the lead to the South Caucasus. The latter also benefi ted sub-stantively from its older recreational facilities, enhanced in the 1960−1980s to anecdotal sizes (cf.: всесоюзная здравница (pan-union resort), and ARUTINOV 1999).



sweets, traditional breads, wines, cheeses and rarely some meat, poultry, fi sh and eggs. There was no lack of sellers: fi rst there were kolkhoz representatives, then individual vil-lagers and formally semi-employed, but actually well self-employed urban “speculators” (спекулянты). The Azeri traders held one of the leading positions inside this organized trading community. Though their presence in urban kolkhoz markets might be visible only on Saturdays and Sundays, the much smaller turnover of the next days were also partially fi lled with surplus greens supplied by Azeris to their Armenian partners on the eve of past holidays.

The trade through the “kolkhoz markets” was estimated at around 10−15 and even up to 30 percent, if we count only the foodstuff.11 The main fl ows of the consumer market were directed through the completely state-owned retail network, including the coopera-tive shops and those of “Гастроном” or “Универсам” type. The famous queues of con-sumers, under-the-counter selling and the bulk of informal trade practices were associated with this network.12

Transport infrastructure inside the region eased communication between large cities (still only the three capital cities) and rural regions, specialized in production of special fruit or vegetables. These links between urban and rural population often bypassed any “kolkhoz markets”, because unlike the immense Russian distances, such travel in the Caucasus took only a day or a half, and because the majority of citizens had relatives in the countryside, while the latter had their own needs to be occasional guests in cities. Thus the real “informal” fl ow of goods inside the region was much greater than contemporary statistics may suggest. Besides, not every traveller took a basket from home, some used to buy a small seasonal gift from petty traders along the roads or in railway stations. Thus, nearly each way from city to village or vice versa was a kind of commuting, enriching the villagers.

The other important factor, related to the internal and household-based trade-economy of the Caucasus, is the ecology of the region. The horizontal zonality of the region creates different but adjacent ecological areas with a large variety in agricultural produce. While the Russian orientation (and the command) of local agriculture infl uenced the choice of local villagers in what to plant and how much, as well as the opportunities of locals to compete with the higher purchasing power of the Northerners, the intra-Caucasian fl ows of agricultural goods were regular and have created, or rather, have preserved the second stage of the economic niche, which appeared soon after the central control ended.

To explain the background of this “preservation” another way, we must look at the semi-rural characteristics of the Caucasian nations in the late 1980s, before the collapse of the USSR transformed them into states with their “own” societies and economies. The cov-ert character of the intra-Caucasian trade relations owes its origins to the colonial exploita-

11 We have the offi cial data only for Armenia (НАРОДНОЕ ХОЗЯЙСТВО 1985), as 10% of the total turnover passing through “kolkhoz markets”. The estimations are tentative, based on the urbanization rates, of which Armenia’s is the highest.

12 And to fi nalize the picture from a “historical” perspective, we must mention that the largest “kolkhoz market” of Yerevan, later with a local “GUM” (abbreviation of “Главный универсальний магазин” – largest malls in Soviet capital cities), and an underground station (and recently with the largest Armenian church), was adjacent to “Turk Mahala”.



tion of a special, Soviet type, which later caused mutual accusations of “who fed whom” type. Cheap air tickets, rapid industrialization and irrigation projects were all aimed at the creation of a type of modern economy, gaps in which were deemed intolerable. The ties between North and South we depicted above were economically much less signifi cant than the thick layer of anti-entrepreneurial regulations aimed at extracting and transforming profi ts in order to construct a “non-consumerist” socialist society. The economy, as we understand it now, generally was banned at some important levels. In particular, it was deprived of the household level.13

Under-urbanization was a special feature in the relations between the Caucasian na-tions for decades before 1988 – the year of the fi rst ethnic riots and the reopening of the Soviet (later the Georgian) – Turkish border crossing point in Sarpi. The predominance of Azeris in the green markets of Transcaucasia and beyond was a result of this feature. While in large cities like Yerevan the infl uence of peasant economy was sporadic, the conver-gence of ethnically different economies was explicit in the rural border areas like Tavush – Kazakh. The proximity of Armenian villages of the north-eastern Tavush province to lowlands along the Kura river gave easy access to fruit and vegetables grown by Azeri villagers.14 The individuals and communities of the border villages involved in these trade-service relations15 were each exploiting a kind of ethnically shaped economic model, used by Armenians and Azeris not only in their provincial variants. The fact that their economies were specialized for decades and even centuries before the industrial trends does not need additional proofs. But it still needs some explanation and racially neutral explorations of the character of such distinctions.16

Leaving aside some demographic aspects of this economic cooperation, our ethno-graphic study reveals a kind of dichotomy between the late Soviet Armenian and Azeri so-cieties: their difference may be expressed in terms of “less” (Azeris) or “more” (Armenian) urbanized. Statistics reveal the same pattern: 65:35 was the mid-Armenian ratio of the urban and rural population, while the same ratio for Azerbaijan was 55:45.17 Shrinkage of legal free trade to green markets created a situation described by local Armenians as their voluntary and even convenient exclusion from trade as a supplementary rural occupation. At the same time local Armenians recognized the benefi ts for them in this proximity. The

13 Deprivation of the individual, in our opinion, is a mere theoretical perspective for societies, which were predominantly rural before sovietization and by different means and for mainly economic reasons tried to escape the urbanization effects of socialist socialization before their independence (cf. PLATZ 1999; 2000 on Armenia; YALCHIN-HECKMANN 2001 on Azerbaijan; PELKMANS 1999 on Georgia). The economic strength of household vs. individual was thus partially determined by the need to resist the state economy.

14 The same was true for the Armenian capital city and its suburbs close to the Nakhchevan border.15 These exchange relations are complicated and not yet suffi ciently studied. The following ethnographic

studies contain some details on economic relations between Armenian and Azeri peasant societies: МКРТЧЯН 1985; 2010; МКРТУМЯН 1963; ЯМСКОВ 1998.

16 By “racial” neutrality we mean an ordinary scholarly criticism and opposition against the discourse, prevailing in the main corpus of oral (ethnographic fi eld materials) and written sources of information with which researchers usually deal within the Caucasus.

17 The same pattern was highlighted in the exchange of populations between the then Soviet republics: 80 percent of Armenian refugees from Azerbaijan were urban residents, while the ratio of peasants among the displaced Azeris was roughly the opposite.



activities of Azeri traders were not limited to frequent visits to Armenian towns and vil-lages, described in more detail in our recent study (DABAGHYAN–GABRIELYAN 2008). Border “kolkhoz” markets of Tovuz and Kazakh functioned like fl ea-markets of the 19th to early 20th centuries, giving Azeri and Armenian peasants an opportunity to sell surplus produc-tion of their households: fruit, vegetables, greens, sheep, potatoes, and to buy rare imported clothes, elsewhere available only in cities, through informal networks of “speculators”. These border markets, especially the one near Tovuz railway station, were small, local, agriculturalist variants of “COMECON” markets in Eastern-Central Europe, described by SÍK and WALLACE (1999) as predecessors of the post-Perestroika era open-air markets.

