South Caucasus, in the shadow of Ukraine

The South Caucasus region has a long conflict-history due to its geostrategic location and importance for trade and energy transit. While internal conflicts remained unresolved and continue to flare up again, as in Nagorno-Karabakh, Russia’s invasion of Ukraine has shifted regional and international dynamics.  

Written by Siri Neset and Arne Strand

Region and people
The South Caucasus lies between the Black Sea and the Caspian Sea and comprises Georgia, Azerbaijan, and Armenia, historically considered a dividing line between Europe and Asia. The region’s geostrategic location is important for regional and international connectivity through transport corridors, railways, and energy transmission projects. 

Historically, the region has been an area of competition between the Ottoman, Persian, and Russian empires, leading to constant movements of people and blending of cultures. During the 20^th century, the Soviet Union closed the region to outside connections and influence, leaving it as a Cold War border zone. The Soviet collapse in December 1991 led to independence for Azerbaijan (10 mill. predominantly Shia Muslim), Armenia (2.9 mill. predominantly Armenian Apostolic Church), and Georgia (3, 9 mill. predominantly Orthodox Christian), but brought forth suppressed sources of tension and grievances. Replacement of the Soviet-era political order together with Russian, Turkish, and Iranian competition over influence resulted in several violent clashes, uprisings, instability and, in some cases, civil war. An example is the August 2008 war between Russia and Georgia over the independence movements in the Russian-supported breakaway areas of Abkhazia and South Ossetia. Georgia had at the time oriented itself towards Europe and sought NATO membership, but was forcefully reminded not to challenge Russian interests.  

War over Nagorno-Karabakh
Another area of major tension is the Nagorno-Karabakh region, located within Azerbaijan, but mostly populated by Armenians. The Armenian forces’ capture of the territory in 1991 led to outright war with Azerbaijan until a 1994 ceasefire provided a degree of fragile stability. Since 1993, the UN Security Council has recognized Nagorno-Karabakh as Azerbaijani territory with its resolution 822. Over the years, the OSCE Minsk Group has been assigned the responsibility to broker a peace deal between Azerbaijan and Armenia, but without any success. The period following 2008 saw several border conflicts until war broke out in 2020, when Azerbaijan recaptured Armenian-held areas and shifted the political power in their favour.

The Russian-negotiated ceasefire agreement of November 2020 led to their unilateral deployment of a 2000-strong peacekeeping force, manning of a military base within Armenia, and positioning of troops on borders with Turkey and Iran. The peacekeeping force was set to secure the important transit and supply route from Armenia through Azerbaijani territories to Nagorno-Karabakh, also known as the Lachin Corridor, and to provide security to the Karabakh Armenians. Turkey sided with Azerbaijan in the conflict and increased their military support and presence, while Iran maintained neutrality.

Russia then in February 2022 engaged with Azerbaijan to secure an allied cooperation agreement   to bring the relationship to the same level as with Armenia. Diplomatic efforts from the US, EU, and the Minsk Group gained limited influence, though the EU stepped up their engagement from 2022. A fragile peace prevailed, based on Russian military presence and longstanding influence in the region.

Trade and energy transfer  
Despite the prevailing insecurity, the South Caucasus has increased its important role in regional and international trade and energy transfers. Several of the existing railroads were upgraded and new ones planned to facilitate trade from and between neighbouring countries; Russia, Turkey, and Iran. Equally important were the many pipelines that cross the region where international energy companies shift gas and oil from Russia, the Caspian Sea, and Turkmenistan onwards to Europe. Russia`s war in Ukraine has increased the importance of the Middle Corridor; a Trans-Caspian logistics route that connects Asia with Europe, bypassing Russia. The region’s importance as an energy and transport corridor for Turkey, European countries, and Russia might come with risks to each of the countries if conflicts escalate, though these risks also come with significant income possibilities.

Post Ukraine
The Russian invasion of Ukraine in February 2022 changed the equation and immediately raised concerns that the South Caucasian could be deprived of sovereignty and territorial integrity. Georgia was the only of the three countries to condemn the Russian invasion, though none supported it. The economy of all countries suffered due to their high dependency on Russian trade and a sharp reduction in remittances. The fallout, however, turned out to be more severe for Russia. With political and military resources steered towards Ukraine, their military capacity decreased along with their ability to maintain diplomatic pressure. Moreover, this state of affair encouraged the EU and US to increase their diplomatic and economic engagement in the region.

