 Well, until not so long ago, however, the region of the South Caucasus and the three countries that formed part of it, Armenia, Azerbaijan and Georgia, were places that not many Europeans had heard of, few had visited and even few had cared about. This is no longer the case. The region these days interacts with Europe in multiple ways. Many of its people have rediscovered their strong European identity and strategically its importance as an interconnector between Europe and Asia, particularly in the energy sphere, but in other ways too, is now unquestioned. In November in Vilnius, at least two of the three countries, Georgia and Armenia, are expected to sign association agreements with the European Union, raising their status vis-à-vis the Union. Azerbaijan is seeking a more particular kind of arrangement that it hopes will take into account its new importance as a major energy supplier. The European Union has been a generous supporter of the three countries over the past two decades, initially with humanitarian aid and subsequently with other financial aid, expertise and mentoring, as well as political support when necessary for their independence and territorial integrity. Yet in Brussels, as well as in many European capitals, one often hears expressions of frustration and exasperation, that the region has failed to turn the corner, that the government of the three countries often flaunt human rights and democratic practices, of flawed elections and lack of independent judiciary, frustration and exasperation at the lack of any progress in finding solutions to the conflicts that have riddled the region since the collapse of the Soviet Union, and its inability to establish any form of meaningful regional cooperation. People often blame corruption and competent politicians, Russia and the baggage of history, not necessarily in that order, for the problems of past and present. And truth, one of the first mistakes that was made when engaging with the region not so long ago, was a failure to appreciate how deep rooted some of the problems were. Yes, these were post-Soviet countries that had to deal with the legacy of 70 years of ideologically inspired and flawed system of governance, but communism was simply the last of many layers of similar legacies. Many of the problems were well entrenched and even institutionalized. Even before starting to tackle the usual problems facing any nation in our times, economic development and growth, unemployment, demographic challenges and social issues, the three countries have had to pass a phase where they needed to address three main challenges, how to modernize their societies, how to democratize and how to address the issue of the unresolved conflicts, which continue to absorb many of their human, financial and political resources. Juggling these priorities has been the challenge of the last 10 years and they have often got it wrong, not least because it somehow became an accepted truth that democracy could wait. But there is now some reason to believe that the region is finally making a breakthrough away from its troubled past. The three current presidents, Silham Aliyev in Azerbaijan, Mihail Sakashvili in Georgia and Sir Sakisyan in Armenia, all came with a modernizing agenda. The process that catapulated them into power was, in all three cases, flawed. They were not products of a democratic process, as we understand it, and this showed in the way that they governed over the last decade, often in directions and sometimes in their words, they made it clear that in their view it was necessary to modernize first and democratize later. The serious deficit in all three countries in the area of governance, human rights, the judiciary and the democratic process has recently been clinically documented by the U.S. State Department in its annual report on human rights performance of the world states, which was published just a few days ago. I do highly recommend it. It is, however, just the latest of many reports produced by governments, international organizations, NGOs that often give a very bleak picture. One reason often cited to excuse shortcomings in the field of democratic governance is that the unresolved is the unresolved conflicts. Armenia and Azerbaijan remain in a state of war following the conflict in the 1990s over Nagorno-Karabakh that resulted in the displacement of hundreds of thousands of refugees. Armenia continues to occupy large chunks of Azerbaijan territory, territory that by and large remains now empty of people. Except the tens of thousands of soldiers that eye each other across the tens line of contact that was established by Anodox's fire in 1994. Armenia on its part is under an economic blockade by Turkey and Azerbaijan. As you know, Georgia fought a war with Russia in 2008 over South Ossetia. Russia now recognizes two Georgian entities of Aparzia and South Ossetia as independent states. Tens of thousands of people were displaced by these conflicts too. In this scenario, the governments of the three countries often demand from their people loyalty and sacrifice and chan demands for transparency and accountability. Whilst at the moment the situation in the Georgia conflict regions is relatively calm, the conflict between Armenia and Azerbaijan is the most serious threat presently to peace in the region and efforts to resolve its bear headed by the OSCE Minsk Group have failed. Within this big, somewhat pessimistic picture of the three countries, all the three have their own specific dynamics and positive signs are starting to emerge. Economically, Armenia remains the weakest of the three. Landlocked, Armenia will have some difficulties even in a perfect political situation. With most of its land borders closed, the country has struggled to create an economic niche for itself. It remains heavily dependent on Russia, but even trade with Russia is hampered because it has to go through Georgia and is subject to the ups and downs of Georgian-Russian relations. Armenian politics have been nasty and violent. The first democratically elected president was forced out of office for trying to move forward with a compromise on Karabakh. Many of the Armenian senior political leaders were killed in a violent incident inside the Armenian parliament in October 1999. And the election of the current president in 2008 was marked by violence and the death of many protesters on the streets of Yerevan. President Serge Sarkisyan is a cautious man, for whom reform does not come easy. But he is also a very pragmatic person and understands the danger of external isolation and internal stagnation for his country. His first big foreign policy initiative was Vaprosman with Turkey. It failed, mainly not for his fault, but three other processes launched in his first term show some signs of success. The first was an effort for some modest democratic accountability. Parliamentary elections were held in Armenia in May 2012 and they've been deemed to be reasonably fair and resulted in six political parties being represented in parliament. Two