A military parade in Baku, Azerbaijan, June 2011.
STRINGER / REUTERS

The South Caucasus has long been a geopolitical fault line, under pressure from both ethnic tensions and the ambitions of powerful neighbors. Since the final years of the Cold War, the region’s three states, Armenia, Azerbaijan, and Georgia, have been locked in confrontations with one another, with various breakaway regions, and with outside powers. In the early 1990s, cease-fire agreements froze the region’s main separatist conflicts: between Georgia and the Russian-backed forces of Abkhazia and South Ossetia on the one hand and between Azerbaijan, Armenia, and the Armenian-backed separatist region of Nagorno-Karabakh on the other. Since then, the regional order in the South Caucasus has been tense but mostly stagnant, with the notable exception of Russia’s invasion of Georgia in 2008

Over the past several months, however, the region’s tectonic plates have begun to shift. In April, Azerbaijani forces seized a stretch of territory that was previously under Armenian control, leaving hundreds dead and reminding leaders in Baku and Yerevan of their ability to use force to change the territorial status quo. A conflict that has been mostly frozen for two decades now threatens to slip into open war. Facing economic problems at home, neither the Azerbaijani nor the Armenian government has much reason to avoid warlike rhetoric or embrace compromise, even though renewed conflict would be disastrous for both sides. 

The situation in Georgia, meanwhile, is more stable. Most of the Georgian population and the country’s leading political parties remain committed to Euro-Atlantic integration, and there probably won’t be any major changes in the country’s domestic or foreign policies in the near term. Yet Russia’s continued efforts to shape Georgian public opinion and Moscow’s tightening control over the breakaway regions of Abkhazia and South Ossetia suggest that Tbilisi’s progress cannot be taken for granted. Georgia’s stalled campaign for NATO membership further risks adding to frustration with the status quo, although the recent approval in principle of visa-free travel to the European Union will help.

Russia is still the most important outside player in the South Caucasus, and recently it has taken a more active diplomatic role throughout the region. But it is not the only foreign power whose interests there are in flux. Turkey, a strategic partner of Azerbaijan that has kept its border with Armenia closed for more than 20 years in solidarity with Baku, is reconsidering its role in the region in the wake of the July 2016 coup attempt. And Iran, which is exiting a long period of international isolation, is looking for transit corridors in the region and to secure its near abroad. As Moscow, Ankara, and Tehran vie for influence, the European Union, which for years sought to draw Armenia, Azerbaijan, and Georgia into its orbit through the so-called European Neighborhood Policy, is turning its gaze inward, consumed by crises of its own. As a result of all these developments, the geopolitical status quo in the South Caucasus is starting to unravel.

Servicemen of the self-defense army of Nagorno-Karabakh near the village of Mataghis, April 2016.
STAFF / REUTERS

IN RUSSIA’S CORNER?

The most important recent shift in the South Caucasus has been the gradual escalation of the conflict over Nagorno-Karabakh, which began in 1988 and was frozen by a fragile cease-fire in 1994. Over the past decade, Armenia and, to a much greater extent, Azerbaijan have bulked up their militaries, both with the help of Russian weapons. The frequency and intensity of the clashes along the so-called Line of Contact, which divides Azerbaijani forces from Nagorno-Karabakh and Armenian-occupied areas of Azerbaijan proper, increased between 2014 and early 2016. Sporadic violence also broke out across the internationally recognized border between Armenia and Azerbaijan. Baku’s growing military capabilities (fueled by massive purchases of Russian weapons) and mounting dissatisfaction with the government have given Azerbaijani officials new incentives to seek a military solution. 

This April’s fighting brought violence of a scale not seen since the 1990s. The conflict began with an offensive across the Line of Contact by Azerbaijani forces on April 2. (Azerbaijani officials claim the offensive was a response to Armenian provocations.) By the time the war ended with a Russian-mediated truce on April 5, somewhere between 200 and 350 soldiers and civilians had been killed, and Azerbaijani forces had seized several frontier posts across the Line of Contact in the biggest revision of the territorial status quo since 1994.

The territory captured by Azerbaijan is of limited strategic importance. But the fighting was a warning that the relative stability of the past two decades may not last. Above all, it showed that territorial changes can be imposed by force and created domestic pressures for escalation that both Baku and Yerevan will be hard pressed to face down.

Low oil prices have sent Azerbaijan’s economy into a downturn, and the government of President Ilham Aliyev faces popular discontent over inflation, currency depreciation, and unemployment, as well as government repression. April’s conflict touched off a wave of nationalism, and in the coming months, the authorities may be tempted to press Azerbaijan’s advantage in Nagorno-Karabakh to distract from their problems at home. As for Armenia, its territorial losses and the poor performance of its army during the Azerbaijani offensive has created an acute sense of vulnerability and a hunger for revenge. It has also exacerbated Yerevan’s frustration with Russia. Moscow provides security guarantees to Armenia, as a result of which Yerevan grudgingly accepts a large Russian military presence and Russian ownership of much of Armenia's critical infrastructure. Many Armenians believe that that Russia failed to adequately aid their country during the April crisis.