Starting in the spring of 2022, the EU initiated several meetings between Azerbaijani and Armenian leaders in Brussels to secure a peace agreement. The US followed suit and facilitated talks in spring 2023 to help unify the countries and provide a platform for further regional and international policy and trade collaboration. The EU had then deployed observers in Armenia to monitor their borders, but Azerbaijan had not agreed to a similar arrangement on their side. Although international negotiation efforts made some progress on the bilateral level, the issue of Nagorno-Karabakh remained unresolved. When the Armenian Prime Minister recognized Azerbaijan`s territorial integrity, including Nagorno-Karabakh, this dismayed many Armenians and the Armenian diaspora. The fundamental question of the Karabakh Armenian`s rights and security remains, however.   

Challenging Russia
With concerns over the increasing tension with Azerbaijan and fears that Russian peacekeepers would not provide sufficient protection, the Armenian leadership contested Russia’s monopoly of force. In September 2023, the Prime Minister stated in an interview that “Russia’s catastrophic invasion of Ukraine means Armenia can no longer rely on Moscow as a guarantor of its security.” Armenia withdrew their representative to CSTO, the Russian-led military alliance. Recently, 85 US soldiers were invited to Armenia to train and prepare Armenian soldiers for international peacekeeping missions. The initiative was not well received in Moscow, but the exercise proceeded as planned.

Azerbaijan was emboldened by its military success in 2020, and with Russia preoccupied, they glimpsed an opportunity to advance on the battlefield and to negotiate a peace treaty on more advantageous terms. When Russian peacekeeping troops had to cede control of the Lachin Corridor to Azerbaijan, it was clear that Russia had neither the will nor the means to preserve the 2020 settlement. Moreover, Azerbaijan is well aware that it sits astride roads and railway lines vital for Russia’s trade with Iran and Turkey and offers a bigger market for Russian goods, especially when compared to Armenia.

A new redistribution of regional power granted Georgia more room to manoeuvre in its foreign policy. The importance placed on the Middle Corridor for trade offered economic opportunities and international cooperation. However, even if Georgia condemned the Ukraine invasion, there are now signs of growing Russian influence and more Kremlin-friendly policies. Internal political unrest and polarisation raises concerns over where Georgia is heading.

Turkey has increased its diplomatic engagement in the South Caucasus region and beyond and might eye an opportunity to fill the gap left by Russia. One crucial step has been to normalise their relations with Armenia. This process has begun and there are grounds for optimism, but from a Turkish perspective, it can only be finalised after or parallel to an Armenia-Azerbaijani peace deal. That could open a new trade corridor from Turkey to the Caspian Sea and the Central Asian Turkic republics, thereby enhancing Turkey`s strategic role in these regions. Furthermore, Turkish soft and hard power in the South Caucasus and Central Asia offers NATO and its members the chance to compete with Russian and Chinese influence there.

Back to Nagorno-Karabakh
The Nagorno-Karabakh conflict again intensified on September 19, 2023, when Azerbaijan launched military attacks justified as an “anti-terror” measure. Following a brief resistance and international calls for restraint, on September 21 the Karabakh Armenians signed a ceasefire agreement under pressure, in which they agreed to dismantle the local self-defence force. After thirty-five years, Azerbaijan now again controls Nagorno-Karabakh, and the Armenian population is considering migration to Armenia.

These latest developments have increased the geopolitical importance of the South Caucasus. One major remaining question is if greater international attention can lead to a more permanent settlement of regional conflicts. Another, more gloomy prospect is that the region turns into a proxy arena for competition between Russia, on the one hand, and the EU and the US, on the other.

This blog is based on the CMI report Changing Geopolitics of the South Caucasus after the Second Karabakh War Prospect for Regional Cooperation and/or Rivalry authored by Siri Neset, Chr. Michelsen Institute; Mustafa Aydin, Kadir Has University and International Relations Council of Turkey; Ayça Ergun, Middle East Technical University, Ankara; Richard Giragosian, Regional Studies Centre, Yerevan; Kornely Kakachia, Ivane Javakhishvili Tbilisi State University; and Arne Strand, Chr. Michelsen Institute.