We have not begun work on real economic transactions between the now independent states of the South Caucasus in Soviet times. Such studies demand years of archival work to comb out the intra-regional fl ows of local enterprises and villages – the main entities of that period, from the fl ows to the North and back. Though the Soviet statistics recognised Republics as separate units, and even Transcaucasia was a separate economic district inside the Soviet Union, we know that even the most reliable sources of that period are inevita-bly treacherous (ASLUND 2002: 15−19). If someone works out graphics of transactions as detailed as modern custom statistics, the artifi cial prices in roubles will defy any effort to make economic sense of such procedures.

But one characteristic of the Soviet economy is still important: the economic plan was ordinarily broken down for each republic separately and thus national economies inside the Soviet economy were nested (see also below). A new type of economic niche – an unnatural, political and not even fully recognized “immoral economy” came into being.18 In the early Soviet years (1920s) economic and trade links inside and outside the region were more sizable and it is still possible to fi nd out what was passing through the internal borders, and even westward to Turkey or other countries, and when. When the “planned” economic forces came into being, the whole picture became blurred in terms of costs and prices. The only stable, though perhaps overreported pattern visible today is the growth of transactions between the South-Caucasian republics and their multiplied populations. These were mainly in consumer goods, because other major productions were directly linked with processing partners in other regions within a larger economic area.

Agricultural production and related food industries were concentrated in the republics proper, but mainly based on their own resources, i.e.: in the usual course of events each country might process its own foodstuff. Lemonade and wine, which were the best in Georgia, were among goods in short supply in Armenia, but in Georgia as well. The same was the case with Armenian cigarettes, sold under the counter and in markets for one rou-ble, three times the offi cial price. Canned peaches, for example, were the same price in the home country as in Russia.

What was the reaction of people to this situation, when any idea of “national econo-my” or similar considerations was in a constantly premature state, while the development of horizontal, “monetary, but reciprocal” trade links between the republics was stabilized in a centrally planned and therefore “secure” economy? Of course, the queues in front of

18 Here we mean double immorality of the Soviet economy, as alienating individuals/households and as the reverse of the concept of “moral economy” (cf. EDELMAN 2005: 331−335).



shops were as ordinary as elsewhere in the Union and near abroad. (VERDERY 1996: 20−30; DUDWICK 1994: 95−104; PLATZ 1999: 9−10, 2000: 114−118). The resistance of locals in the Caucasus took other forms as well: the practice of preserving fruits and vegetables for winter, for instance, was as widespread in towns as in villages.19 The greatest share of the local “second economy” was based on local resources that had simply been “stolen” from pan-union turnover.20 Distances between districts within regions impeded, but did not block the Russia-oriented economic and command infrastructure. The good thing was that this infrastructure otherwise served the demand for foodstuff unavailable in the Caucasus in suffi cient quantities (wheat, sugar, etc.) and it was used for the semi-legal export of il-legally produced goods.

Some other examples of the simplest manufacturer–consumer chains inside the re-gion will elucidate this fractured nature of the late Soviet economy. Large quantities of fruit and vegetables grown in households of Nakhchevan ASSR were sold in Yerevan and part of the income was spent to buy shoes produced in Armenia and available in local shops.21 These completely legal exchanges between an industry and a local group of peas-ants, in the post-Soviet period are “suddenly” found transmitted to the Russian North, as described by a Saint Petersburg-based group of sociologists (ДАМБЕРГ-ЧИКАДЗЕ 1999; BREDNIKOVA–PACHENKOV 2000). Here the groups of Armenian shoe-makers and Azeri green market traders communicated with a different set of customers, but at least initially they were reproducing a framework constructed much earlier and having some resemblance to networks of “ethnic economies”. As our materials from Sadakhlo marketplace suggest, the same exchange existed for many years in the border trade, before the Armenian indi-vidual producers of now old-fashioned shoes were pushed out by cheap Chinese products. This appeared in Saint Petersburg in the late 1990s, and perhaps a few years later in the Caucasus proper.22 But before this happened, the shoes produced in Armenia were one of the major suitcase export items from this country.

On the other hand, in a comparative chart summarizing prices for several imported and exported goods in different South Caucasian countries before 1998, the World Bank expert Evgeni Polyakov ranked animal hide fi rst among the export articles from Armenia to Turkey (2000: Tables 8 and 9; p. 49). During the energy crisis in Armenia a few years

19 The region’s natural diversity allows a wide range of food preservation skills and assortments. Apart from canning, different sun-drying techniques are used as well.

20 The shift in moral, legal behaviour of individuals in the socialist economy has not been explored suf-fi ciently. Many observations of western scholars suffer one-sidedness: the state is often introduced as the only “immoral” actor in economic relations where the citizens were victims, except those challenging its rules by running the “second economy”. We must note that the peasant economic “morale” in the sense of the “resist-ance of the weak” is strangely overlooked in this explanation and replaced by “sovietological” morale in the social sciences.

21 As one of the Azeri participants of the 2006 Summer school (B. Mammedov) reminded one of the authors in a personal conversation, shoes produced in Armenia were highly appreciated by Azeri customers even from the central regions.

22 The vicissitudes of the Armenian shoe industry merit special research, as it was one of the basic eco-nomic occupations of Armenians at home and especially abroad. Its “achievements” before the late 1990s testify to its specifi c character as a kind of modern “ethnic economy”. Shoe manufacturing in Armenia or by Armenians abroad has not yet ceased; it is striving to hold a mid position between the Chinese and European products and prices.



ago the only tannery in Yerevan functioned only as a store for hide for future export. The same “initiative” was common along the border areas with Georgia, which itself exported large quantities of hide. Until recently leather was not produced in Armenia, though we know that local shoemakers actively produce and their output is heavily based on imported leather.

It does not require a full economic analysis of such curiosities to see in them transi-tional phenomena, typical for all branches of post-Soviet economy. The disappearance of former industrial ties was accompanied by the extension of “gaps” formerly controlled by the state as supreme owner. The attempted Ajarian textile revival in the early 2000s is another reported case illustrating the pathways of transition. Burcu Gultekin explains this episode as an enforced revitalization of industry or as an unemployment reduction strat-egy in exchange for state protection of investors (GULTEKIN 2005: 107−108). The textile produced in this way was too costly, and besides, it was dyed in Bursa, inner Turkey. The fact that Azerbaijan, the last base of cotton growing in the South Caucasus, does not yet have a sizable textile industry, is an additional example of how complex the processes of divergence and convergence can be in the region.

