Key Findings
• Shortfalls in financial subsidies to North Caucasus republics will intensify and widen the cycle of violence which will affect the South Caucasus.
• A widened cycle of violence would be harmful to Western interests in Georgia and Azerbaijan.
• Reduced scale of subsidies contrasts sharply with the vast sums being spent by Russia on 2014 Olympics and financial aid to South Ossetia and Abkhazia and will intensify discontent.
• Need for radical political reform: continuation of forceful measures alone will not improve the situation. Need for republics to elect their own leaders.
• Greater investment in education, technical training, job creation and health care are needed for the young and the population in general.
• Effective intelligence is needed to stop the flow of illegal funds into the North Caucasus.
• Operations against illegal bandit formations must be conducted within the law: punishment of offenders must be effected openly through the courts.
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