Located between Europe and Asia, the Caucasus region is characterized by a web of complex relationships. First, there is Georgia, which is oriented toward the West and at odds with Russia. The government in Tbilisi aspires to join the European Union and NATO, to the point, in fact, that it fought a war with Russia in 2008 over its NATO ambitions. Then there is Armenia, a staunchly pro-Russian state that has eschewed any meaningful interaction with the West. Driving Armenia's closeness with Russia is its adversarial relationship with Azerbaijan, the third country in the Caucasus.
Armenia and Azerbaijan fought a war over the region of Nagorno-Karabakh in the late Soviet and early post-Soviet period, and frictions remain to this day. Its relationship with Armenia notwithstanding, Azerbaijan is neither overwhelmingly pro-Russian nor pro-Western. Rather, Baku has used its extensive energy resources to balance between both sides while at the same time building up its military to potentially re-engage Armenia over Nagorno-Karabakh.
Adding to these complexities in the Caucasus is the position of other regional powers. Turkey has a strong relationship with Azerbaijan and is a crucial part of the Southern Corridor energy route, through which Baku exports its energy supplies to Europe. Turkish ties with Armenia are not so strong, however, because of Turkey's support for Azerbaijan and the mass killings of Armenians at the end of the Ottoman period. Iran has a solid relationship with Armenia but is suspicious of Azerbaijan; Baku has close security ties with Israel, and northern Iran boasts a large Azeri minority. Finally, the United States has influence in all the Caucasus countries but has not shown a serious level of commitment to any of them.
These relationships are impermanent, of course. Ties are constantly shifting, and as they reset they affect the entire region, sometimes in unexpected ways. This is particularly true amid the confrontation between Russia and the West.
The standoff has centered on Ukraine but already reverberates elsewhere. Indeed, Georgia is undergoing the same process of EU integration that set off the uprising in Ukraine, and Tbilisi will sign the same EU association and free trade agreements that Ukraine and neighboring Moldova are set to formally conclude with the bloc at a summit on June 27. In response, Russia has become more assertive not only in Ukraine — where it annexed Crimea and has tacitly supported separatists — but also in the Caucasus. Georgia's move toward EU integration has prompted Russia to more seriously promote its own integration bloc, the Eurasian Economic Union. Armenia will join the Russian-led grouping at the beginning of 2015. Russia has also beefed up its security presence in Armenia and Georgia (specifically in the breakaway Georgian territories of Abkhazia and South Ossetia), a worrying sign for Azerbaijan.
Russia is not alone in becoming more active in the region. As a way to counter Russia's influence and lessen their own energy dependence on Russia, the Europeans have increasingly looked to the Caucasus region as an alternative energy provider. Key in this regard is Azerbaijan, which could serve as an exporter and transit state for significant amounts of natural gas from its own fields and potentially from those in Turkmenistan, Iran and even Iraq. This development has bolstered the position of Baku, which is always looking for opportunities to diversify its partnerships. At the same time, however, the increased attention from Europe is a serious challenge to Russia's position as Europe's energy supplier. Add to this a renewed U.S. interest in the Caucasus, and in Azerbaijan specifically, and this has the potential to rework the power structure of the entire region.
Sensing the changes underway, Russia has altered its own strategy. For example, it is engaging Baku on the energy front, resuming imports of natural gas from Azerbaijan and signing several cooperation deals with Azerbaijani state energy firm SOCAR. Russian diplomats have also become more active in the Nagorno-Karabakh dispute. Russian President Vladimir Putin discussed the matter June 23 with his Azerbaijani counterpart, Ilham Aliyev. On the same day, Russian Foreign Minister Sergei Lavrov met with his Armenian counterpart, Edward Nalbandian, and promised that Moscow would do its best to find a resolution to the Nagorno-Karabakh dispute. Russia is key to any peaceful settlement of the issue because of its strong political relationship with Armenia and its military presence there. But the Russian government also knows that Azerbaijan is a pivot in the Caucasus and must at least be kept neutral. Greater U.S. engagement with Azerbaijan gives Baku substantial leverage.
Though it is notable that Russia is simultaneously engaging Armenia and Azerbaijan on the Nagorno-Karabakh issue, a major shift is not necessarily imminent. There has been a lot of push and pull over the disputed region over the past two decades, with little to show for it. But the standoff between Russia and the West has caused all the players in the region to review their position on all major issues, including Nagorno-Karabakh. Whether that leads to a change and what that change actually would look like remains unclear, but the feverish diplomatic activity between Russia and the other states in the region suggest that all options are on the table.