Cases like these, or more precisely, excerpts from case studies, reveal a temporal or a historical feature of transitional economies. The Soviet legacy has shaped the peoples of the region as workers and customers in a manner now opposing them to Turkey and the Middle East on the one hand, and to Europe on the other. The expectations of investments, which are believed to be attracted by “low cost labour”, are at variance with socially burdened economies in Russia and the NIS. The South Caucasus occupies a middle place between Central Russia and the Central Asian republics in such technical features as urbanization rate, population density, education and skills, etc. The uniqueness of the economic pasts of the regions, undeniably present in their fi rst steps into commercial agriculture since the late 19th century and through the entire Soviet age still needs to be studied. The region bears the imprint of its colonial past, which itself is mixed with the uneven effects of Soviet industrialization.

NATIONALIZING BORDERS AND MARKETS

Comparing the border trade cases that we came across while searching for parallels to Sadakhlo-type marketplaces in border regions of the Far East and Central Europe, we came to the expected conclusion that the liberated trade is not the main reason for such a spatially discernible – “arrow-shaped” distribution of border markets. Short- or long-lived nodes of such marketplaces coincide roughly with the “Cold War” frontlines or with the confi guration of the “Iron Curtain”.23 The situation with border trade and cross-border co-operation regions in Europe, as described by PERKMANS (2003; cf. also MAYE and ILBERY 2006), has little direct relevance for this geographical belt. But a limited number of cases, known to the authors, allow a brief comparative perspective on the formalization processes

23 The same effect is traceable along the state borders in the Mekong River basin in South-East Asia, between the former “socialist” and “capitalist” states. Cf. CROSS BORDER 2005.



of regional cross-border economic affairs inside the EU before 1999. Formation of CBRs (cross-border regions) has been increasing steadily since the 1970s, i.e. two and half dec-ades after the end of WW II (PERKMANS 2003: 162−164). The 1990s merit special attention as the fi rst decade in the eastward spread of this process.

Egbert’s recent article on similar trends further East reviews the existing scholarship and concludes that “Despite the importance of CBST (cross border small-scale trade) for transitional societies and for those people who make a living from it, it is not a major topic in economics: neither in neoclassical economics, nor in New Institutional Economics. This is surprising because the observation of CBST on the micro level provides a wealth of data on how people really behave in situations of radical and comparatively fast institu-tional change in industrialized countries and modern societies. The neglect of the topic by economists is even more surprising because economically it is not a marginal phenomenon in transitional societies. Eder et al. (2003: 5) note that traders from Eastern Europe ac-counted for a volume of 10 billion US dollars in Istanbul in 1995, Iglicka (2001) estimates that 500,000 Ukrainians regularly crossed the border into Poland for small-scale trade in 1995 and Konstantinov (1996: 773) mentions a sum of 500,000 US dollars paid in bribes per year by small-scale traders at the Bulgarian–Turkish border.” (EGBERT 2006: 348).24 So what we have today around each such trade spot is more or less related to transformations of international trade (cf. BROWN et al. 2005; WALLACE et al. 2004).

As we have noted, the separate economic region of South Caucasus has existed since the “economic region” approach fi rst emerged, i.e. since its incorporation into the Russian economy and common northwards orientation.25 Multiethnicity, then multinationality of the region was always present and trends of regional economic cooperation were shifting between poles of divergence and convergence, between ethnic (political) and geographi-cal (economic) priorities. While the Russian orientation contributed to the latter trends of these pairs, the local factors, including the nationalization processes aimed to optimize the former.

The territory of Georgia started serving its role of corridor earlier than the fact was recognized and formed into ideas like TRACECA, New Silk Road and the like (BLANDY 1999). It is suffi cient to note the reaction of the fi rst President of independent Georgia to the Gyumri-Poti railway project as early as in 1991: “Georgia is not a yard with a through-passage” (ABRAHAMIAN 1999: 63). Later isolationism inside this country was mostly against the north, but as the experience and huge turnover of the Ergneti market in South Ossetia suggests (CHKARTISHVILI et al. 2004; DZIKAYEV–PARASTAYEV 2004), it was only a political rhetoric. Dozens of check-points, extracting levies not for states, but for uniform-wearing residents of those states, were another constant attribute of weakness of those states during at least the fi rst transitional decade. After the Rose revolution in November 2003, the new Georgian government took two major interrelated actions to enlarge its base for transit

24 There are several explanations of why the anthropologists and sociologists have taken the lead in stud-ies of the border-markets, including such a prosaic reason as the unreliable statistics of the mostly informal trade fl ows (cf. ASLUND 2002:15−18).

25 The name “Caucasus” was fi rst extended from the mountain range to the entire region in the early Middle Ages, when the Araks and Kura river basins were fi rst incorporated into one empire as Kapkoh qust (province) of the Eranshahr (Sasanian Empire).



fees: it established order on the internal roads and closed the border markets, which were declared to be nests of smugglers. The third reaction, linked with the two mentioned at least chronologically, was the activation of efforts to fi nalize demarcation of the new in-ternational borders of Georgia, thus upgrading their status from former “administrative” to “national”. As a whole, these measures were aimed at acknowledging the role of “transit state” which was already assigned to Georgia both by its neighbours in the region, and by more powerful actors in the global economy. Thus the reaction of Georgia to regional and international pressure was the removal of internal obstacles to trade and the regulation of customs affairs or “fences and gates” around the country, with the clear intention of “na-tionalizing” as much of the transit profi ts as possible.

The move of the border market from Georgian territory upstream to Armenia falls into a logic of the Georgian state, disposed because of its nebulous relationship both with sepa-ratist autonomies, and with its own Armenian−Azeri south underbelly (WHEATLY 2004; 2005). The ethnically “unclean” periphery in this case makes the fences and gates unstable, although harsh separatism is hardly predictable in this area. But only its threat can explain the illogical economic behaviour of the Georgian state. This “caution line” is more visible if one compares the Debed area with the Ajaria case, where successful Orthodoxization of the former Muslim Georgian majority has defi nitely had a positive impact on the vast changes that arose from the Sarpi border crossing point during the past two decades (cf. PELKMANS 2005; GULTEKIN 2005: 107−108). Today the density of the transportation and transit means and fl ows between the west Georgian and north-eastern Turkish border areas resembles the best examples of European cross-border cooperation in their early (post-WW II) years.26

The multiethnicity of Georgia was apparent in ethnicity-related roles of actors in Sadakhlo marketplace. Like in Soviet times, when the Gyumri-Kars crossing point was preferred by the Union Government as a safer gateway for communication with Turkey, because the Armenians’ attitudes towards the NATO member neighbour were believed to exclude “collaborationism,” so the Armenians of Javakheti isolated themselves from the trade between Turkey and Armenia, leaving it to Azeris, positioned further on the route.27

The position of the Azeri state towards fellow-compatriot traders from Sadakhlo is even more severe: regretting any “assistance” to Armenians, Azerbaijan traces and pros-ecutes “collaborators” individually. Its support to the “Borchalu” Azeri minority is coun-terbalanced by harshness towards those whose Georgian passports bear an Armenian visa stamp.28 The latter option became possible since the market moved from the Georgian side of the border to the Armenian side. Earlier the “betrayal” of the “homeland” or par-ent nation’s interests was diffi cult to personalize. To avoid regular interrogations at the Georgian−Azerbaijani border posts, families engaged in trade with Armenia used a variety

26 This article was written before the “Five-day war” in August 2008, but since then the authors have not recorded signifi cant changes, able to reverse serious infrastructural improvement in the Batumi subregion.

