ASSESSMENTS

In the Caucasus, Competition Will Limit Cooperation

Feb 7, 2018 | 09:30 GMT

The Caucasus countries of Azerbaijan, Armenia and Georgia serve as trade and transit corridors to and between neighboring Russia, Iran and Turkey and could eventually connect markets in Europe and China.

The Caucasus countries of Azerbaijan, Armenia and Georgia serve as trade and transit corridors to and between neighboring Russia, Iran and Turkey and could eventually connect markets in Europe and China.

(BEYHANYAZAR/iStock)

Highlights

  • The Caucasus, consisting of Azerbaijan, Armenia and Georgia, will attract increased interest in the coming months and years, as it rises in importance as a trade and transport corridor between Europe and Asia. 
  • New developments will take place in both an east-west and north-south direction, offering opportunities for the three Caucasus countries to link to trade and infrastructure projects well beyond their region.
  • Such projects will be modest, however, and will remain limited by logistical and financial constraints as well as by a complex geopolitical environment characterized by regional security concerns and competition between external powers.

In terms of their overall population and economic size, the three Caucasus countries of Georgia, Armenia and Azerbaijan are relatively small. Fewer than 17 million people live in the South Caucasus, and the total GDP in the region is just over $60 billion. The region's economic importance outweighs its small size, however. The Caucasus is a strategic transcontinental land bridge, and Azerbaijan is a significant producer of oil and natural gas. Azerbaijan, Armenia and Georgia also serve as trade and transit corridors to and between bigger countries -- including not only neighboring Russia, Iran and Turkey, but also with the potential to increase connections to even larger and more distant markets in Europe and China....

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