Jul 8, 2013 | 10:46 GMT

5 mins read

The Caucasus Today and in the Coming Years

The Caucasus Today and in the Coming Years
(ADEM ALTAN/AFP/Getty Images)

Located between Europe and Asia and replete with energy and mineral resources, the Caucasus has long held the attention of regional and global powers. The countries of the Caucasus were in disarray after the fall of the Soviet Union: Armenia and Azerbaijan fought over Nagorno-Karabakh, while Georgia struggled with the secessionist regions of Abkhazia and South Ossetia. But over the past decade the Caucasus states have achieved relative domestic political stability and have developed their own distinct foreign policies.

In the future, Russia, Turkey and Iran will remain active in the Caucasus, but a deeply fragmented Europe will not even be able to interact with the world as a unified force, let alone have a major impact on the region. Washington's involvement will not be as obvious, but the region is of too great a strategic interest to the United States to be ignored.

After holding its least controversial presidential election in years in February, Armenia looks poised for relative political stability. With generally the weakest economy of the Caucasus states, Armenia has relied on Russia, which owns many major assets in the country's energy, transit and telecommunications sectors. Russia has also served as Armenia's security guarantor, helping to prevent another outbreak of war with Azerbaijan over Nagorno-Karabakh, the separatist region in Azerbaijan.

Azerbaijan found stability much sooner, at least during the presidency of Heydar Aliyev from 1993 to 2003. Like his predecessor and father, current President Ilham Aliyev has sought to balance between Azerbaijan's larger neighbors while developing the country as an energy producer and exporter.

The most dynamic political situation in the Caucasus is in Georgia, which witnessed the Rose Revolution in 2003 and, most recently, the rise of billionaire tycoon Bidzina Ivanishvili and his Georgian Dream movement. Ivanishvili has been consolidating power since becoming prime minister in October 2012, and with President Mikhail Saakashvili unable to run for another term, the country's presidential election in October could be another turning point in Georgian politics. Even if Ivanishvili's candidate lost, impending constitutional changes will limit the power of the presidency, meaning late 2013 will likely be the end of Saakashvili's decadelong domination of Georgian politics.

Future Policy Direction

Given its newfound political stability and its dependence on Russia, Armenia's foreign policy is unlikely to change much in the next few years. Russia's military presence and subsidization of Armenia's economy are the strongest sources of influence that any foreign power has in Armenia, and Yerevan will likely only increase its cooperation with Moscow. Russia's support of Armenia, while a source of tension between Azerbaijan and Russia, will likely keep full-scale war from erupting over Nagorno-Karabakh.

Azerbaijan will hold a presidential election in October, but with few significant challengers, Aliyev is likely to win, enabling him to continue to focus on Baku's emergence as an energy power. However, success could depend on the European market — a worrisome proposition for Baku. With other sources of energy becoming available, European natural gas consumption is not expected to climb significantly in the coming years. Moreover, Georgia is a crucial transit state for existing and future Azerbaijani pipeline projects to Europe, and Georgia's new government appears to be set to work more closely with the Russians. Azerbaijan must consider that Russia could use its ties in Georgia to pressure Baku into compliance on various issues. To counter warming Russo-Georgian relations, Azerbaijan will probably increase energy, political and security cooperation with Turkey, though the Turks would not be able to provide the kind of energy diversification and leverage that Azerbaijan hopes to find in Europe. 

Saakashvili's Georgia has been thoroughly oriented toward the West, but Ivanishvili campaigned on building closer ties with Russia. This will be the greatest shift of the Ivanishvili era. Change has been gradual so far, and Georgia has continued its Western-oriented course at least rhetorically, but its regional partners — Azerbaijan and Turkey — are nervous that a wider political shift could be imminent.

The Policies of Regional Powers

Other powers' strategies for the Caucasus will also affect the region's developments. Most important is Russia, which aims to block any foreign influence in the region, particularly Western influence. To do so, it will maintain its already strong position in Armenia and deepen its foothold in Georgia. Both will be key to Moscow's efforts to shape the actions of Azerbaijan, the most strategically important and most independent of the Caucasus countries. The potential for warmer ties with Georgia under Ivanishvili and his political camp could encourage Azerbaijan to be more accommodating toward Russia.

Turkey is a major consumer of Azerbaijani oil and natural gas and serves as a key transit state for energy bound for Europe. Though it may be uncomfortable for Azerbaijan given its desire to diversify its export market, Turkish demand for its natural gas and the uncertainty of the European energy market will bind the two together. Russia's military presence in Armenia and in Georgia's breakaway territories, Abkhazia and South Ossetia, will also encourage the two to enhance defense ties. Still, Russia is the main supplier of Turkey's energy, and that fact will preclude Turkey from becoming too close to Azerbaijan in the security realm.

Iranian relations with Armenia (mostly limited to the economic sphere) and Georgia will remain mostly the same, but the occasional diplomatic row could arise between Iran and Azerbaijan. Tehran will keep pressure on Baku through religious and cultural groups in Azerbaijan, though their effect will be limited. There is also the chance of a military buildup in the Caspian Sea as Iran tries to strong-arm Azerbaijan into cutting back its cooperation with Israel.

Given the ongoing crisis that is fracturing the European Union, Europe cannot be relied upon to finance strategic projects in the Caucasus. Similarly, the United States is working to reduce its role in various parts of the world and is thus unlikely to become more involved in the Caucasus. However, the rebalancing of U.S. foreign policy means the United States will be more reliant on foreign partners to accomplish its goals. Due to the uncertainties of its future relations with Georgia in the Ivanishvili era, the United States could look to Azerbaijan to fill the role of partner in the Caucasus.

Azerbaijan's growth as an energy producer and exporter will make it a dynamic player, while Armenia will build on its close economic and security relationship with Russia. But it is the specifics of Georgia's political evolution that are the least clear and that have the greatest potential to alter the trends in the Caucasus.

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