27 The “mosaic” of future trade-related communications may change gradually, after the rerouting of the fl ows via the planned Kars-Akhalkalak railway or opening of the existing Kars-Gyumri border crossing point but currently many factors which have contributed to the existing communication pattern are in full force.

28 The new Georgian passports were issued in 2005 as another nationalization measure related to those mentioned above (see also: MÜHLFRIED 2010).



of methods: keeping separate passports for the two countries’ visa services, or delegating different members of the family to each country-related activity. Thus the household-level “Azeriness” responds to the “Azeriness” on national level. Moreover, customs regulation measures taken by Georgia in 2004 are now evaded by Armenian−Azeri couples of petty traders, visiting Turkey together. Armenian passports are used to register the cargos as tran-sit and thus avoid customs and taxes inside Georgia (except moderate transit fees), while after passing the border the Azeri (Georgian) partners declare ownership and exercise re-sale rights of goods obtained in Turkey.

Here we should note some limits of the theory of “economic niches” in explaining dif-ferent external trade behaviour. The explanation of the activeness of Azeris of Georgia in mediating between Armenia and external markets fi rst must try to avoid as overestimation of their role, so an association of the ethnicity related dimension of modern trade with its transitional complications. Indeed, we may observe some similarities between agricultural produce (vegetable market produce) and the trade function of Azeris in the Caucasus today and the similar role of the Kipsigis, for example, in east coastal Sub-Saharan Africa.29 But bare substantivist approaches fail to explain this case. The same objection is true for too “sovietological” approaches, like in the statement that “The economic autarchy practised by the Soviet government, that excluded the frivolous expenditure of hard currency for im-ports of fresh produce, in effect ensured a steady monopolistic rent enjoyed by the internal suppliers like Azerbaijan.” (DERLUGIAN 2007: 50).

Treacheries of traders against states demonstrate the ways used by households to evade constraints erected by the nationalization of borders. Moreover they deserve attention if compared with “state” forms of sharing actual profi ts from transactions, including those avoiding state budgets. Today these forms have replaced their Soviet economic predeces-sors: planned distribution of economic branches and specifi cities between the republics to create artifi cial “share-cropping”. Informality of trade and export oriented economies of the region is mostly determined by state regulations, aimed at extension of the tax and customs base, but simultaneously excluding that part of it which falls outside “politically” defi ned or admitted borders. While Azerbaijan defi nes any trade with Armenia as illegal, Georgia fi gures in the range of Armenia’s trade partners as importer of “oil” and other natu-ral products, which it might only import from elsewhere. Substantive trade fl ows through Ergneti market were not taxed by the Georgian government because the security line be-tween communities in the state of guarded confl ict in South Ossetia were not recognized as a national border, and thus transactions could not be counted as legal (CHKARTISHVILI et al 2004; DZIKAYEV–PARASTAYEV 2004). As for Armenia, though it does not have “partner” or

29 BOHANNAN–DULTON (1965: 372−373) have described that group as follows: “The Kipsigis have had an even more dramatic entry into market economy; indeed, their eagerness to produce for sale is only the most striking of many examples which belie the view that Africans were always forced to change. Traditionally a people whose values were pastoral in spite of their small patches of millet, Kipsigis have become farmers and marketers with alacrity and success. Perhaps their most striking achievement is the aplomb with which they have handled the situation of land entering the market. Their success may be explained by the fact that “land tenure” did not really exist in their old system, so when they settled and changed their way of life, they had no traditional form of institutionalization for distribution of land or of labor which was relevant to the new situa-tion. They have nothing basic to unlearn.”



“border”-related political problems in external trade, the above-mentioned “neighbourly” limitations cannot but restrict legality or accountability of its import and export operations. This is visible at least in barter-type “oil” – “cement” transactions with Azerbaijan, or in such special features of tax regulation as the tax-free import of raw materials for manufac-turing and exporting.30

Our concerns in this type of state regulation or under-regulation related to cross-border trade are the following: though the editors and contributors of the recent volume “From Economy of War to Economy of Peace” have highlighted the local confl icts as the greatest determinants of many shadow trade fl ows inside the region (CHAMPAIN 2004), the impact of “nationalizing” economies on these complications is still underrepresented. The strength-ening of local states (not only the internationally recognized three), which was long resist-ed by the “grey economies” in peripheries or in contact zones between the national econo-mies, now tries to fi nd a balance between economic centralization and decentralization trends on the national level. As we noted, the choice of Georgia was to eliminate border trade, which follows its earlier efforts to construct a “Caucasian House”, but contradicts its real policy of providing transborder trade services to neighbors. The recent developments may be qualifi ed as a new victory of centripetal forces, which, in view of the intercon-nected character of regional economies, contributes to the strengthening of similar trends in the neighbouring countries.

Before the fall of the Soviet Union there were at least two types of centres for South Caucasian rural populations: Russia, mostly embodied by Moscow and by the central and north-western urbanized regions, and industrial capital cities of the republics, hosting the majority of local urban populations. In times of divergence of national economies, these centres continued functioning as the largest markets, but commodities in them were mostly of foreign origin. From 1992 the Armenian market was fl ooded with Iranian, then with Turkish industrial and agricultural products. It was also a time of reorganization of trade between older partners, including Russia. Border markets along the Georgian borders were immediate responses to this situation.