forming part of the government coalition and four in various degree of opposition to it. This process brings all the main political forces into the political framework. Unfortunately, presidential elections held last February provided an ambiguous result. Most opposition parties kept away from the process. The leader of one party who did contest unexpectedly got 37% of the vote and claimed victory. In many ways, the election raised more questions than it gave answers. But Sarkisyan has now been sworn in as president for the second term and the international community has by and large acquiesced to the situation. The second development has been Armenia's somewhat unexpected embrace of the EU. Given its historical relationship with Vasa and its dependence on these relations in both military and economic sphere, Armenia's decision not to pursue membership of the Russian Sponsor Activation Union, but instead to work hard to fulfill the necessary criteria to be able to enter into an association agreement with the EU took some by surprise. Armenia is trying to balance its extended relations and the EU has so far responded positively to this process. The third area is somewhat more difficult to define as yet and is related to internal reforms including the reining of some of the oligarchs who have suffocated the Armenian economy over a number of years and modest reforms in areas such as the judiciary, customs, etc. Some credit needs to be given to Sarkisyan's current prime minister, also called Sarkisyan, Tigran Sarkisyan, for persisting with these reforms despite the obvious dangers of treading on the toes and interests of some very influential people. The riches of the three countries is Azerbaijan, thanks largely to its oil and gas reserves that have for nearly a decade now been flowing seamlessly from the Caspian to the Mediterranean and the Black Seas to Georgia. Those who knew Baku in the 1990s cannot but marvel at how the face of the city has changed. The government has put in place ambitious problems in the field of social development to address the problems of refugees and IDPs to improve the infrastructure and in education. The recent appointment of a young and open-minded minister of education is also a positive change when you see it as part of a development and a tightly managed personnel policy. Azerbaijan is determined to resolve the Karabakh conflict and does not exclude doing so by military means. It now spends more than $3 billion a year on defense. President Ilham Aliyev is a committed modernizer who wants to see his country amongst the more developed nations. It's tried as the launch of Azerbaijan's first telecommunications satellite last January summed it up well. Who would have imagined, he told his cabinet, that Azerbaijan would become a space-faring nation. Aliyev has however made it clear that for him democratization was not a priority and Azerbaijan's record in this sphere is very bad. It is not, as some opposition activists say, a totalitarian state, but streaks of totalitarianism appear from time to time in the way the government conducts itself. The problem is the situation is getting worse. It was worse last year than it was 10 years ago. It is worse this year than last year and it is worse this month than last month. This puts the European Union, which has been trying to develop a strategic relationship with Azerbaijan in a difficult position. Azerbaijan is ready to be a good, reliable partner with the EU and the West in general on energy, on the struggle against terrorism, on human trafficking, in the fight against extremism. And it has already shown this in a number of ways. But as a democratic partner Azerbaijan fails. Repression is increasing and so is the opposition's response to it and vice versa and the spiral of tension is developing that sooner or later is going to snap. My message to the EU speaking here in the capital of the EU presidency is take this seriously. Vussals, you have a problem. The mixed and confused messages that have been sent by Europe to Azerbaijan over the last year or two only makes the problem worse. We need to remain engaged with Azerbaijan but we need equally to be robust in our response when serious human rights violations occur. Georgia does things differently. Its rollercoaster politics often leaves foreign observers wetteless and speechless. Since 1990 the country has seen ethnic wars, civil wars and plain wars. A revolution, a few attempted coups, economic collapse and economic revival. A LSEF government under President Chauvin Nasser and a control free government under President Zakashvili. But, and I hope I am not tempting the gods by saying so, Georgia seems now to have finally turned the corner. Very few, this speaker included, would have thought this time last year that President Zakashvili would have bowed so graciously to the will of the Georgian people after the 1st October election. Zakashvili has, and had over the last eight years or so since he has been President, a messianic vision of his role as leader of Georgia. He was a modernizer in a hurry who did not want to be hindered by too much democracy. In the end the Georgian people rejected this model and applied the brakes. He remains President of Georgia until October but his wings are clipped. There is some confusion in European minds as to what happened in Georgia in the last 12 months. For me the most significant factor was that Georgian civil society was strong and mature enough to establish red lines to Georgia's squabbling politicians. Zakashvili on the morning of the 2nd of October knew exactly the red lines he could not cross. Over the last seven months we have seen a transfer of power to the ballot box unprecedented in the region as somewhat awkward but functioning political cohabitation and the government that has already taken some steps to address some key shortcomings of its predecessors. In Georgia the EU now has an opportunity. This opportunity is not based on the nature or constitution of the new government. Indeed it is too early to draw judgment on the new government. But it is based on the determination and success of Georgian civil society to keep their politicians within bounds. In this they should have our wholehearted support. The South Caucasus is therefore far from being a stagnant region. For the region this indeed is in many ways a defining moment particularly for its relationship with Europe. We need to be sure that we rise to the occasion. There are many potential pitfalls and it is easy to dismiss the whole place as a backwater filled with a bunch of losers. Yet close as scrutiny shows that the picture is much more nuanced and rich with opportunities and possibilities even if with some dangers too. I sincerely hope that the Irish presidency of the EU will in its last weeks contribute to ensuring that the way the EU engages with the region is based on a sense of generosity at duty to uphold our values and the willingness to accompany the countries of the South Caucasus on their difficult journey towards Europe.