Until the crisis in Ukraine, Russia was in a very good position in the Caucasus, arguably its strongest since the fall of the former Soviet Union. Armenia was a loyal ally, hosting some 5,000 Russian troops in its territory. Georgia was nominally oriented toward the West, but its integration efforts, particularly with NATO, were mostly unsuccessful because of Russian pressure on the government, as well as Moscow's military buildup in the breakaway territories of Abkhazia and South Ossetia. Azerbaijan was the only Caucasus country without any Russian military presence, but Baku was increasingly taking Moscow's interests into account in its energy and regional foreign policy strategies.
Now, six months into the Ukrainian crisis, the situation in the Caucasus has changed significantly. Although Armenia has stayed loyal to Russia, eschewing EU deals while agreeing to join the Russian-led Customs Union, Georgia, like Ukraine, has pushed forward with Western integration efforts by signing the Association and Free Trade agreement with the European Union. (Its ties with NATO are still limited.) In addition, Azerbaijan — an energy producer — has risen in importance as Europe's desire to diversify its energy resources away from Russian natural gas has increased as a result of the crisis in Ukraine.
Accordingly, Russia has expanded its efforts to try to keep Azerbaijan out of the Western camp. First, Moscow strengthened its ties to the Azerbaijani energy sector through new deals signed between Russian oil giant Rosneft and Azerbaijan's state energy firm SOCAR. Second, Russia has explored options for greater cooperation on security issues, including increasing weapons shipments to Baku. Finally, Russia has increased its diplomatic activity with Azerbaijan over Nagorno-Karabakh, one of the regions Azerbaijan lost to Armenia during a separatist war from 1988-1994. Retaking the territory remains Azerbaijan's primary strategic interest and offers an opening through which Moscow can enhance ties and influence.
Russia's Interest in the Conflict
While Armenia and Azerbaijan have been engaged in regular low-level clashes over Nagorno-Karabakh for the past 20 years, it may not be a coincidence that violence has escalated between the two countries since the Ukraine crisis broke out. The specific trigger that caused the clashes remains unclear, but violence peaked over the weekend of Aug. 1-3, with more than a dozen soldiers killed on both sides. This has spurred rumors that the spike in violence was not accidental and that Russia had an interest in inciting conflict either to increase its support for Azerbaijan or to save face as a regional power player and peace broker at a time when Russian President Vladimir Putin is seemingly showing weakness on Ukraine.
Little direct evidence has been given to support either of these theories, but Russia's management of the crisis offers clues as to how it intends to deal with Nagorno-Karabakh. Putin hosted Armenian President Serzh Sarkisian and Azerbaijani President Ilham Aliyev in Sochi on Aug. 9-10 to discuss the state of affairs in Nagorno-Karabakh. The meeting between the leaders produced standard statements: that they are addressing the conflict peacefully and promise further consultations. It was notable, however, that even as Armenia and Azerbaijan blamed each other for the recent hostilities, Sarkisian and Aliyev were resolute in describing Russia as a cooperative partner. Both know that any resolution to the conflict requires Moscow's involvement. They also understand the consequences they would face if Russia leaned toward the other side, making winning Russian support all the more important.
Perhaps more revealing are developments that occurred during and after the meeting. Russian weapons manufacturer Uralvagonzavod announced that it would send a new batch of military equipment to Baku in accordance with an agreement reached in 2011. This includes a delivery of TMM-6 mechanized bridges and the first batch of three IMR-3M combat engineer vehicles acquired in a supplemental agreement in 2013.
But Azerbaijan was not the only one to see positive signs from Russia. Around the same time, Armenia's energy minister announced that Russia might finance 35 percent of construction costs for a $4.9 billion nuclear power plant by contributing buildings and equipment for the plant's reactor. Also, after the Nagorno-Karabakh meeting, Sarkisian said that Armenia would join the Eurasian Economic Union in an agreement to be signed later this year. This is notable in light of the Azerbaijani weapons delivery announcement, as well as signs earlier this year that Armenia might seek to delay its accession to the Russia-led organization.
These moves show that, in response to Nagorno-Karabakh, Russia intends to manage the situation by keeping close relations with both parties while maintaining its status as the conflict's indispensable arbitrator. Ultimately, Russia's interest in the Caucasus is to keep the entire region within its sphere of influence and away from the West. Russia's position has certainly been challenged in Ukraine, and Moscow is working to prevent a similar outcome in the Caucasus. Thus, Russia's broader goal is to keep the conflict over Nagorno-Karabakh simmering while avoiding a full-scale war. The key to this is for Russia to exploit tensions between Armenia and Azerbaijan while maintaining important economic and security ties with both.