Leaving aside some possible historical connotations with “Byzantine type” urbaniza-tion which may be observed in these cases of centralization of economic fl ows, we must note that, with few exceptions, the situation is similar to Armenians and Georgians of nearby provinces, i.e.: the hinterlands of the now built TRACECA corridor, with pipelines and the slightly redirected Kars-Tbilisi railway now intersecting the former corridor along the once important Tbilisi – Kars and Tbilisi – Yerevan – Julfa railways. The Armenian industrial North, though it suffered badly from the Spitak earthquake of 1988 and is now experiencing a population crisis like the entire country, is still a reminder of that former corridor. Elaborately built by the empire for decades in the 19th century as a kind of Russian “TRACECA”, to realign the contemporary caravan trade fl ows with the compass – to the North it still functions as a spatial pattern in regional economy affecting the trade fl ows as in North to South, so in West to East directions. Moreover, the processes of economic cen-

30 Much more detail on regional transactions can be found in TOROSYAN 2005; 2007; FRIENKAM et al. 2004 and in contributions to the recent conference on the issue of opening the Turkish−Armenian border (CONSE-QUENCES 2007).



tralization which now make use of both currents are likely to insert additional complexities in reconstruction of the economic space in the South Caucasus.

There were several reasons for reversal of old trade links. The supply-demand struc-ture was radically modifi ed, so, except for foodstuffs, fuel and energy, the completely dis-organized local post-Soviet industries have a negligible role in trade structure. A more important effect is the vacuum created by the Soviet Union along the southern and western borders of Transcaucasus in its unwillingness for over half a century to trade and to let others trade. The early 1990s found the Iranian economy radically oriented to the Persian Gulf (PLANHOL 1998), while Turkish Eastern Anatolia, separated from the Black Sea littoral or the Trapezund area by Pontic Mountains, was not only underurbanized, but also under-populated, if compared with Transcaucasia. The economic geography of the wider region, embracing the Caucasus was so radically reshaped in the period between WW I and the end of the Cold War that the new national economies ready to emerge have no other way of advancement except complete reliance on existing economic channels.

We use the word “channel” instead of “routes” with intention to mark the closed bor-ders phenomenon once more, as it is especially important for demonstrating the economic signifi cance of border trade inside the South Caucasus. Some recent accounts of these real-ities had heavily criticised the forms that transborder trade often uses to overcome political barriers. The state measures are qualifi ed as taken against smuggling, drug-traffi cking, ter-rorism, warlords and in favour of the establishment of national economies (CHAMPAIN 2004; LOCAL BUSINESSES 2006: 93−94). In our opinion, the line between informality and formality of trade often passes between the old and new channels, oriented respectively towards the North (Russia) and towards the West. As the former are less visible and more treacherous in terms of statistics, mentioning the role of remittances received by South Caucasians from Russia is still the only way to emphasize its signifi cance. At the same time, orientation to the West, or better to say: to the rest of the world is guided by a scheme of bilateral ties with numerous trade partners. Overall, the economic development in the South Caucasus is un-dergoing a process of simultaneous nationalization and globalization. The former process bears the imprint of the past at least in the division inside the societies which are creating their modern hierarchies along two distinct lines: economic and political.

CONCLUSIONS: SADAKHLO MARKET AND ITS CONCERNS

We do not see any need to prove the usefulness of cross-border trade either for local, mostly agriculturalist populations, or as a moral factor opposed to confl ict relations. As B. Kaminski concluded his report: “The prospects of the region, indeed, may be said to hinge on three big “C”-s: cooperation, cooperation, and cooperation. Without cooperation, the region’s development will be stunted” (KAMINSKI 1999: 20). Unfortunately, the morale of Sadakhlo was never predominant in inter-state and international relations inside the region. So, we prefer to discuss the economics of this border market from a “national” perspective, taking into account that two decades of free “nationalization”, accompanied by free trade and globalization, have merged into one of the three stages we have briefl y described above as revealed in the new era South Caucasus.



As it was justifi ed for Hungarian sociologists to notice common features between the late socialist COMECON type markets and the newer open-air markets in the Central–East European region, so we believe that the fact of inter-ethnic transborder trade observed in Sadakhlo originate from the Soviet past. Its main features – the rural origin of market wholesalers, the predominance of Azeri merchants among them, etc. – are easily explain-able by the redirection of the late Soviet agriculturalist trade fl ows from the eastern borders of Armenia to the north-eastern corner. The fact that it was on Georgian territory and thus it was the only safe place where an Azeri trader might communicate with an Armenian client is also descriptive of the political environment in which the trade fl ows.

The main conclusion which observers have usually reached after visiting Sadakhlo in the years of its prosperity, is that politics is absent (or veiled) in that marketplace. Ethnicity and confl ict-related issues are emphasized so readily and frequently, that other economical-ly signifi cant factors, like its geographical position between two of the three largest cities in the Caucasus (Tbilisi and Yerevan), or its advantageous location between three nationally protected spaces have not been considered yet. The Azeri ethnicity of the wholesalers and the Armenianness of their clients are stressed instead. Of course, a proper understanding of the economic dimensions of internal turnover in the Caucasus needs special attention to the factors that had caused the recent unrest in the local national relations.

Political, social, economic, and even geographical and ecological realities, though they may be confi gured in an ethnicity-related manner and interpreted as determinants of constant cultural patterns, are determinants in their own sense. For example, the widely discussed topic of “interest-free credits” provided by Istanbul wholesalers to their foreign counterparts were exemplarily “formalized” by EDER et al. (2003). Similarly, the behaviour of Azeri traders from Sadakhlo village, cooperating with Armenians while their compatri-ots were fi ghting against the same nation in Karabakh and even a few kilometres further East – in the Tavush-Kazakh borderlands – is not an ethnically-determined behaviour, if the ethnicity is taken as synonymous to nationalism or patriotism. It is a nationally quite cor-rect behaviour of a minority group in Georgia, living in 72 overpopulated villages around the capital city and represented by only 18,000 inhabitants in that capital city. If the rate of Azeri peasants in Azerbaijan proper approaches 50 percent, the number of Azeri citizens in Georgia is negligible for the largest minority (8.2% or about 300,000 people).

In an earlier detailed account of Sadakhlo market, two Azeri reporters have predicted two ways of possible development of the market, without noticing their mutual exclusive-ness (JUVARLY–SHABANOV 2004: 237−245). One was the closure of the market, which, as we have noted, was already a fact when we visited it in August 2006. The second pre-diction was that the market may survive as a border trade institution if it fi nds ways to become “civilised”. The position of the authors is neutral, and sometimes fearful for the future of Azeri peasants for whom the trade with Armenia was the main survival strat-egy. They also mention the fears of local residents regarding different changes coming to modify international trade structures in the region, including the possible opening of the Armenian−Turkish border, the renovation of the Tbilisi–Sadakhlo highway or construction of the Kars–Akhalkalak–Tbilisi railway. Each of these changes was a threat to the monop-oly of the village over the links of their clients with markets abroad. Such fears among the merchants involved in and attempting to control the supply for shuttle trade can be deduced



from other case studies (EDER et al. 2003; РЫЖОВА 2003; HOLZLEHNER 2008). If compared with the latter account, related to customs and transportation affairs of the merchants at Laleli market (Istanbul), the fears registered by Juvarly and Shabanov in 2003 are of a spe-cial nature: “The future status of Sadakhly market is viewed in the following manner. When the countries of the South Caucasus dig themselves out of their current economic crises, industry will pick up, new employment opportunities will be created and the need for the market will disappear. At present, the market is vitally important for Azeris and Armenians living in areas around the market, but … monopolization of the trade, the development of border trade between Turkey and Armenia, the opening of the new highway, the outlawing of border trade – threaten to lessen its future importance.” (p. 242).

