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Ambassador Joseph Presel discussed US policy towards the new states of the Caucasus region. The US, he stated, tends to focus on the individual countries rather than to look at the region as a whole. Further, it tends to look at each state in terms of one defining issue. For Georgia, the key is to support Shevardnadze, in essence rewarding him for his role in ending the Cold War and the reunification of Germany. For Azerbaijan the issue is oil, and for Armenia it is a serious energy shortage. Presel then turned to an examination of the two major conflicts in this region which are the focus of State Department peace efforts. He began with Georgia''s two conflicts, the secessionist struggles in Abkhazia and South Ossetia. He suggested that the Ossetian problem will probably be solved only after the Abkhazian conflict ends; but that at present the Abkhazian crisis showed no signs of abating. Turning to Nagorno-Karabakh, Ambassador Presel stated that everyone already knew what the settlement of that conflict would look like. It would involve the nominal preservation of Azerbaijani territorial integrity with de facto independence for the region of Nagorno-Karabakh. The latter would retain guaranteed access to Armenia proper through the Lachin corridor, but would give up the rest of the occupied Azerbaijani territories. An OSCE peacekeeping contingent would enforce the agreement. He proposed that the leaderships of all three parties (Armenia, Azerbaijan and Nagorno-Karabakh) had accepted this intellectually, but not emotionally, although progress was evident. US policy thus far has been to pressure the sides into coming to such an agreement. The precedents set by these peace efforts might also prove helpful in solving conflicts in other parts of the Caucasus region. Presel then touched on US policies towards the states that neighbor this region. He noted that the US has intentionally ignored Iran and has encouraged Turkey in its efforts to improve relations with Armenia. He further suggested that the key player in the region, Russia, currently does not have a single policy in the Caucasus, as many of its political actors have different agendas, making interpretation of Russia''s actions difficult for the US government. Nevertheless, the United States respects the legitimacy of Russia''s historical, economic, political and psychological ties to the region.