Russia, in fact, was probably the biggest winner of the recent conflict. The Armenian and Azerbaijani chiefs of staff flew to Moscow to hammer out the April 5 cease-fire, and Russian officials, including President Vladimir Putin, were instrumental in persuading Baku and Yerevan to accept the deal in the weeks that followed. His involvement was a reminder of the failure of the Organization for Security and Cooperation in Europe (OSCE) Minsk Group, an internationally recognized mediator for the conflict over Nagorno-Karabakh co-chaired by France, the United States, and Russia, to resolve the standoff. It also underscored the fact that Russia has more leverage and interests in the region than either France or the United States.

The worry in the region is that Russia will use Armenia and Azerbaijan’s desperation to impose a settlement that will cement Russia’s own position as regional broker. Russia’s message to Baku is that only the Kremlin has enough influence over Armenia to deliver an agreement that will return at least some Armenian-occupied territory to Azerbaijan’s control. That is an enticing prospect to Azerbaijani officials, but they worry about what Moscow could demand in return. A settlement of that kind would likely require Azerbaijan’s accession to the Russian-led Eurasian Economic Union and Collective Security Treaty Organization, and perhaps the limiting of its development of oil and natural gas for sale to Europe. Officials in Yerevan conversely fear that Russia will force their country to give up some of the territories it won in the early 1990s, for Armenia would receive little in return. Moscow, finally, would like to deploy Russian peacekeepers, perhaps under the nominal aegis of the Commonwealth of Independent States, to police an eventual peace settlement—a proposal to which Armenia and Azerbaijan are united in opposition. 

Russia’s attempt to position itself as the critical broker in Nagorno-Karabakh reflects a broader ambition to resume its position as the dominant player in the South Caucasus. At the moment, the odds of it succeeding are low, thanks to the involvement of the international community and the opposition of both Armenia and Azerbaijan. But in the event of renewed fighting, Moscow will be best positioned to impose an agreement, and France and the United States might be willing to accept one as an alternative to a major war between Armenia and Azerbaijan. The mutual fear of a Russian–imposed settlement also increases the likelihood that Armenia or, more probably, Azerbaijan, will act rashly to change facts on the ground and achieve a fait accompli.

President Ilham Aliyev of Azerbaijan, President Vladimir Putin of Russia, and President Serzh Sargsyan of Armenia in St. Petersburg, June 2016. 
Sputnik / Kremlin / Mikhail Klimentyev / via REUTERS

THE COMING UPHEAVAL

Apart from Armenia and Azerbaijan, both Georgia and Turkey stand to lose from such an outcome. Since the early 1990s, Turkey has positioned itself as a strategic partner of Azerbaijan, which is populated mostly by ethnically Turkic Muslims. In 1993, Turkey sealed its border with Armenia and imposed an economic embargo on the country that persists to this day. Over the past decade, Turkey has worked with Azerbaijan and Georgia to create an east-west transit corridor between the Caspian Sea and Europe. The resulting pipelines, railways, and other infrastructure projects have facilitated a strategic axis among Azerbaijan, Georgia, and Turkey that has reduced Baku and Tbilisi’s dependence on Russia and moved all three states closer to Europe. A shift in Baku’s strategic orientation toward Russia—especially one that affects its energy policy—could weaken that grouping, leaving Georgia more vulnerable to Russian influence and further undermining Turkey’s connection to Europe at a time when tensions between Ankara and Brussels are already high over Turkey’s responses to the migrant crisis and July’s failed coup attempt. 

Part of the reason Russia wants to resolve the Nagorno-Karabakh conflict on its own terms is because it worries that Turkey and Iran will not stay on the sidelines in the event of renewed fighting. Those two countries have always been interested in the South Caucasus, but until recently, each faced constraints on its ability to intervene there. Ankara’s hope to eventually join the European Union checked any provocative behavior, whereas Iran was hobbled by international sanctions and mostly concerned with managing the threats from Israel and the United States. As Turkey’s EU aspirations fade and Iran emerges from the cold after the 2015 nuclear deal, Moscow can no longer assume that either country will stay out of a renewed crisis. Turkey will be more willing to provide military support to Azerbaijan, which could make any fighting more serious and complicate Russia’s efforts to pull Baku into its orbit. At the same time, Ankara is putting out diplomatic feelers in Armenia, with which it has unsuccessfully sought to normalize relations in the past. Yerevan remains wary, but even a small breakthrough in Turkish-Armenian relations would complicate Russia’s ability to broker an agreement on its own terms. For its part, Iran has long had good relations with Armenia, providing it with a critical link to the outside world as its borders with Azerbaijan and Turkey remain closed. Now relations between Iran and Azerbaijan are warming as well, as Iran as seeks to peel Azerbaijan away from Turkey and as Baku downplays its irredentist claims on ethnically Azeri territories in northern Iran and its strategic partnership with Israel.

April’s war was a sign that both Armenia and Azerbaijan are frustrated with a peace process that has become more about managing their conflict than resolving it. The South Caucasus has seen its share of drama in the 25 years since the Soviet collapse. By all indications, the region faces more upheaval in the years ahead.

  • JEFFREY MANKOFF is Senior Fellow and Deputy Director of the Russia and Eurasia Program at the Center for Strategic and International Studies.
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