In fact, the authors have registered local hopes of being “dug out” anyway, sometime in the future – a hope grounded on Soviet village mentality that all young men can fi nd a job and a dormitory room in the cities, or at least, the urban comforts will soon reach their villages. Previous years of “happy marketing” have certainly heated this enthusiasm. But as we heard later in 2007 more than 1500 men from Sadakhlo have left to work in Russia, and many peasants were worried about how to pay back the mortgages for new houses they have built in recent years.31 The number of traders visiting the new marketplace at the Armenian village of Ptghavan is cut off by the sharply decreased number of petty traders from Armenian provinces to reach the same place. The reasons for this “block out” may be found in the emergence of Yerevan-centred trade network in 2002−2003. Many village shopowners now wait for lorries from Yerevan instead of travelling to any market. The notion of “region” works now in a more European manner (MAYE–ILBERY 2006), when it is not the states that benefi t, but the entrepreneurs striving for the shortest possible links to customers. Modernization of trade is now based on private efforts to leave as little space for state intrusion as possible.

While fi lling the gaps, formerly controlled by governments, modern traders compete with each other as well. This passage is not a path from fears to hopes. As one of our Armenian respondents stated: “Now is the time of businessmen, not of small traders”. In view of the realities and practices we have observed in this border area, what he meant still remains unclear, because some reported new rich from the villages are already in Baku or Yerevan, living in their own apartments and searching for jobs or positions they consider better than their “successful” businesses. At the same time dozens (though sometimes re-ported as hundreds) of traders from Armenia and bordering Azeri villages couple their capital and passports for shopping tours to Turkey via Georgian buses. Thus the petty trad-ers simulate a model that may emerge if the border market continues functioning: trade as a rural non-farm occupation for a short or long period of time.

The global network of which Sadakhlo marketplace may be considered a part, consists of hundreds of other places crowded with petty traders, described elsewhere along the peripheries and in everyday open-air markets in many centres (HANN–BEILER-HANN 1998; KAISER 1997; РЫЖОВА 2003; YUKSEKER 2004).32 From the “social capital” perspective such

31 The Kvemo-Kartli province of Georgia has the highest poverty rate in the country and also suffers from the restrictions in force in the country on the borderland use. More details in WHEATLY 2005.

32 See bibliographical review in EGBERT 2006 and more in HOLZLEHNER 2008.



markets are comparable to a pyramid with a wide base, which has vertical and horizontal lines between the actors involved. The place of a trader inside the pyramidal structure of border markets among many other features depends on the geographical scope of his or her operations. The lowest layers were serving limited numbers of clients in a city or village quarter, or inside larger geographical units, in which the retail trade was arranged along individual social networks. Vagueness of the pyramid’s base is more related to the initial period of transition: the deindustrialization that followed the local Independence parade and confl icts was partially counterbalanced by free trade opportunities. The numbers of people engaged in them were disproportionately high inside all new-born national econo-mies, but this disproportion was higher in some of them, i.e. it was related to the number of “free hands”. The advancement of trade from a bread-winning strategy to professional occupation was one of the drivers which limited the social base of cross-border trade. Our observations on the spot, when the market was functioning on the Armenian side of the bor-der, revealed changes in its geographical reach as well: the majority of visitors were from northern Armenia. At the same time, the opportunity of fair trade without passing a border had increased the number of ordinary customers. On the whole, the local residents, long en-gaged in trade and service operations, rightfully contrasted the market in 2007 (Ptghavan) to the former one on the Georgian side (Sadakhlo: 1991−2005), fi nding it smaller (up to four or fi ve times) and less profi table. The reasons mentioned are mostly concerned with state regulation effects, which had removed the small-scale traders from the scene in favour of those who had reached the top of the former wide-based pyramid.

Earlier the Sadakhlo market had a very wide geographical reach. Our tentative cal-culations revealed at least 100,000 visitors from Armenia and Karabakh annually, most of them visiting Sadakhlo more than once. The number of trade benches in the late 1990s to early 2000s was estimated at about 2000, with 3000–5000 weekly visits on Tuesdays and Wednesdays. The marketplace had areas for specialized trade of local agricultural products (fruit and vegetable market), imported processed food and apparel, the latter gradually taking the lead among the goods traded. Before relocation the turnover of Sadakhlo was estimated to be about 300 million US dollars annually (JUVARLY–SHABANOV 2004: 230−232; ВААЛ 2005: 356), which was roughly the third of the national external trade of Armenia in the same year (2000). Such estimations are tentative and might be exaggerated, but in fact this marketplace has more than a decade-long history of successful resistance to Yerevan-based centralized trading. By now the latter can celebrate its victory: the majority of the border region’s village shopkeepers are now tied with wholesalers inside or around the capital.

Acknowledging the irresistible force of the market, we have to agree with the main conclusions of our informants, including their opinions about the “ill will” of the state in this process. Nationalization of the gates through the border is more obvious in the former main marketplace with its ethnically Azeri population, which condemns that policy as anti-minority. In view of the growth in labour emigration from that village (about 1500 work-ing-age men in 2007 from the village population of about 12,000), the border regulation efforts have led to accusations of peaceful “cleansing” (cf. WHEATLY 2005: 5−7, 33−39). At the same time, about 200 to 300 Azeri traders per week pass into Armenia for a day or night-long trade in the new market at the Armenian village of Ptghavan. Far less than half of them are “professional” traders.



As for the Armenian side of border trade, Yerevan-based wholesale markets have at-tracted the traders nationwide and thus the Ptghavan fairs are left with a small portion of Sadakhlo’s former network and turnover. Contemporary border passage schemes have out-lawed even small-scale commuting via Tbilisi−Vanadzor−Gyumri−Yerevan train. Media reports on prosecuted smuggling complete the picture of border “nationalization” on the Armenian side.

The emigration in 2006−2007 from the Armenian border village Bagratashen, which has earlier partnered Sadakhlo neighbours in interstate trade, and therefore was one of the rare localities without signifi cant loss in population, makes it obvious that ethnicity-related issues are not the main cause of the market’s removal from Georgia to Armenia. If some do exist, they should not be assessed as pervasive. The “state”–“peasant” opposition is a more reasonable explanation for this fl otation, concerned with centralization and “nationaliza-tion” of foreign trade fl ows. Unfortunately, the outcomes of these processes until recently are obviously opposite to those that have followed similar processes in the European bor-derlands.

