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The problems of weak state structures, including state territoriality, in the South Caucasus has highly influenced political developments and the building of a democratic state. This paper explains the difficulty of recovering statehood in the cases of Armenia and Georgia, both in the context of post-Soviet state transformation and post-conflict state-rebuilding. It argues that recovering statehood in the South Caucasus meant at once maintaining the status quo within the state structures and managing the highly volatile political and ethnic relations (culminating in armed conflict). In the cases of conflict, elite management impeded conflict solution. In this context, this paper finds that elite power slowed the construction of a democratic and effective state. In particular, elite fragmentation has led to serious impediments for state development and the consolidation of territoriality. In sum, elite-led state development and conflict management hindered the successful consolidation of state territoriality. [ABSTRACT FROM AUTHOR]