Trade fl ows in Sadakhlo, as well as in other Caucasian border markets refl ect old and new geographical and population patterns we have discussed above. Moreover, these marketplaces owe their origins to similar economic and political drivers and constraints, which have acted simultaneously, changing the character of cross-border small-scale trade within a year or two. We started writing this article after the dubious relocation of the bor-der market from the Georgian side of the border to the Armenian villages a few kilometres upstream.33 We believe that this “fl otation” of the border market with a simultaneous sharp decrease in its turnover signifi es a new phase in border trade and cross-border cooperation in the Caucasus.34

LITERATURE

ABRAHAMIAN, Levon 1999: Typology of Aggressiveness and National Violence in the Former USSR, in: Tim Allen–John Eade

(Eds): Divided Europeans. Understanding Ethnicities in Europe. The Hague/London/Boston: Kluwer Law International, 59−76.

ARUTINOV, Sergei 1999: Tradition and Prosperity in the Caucasus: Are They in Confl ict? – Conference report in “State Building

and the Reconstruction of Shattered Societies” of the Berkeley Program in Soviet and Post-Soviet Studies, University of California, Berkeley, Institute of Slavic, East European, and Eurasian Studies, April 20, 1999, 22−25.

33 In August 2008 Armenian media reported on prosecution of an organized group, said to be headed by the owner of the Ptghavan marketplace, assisted by local residents, customs offi cers and border guards. They were arrested for organization of wide-scale smuggling through the village roads along the Armenian−Georgian border.

34 Case studies on other border markets or related dispersed CBST (cross-border small-scale trade) con-vince us that this transformation started in the late 1990s (EDER et al. 2003; EGBERT 2006). The 2001 economic crisis in Turkey may be taken as the starting date of this process in the Caucasus (cf. GULTEKIN’s report on Nakhchevan-Igdir oil trade restrictions in 2005:131−136).



ASLUND, A. 2002: Building Capitalism: The Transformation of the Former Socialist Bloc. Cambridge: Cambridge

University Press, 2002. BOHANNAN, Paul–DULTON, George 1965: Introduction., in: Paul Bohannan–George Dulton (Eds). Markets in Africa, New York: Anchor Books,

345−376.BREDNIKOVA, Olga–PACHENKOV, Oleg 1999: Economic migrants from Azerbaijan in Saint Petersburg: problems of adaptation and integration.

Caucasian Regional Studies 1999. Vol. 4/3. CHAMPAIN, Phil 2004: Introduction, in: Phil Champain–Diana Klein–Natalia Mirimanova (Eds): From Economy of War to

Economy of Peace. London: International Alert, 18−26.CONSEQUENCES

2007: “The Economic and Social Consequences of Opening the Armenia−Turkey Border”. Conference of the Armenian International Policy Research Group, Yerevan, January 13−14, 2007. Materials available at: www.aiprg.net

CROSS BORDER

2005: The Cross Border Economies of Cambodia, Laos, Thailand and Vietnam. Development Analysis Net-work. Available at: www.rockmekong.org

CZAKÓ, Á.–SÍK, E. 1999: Characteristics and origins of the COMECon open air market in Hungary. International Journal of

Urban and Regional Research 23(4), 715−737.DABAGHYAN, Artak and GABRIELYAN, Mkhitar 2008: Tntesut’yun, arevtur yev etnikut’yun sahmanamerdz gotum. Azgagrakan het’azotut’yun HH Tavushi

marzum. [Economy, Trade and Ethnicity in Borderlands. Ethnographical Study in Tavush Province of Armenia]. Self-edited publication. Yerevan.

DERLUGIAN, Georgi 2007: Azeri Orientalists as Mirror of Post-Soviet Revolution. 21-st Century, Vol. 2. 35−50.DUDWICK, Nora 1997: The Borders of Belonging: State and Citizenship in Armenia. Conference report in “Institutions,

Identity and Ethnic Confl ict: International Experience and Its Implications for the Caucasus” of the Berkeley Program in Soviet and Post-Soviet Studies, University of California, Berkeley, Institute of Slavic, East European, and Eurasian Studies, May 2−3. 71−76.

ДАМБЕРГ, Алексей–ЧИКАДЗЕ, Елена 2000: Армяне в обувном бизнесе Петербурга. In: Этничность и экономика. Под ред. Бредниковой О.,

Воронкова В., Чикадзе Е. СПб.: Труды ЦНСИ, вып.8. 54−59.DZIKAEV, V.–PARASTAEV, A. 2004: Economy and Confl ict in South Ossetia, in: P. Champain et al. (Eds): From Economy of War to

Economy of Peace. London: International Alert, 180−240.EDELMAN, M. 2005: Bringing the Moral Economy back into the study of 21st century Transnational Peasant Movements.

American Anthropologist 107 (3), 331–345.EDER, M.–YAKOVLEV, A.–ÇARKOGLU, A. 2003: The suitcase trade between Turkey and Russia: microeconomics and institutional structure. Working

Paper WP4/2003/07. Moscow: State University, Higher School of Economics.EGBERT, H. 2006: Cross-border Small-scale Trading in South-Eastern Europe: Do Embeddedness and Social Capital

Explain Enough? International Journal of Urban and Regional Research 30 (2), 346−361.ЕРИЦОВ, Александр 1886: Казахский уезд. Материалы для исследования экономического быта государственных крес-

тян Кавказского края. Том II. Тифлис.ЕРИЦЯН, Хачатур 1923: Положение животноводства в ССР Армении. Экономический Вестник Армении, 5/6, 3−21.



GULTEKIN, Burcu 2005: Prospects For Regional Cooperation on NATO’s South Eastern Border. Developing a Turkish−Russian

Cooperation in South Caucasus. Final Report for Manfred Wörner Foundation. Available online at: http://www.nato.int/acad/fellow/04-05/gultekin.pdf

HANN, Christopher–BELLIR-HANN, Zeinep 1998: Markets, morality and modernity in north-east Turkey, in: Thomas M. Wilson–Hastings Donnan

(Eds): Border Identities: Nation and State at International Frontiers. Cambridge University Press, 237−262.

HOLZLEHNER, T. 2008: Weaving Shuttles and Gin-seng Roots: Commodity Flows and Migration in a Borderland of the Rus-

sian Far East. Berkeley Program in Soviet and Post-Soviet Studies. Working Paper Series. Fall. ИСМАИЛ-ЗАДЕ, Д. И. 1960: К истории кочевого хозяйства в Азербаиджане в первой половине XIX века. Исторические

записки, вып. 66. 96−136.JUVARLY, T.–SHABANOV, I. 2004: The potential impact of Sadakhly market on the settlement of the Armenian−Azerbaijani confl ict,

in: Phil Champain–Diana Klein–Natalia Mirimanova (Eds): From Economy of War to Economy of Peace. London: Amnesty International, 227−238.

KAMINSKI, Bartolomej 1999: Economic Transitions in the Transcaucasus: Institutions, Performance, and Prospect, in: State

Building and the Reconstruction of Shattered Societies. Conference Papers of the Berkeley Program in Soviet and Post-Soviet Studies. University of California, Berkeley. Institute of Slavic, East European, and Eurasian Studies, 15−21.

KAISER, M. 1997: Informal Sector Trade in Uzbekistan. Working paper N. 281. University of Bielefeld. KURKCHIYAN, Marina 2000: The Transformation of the Second Economy into the Informal Economy, in: A. Ledeneva–M.

Kurkchiyan (Eds): Economic Crime in Russia. London: Kluwer Law International, 83−97.LOCAL BUSINESS

2006: Local Business, Local Peace: The Peacebuilding Potential of the Domestic Private Sector. London: International Alert.

MAYE, Damian–ILBERY, Brian 2006: Regional Economies of Local Food Production. Tracing food chain links between “specialist” pro-

ducers and intermediaries in the Scottish−English borders. European Urban and Regional Studies 13(4), 337–354.

МКРТЧЯН, АРТУР 1985: Межэтнические связи в Нагорном Карабахе (вторая половина XIX – начало XX века). In:

Межэтнические контакты и развитие национальных культур. Москва, Институт этнографии и антропологии АН СССР, 54−62.

2010: Общественный быт армян Нагорного Карабаха (вторая половина XIX – начало XX века). Ереван: Изд. “Гитутюн”.

MKRTUMIAN, Yuriy 1963: Annual Pastoral Cycle of Armenians in North-Eastern Armenia. Teghekagir HSSH GA hasarakakan

gitutyunneri N. 7, 87−101. MÜHLFRIED, Florian 2010: Citizenship at War: Passports and Nationality in the 2008 Russian−Georgian Confl ict. Anthropology

Today 26 (2), 8−13.НАРОДНОЕ ХОЗЯЙСТВО 1985: Народное хозяйство Армянской ССР в 1984 г. Ереван. PELKMANS, Mathijs 1999: The Wounded Body. Refl ections on the Demise of the Iron Curtain between Georgia and Turkey.

Anthropology of Eastern Europe Review 17, 49−58.



2005: Baptized Georgian: Religious Conversion to Christianity in Autonomous Ajaria. Working Paper 71. Halle–Saale: Max Plank Institute of Social Anthropology.

PERKMANN, M. 2003: Cross-border regions in Europe: Signifi cance and Drivers of Cross-border Co-operation. European

Urban and Regional Studies 10(2), 153−171.PLANHOL, de Xavier 1998: Economic Geography, in: E. Yarshater (Ed.): Encyclopaedia Iranica, Vol. VIII. Costa Mesa: Mazda

Publishers.PLATZ, Stephanie 1995: “We don’t have capitalism… We have kinship”: The State, The Family and the Expression of Armenian

Identity. Anthropology of East Europe Review 13(2), 30−33. 2000: The Shape of National Time: Daily Life, History and Identity during Armenia’s Transition

to Independence, 1991−1994, in: D. Berdahl–M. Bunzl–M. Lampland (Eds): Altering States: Ethnographies of Transition in Eastern Europe and Former Soviet Union. Ann Arbor: University of Michigan Press, 114−138.

POLYAKOV, Evgeni 2000: Changing Trade Patterns after Confl ict Resolution in South Caucasus. The World Bank Policy

Research Working Paper No 2593. Washington: D.C. РАДАЕВ, Владимир 2004: Экономическая социология в России. Экономическя социология 5(2), 126−139.RASANAYAGAM, Johan 2003: Market State and Community in Uzbekistan: Reworking the concept of Informal Economy. Working

Paper No 59. Halle–Saale: Max Plank Institute of Social Anthropology.РЫЖОВА, Наталья 2003: Трансграничный рынок в Благовещенске. Экономическая социология, 4(5), 54−71. TOROSYAN, Karine 2005: Trade Patterns in Armenia. Paper presented at the Third AIPRG conference on Armenia. WB.

Washington: D.C. 2007: A Phased Strategy for Opening Armenia’s Western Border. Working Paper of the International School

of Economics in Tbilisi (ISET).ВААЛ, Томас, де 2005: Черный сад: Армения и Азербайджан межды миром и войной. Перевод с англ. Москва, изд.

“Текст”. VIRABYAN, Amatuni (Ed.) 2003: Hayeri kotoratsnere Bakvi yev Yelizavetpoli nahangnerum 1918−1920 tt. [The Massacres of

Armenians in the Baku and Yelizavetpol Provinces 1918−1920]. Yerevan: State Archive of History of RA.

ВОЛКОВА, Наталья 1984: Материалы экономических обследований Кавказа 1880-ых годов как этнографический

источник. Кавказский этнографический сборник, том VIII. Москва, 206−266.YALCIN-HECKMANN, Lale 2001: The Political Economy of an Azeri Wedding. Max Plank Institute of Social Anthropology Working

Paper 28. Halle–Saale. YAMSKOV, Anatoli 1991: Ethnic confl ict in the Transcausasus: The Case of Nagorno-Karabakh. Theory and Society 20(5),

631−660.ЯМСКОВ, Анатолий 1998: Традиционное кочевое землепользование в Карабахе и современный Азербайджано-

армянский этнотерриториальный конфликт. In: Фактор этноконфессиональной самобыт-нос ти в постсоветском обществе. Москва: Центр Карнеги, 168−186.

YUKSEKER, Deniz 2004: Trust and Gender in a Transnational Market: The Public Culture of Laleli, Istanbul. Public Culture

16(1), 47−65.



WALLACE, C.–SHMULYAR, O.–BEDZIR, V. 1999: Investing in social capital: the case of small-scale, cross-border traders in postcommunist Central

Europe. International Journal of Urban and Regional Research 23(4), 751–770.WALLACE, Claire–HAERPFER, Christian–LATCHEVA, Rossalina 2004: The Informal Economy in East-Central Europe 1991−1998. I.H.S. Working Papers, Sociology Series

No 64. Vienna: Institute for Advanced Studies.WHEATLEY, Jonathan 2004: Obstacles Impeding the Regional Integration of the Javakheti Region of Georgia. ECMI Working

Paper No 22 (September). Flensburg, Germany. 2005: Obstacles Impeding the Regional Integration of the Kvemo Kartli Region of Georgia. ECMI Working

Paper 23 (February). Flensburg, Germany.


Rural transcaucasian trade before and after national borders

Documents