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China’s changing interests in South Caucasus

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President Ilham Aliyev and Chinese leader Xi Jinping in Beijing Photo: Azertac

On April25-28,“Second Belt and Road Forum for International Cooperation” took place in the capital city of China. From South Caucasus region only Azerbaijan leader Aliyev was in the list of 36 top-Level attendees (Diplomat, April 27).As the Azerbaijan was participating first forum in 2017 on ministerial level, visit of President in second forum demonstrates intention of both sides for close cooperation within the framework BRI.

Despite fact that China’s strong ambition to enter European market through BRI makes Georgia one of the most important players in the region (it has FTA both with China and EU) its high-level officials did not attend the forum (Emerging-Europe, January 3, 2018).

Generally, South Caucasus region was not in the Chinese focus when the BRI project was unveiled in 2013.Its attitude to the region has changed afterwards. Being part of the Central Asia-West Asia Economic Corridor, South Caucasus has strategic importance for China. At the same time, transportation projects such as Baku-Tbilisi-Kars railway and Anaklia Deep-Sea Port has increased significance of the region.

From geopolitical point of view stability in Azerbaijan and Georgia’s political problems with Russia creates ground for Chinese presence in Caucasus. It is clear that having political problems with West Russia is not willing to confront China. Therefore, using these opportunities and establishing good relations both with Georgia and Azerbaijan China is able to avoid its biggest rival in Eurasia and use shortest way to European markets (Trend.az, April 10).

Importance of South Caucasus countries within the BRI framework is not same. Armenia has less potential for BRI. It does not have enough transportation infrastructure and its borders with Azerbaijan and Turkey closed. Armenia has a potential to become a corridor to markets of Eurasian Economic Union (EEU) and Iran. However, it does not have borders with the members of EEU and  railway project between Armenia and Iran is not viable due its high costs ($3.2 billion) and less importance in commercial means (Vestnikkavkaza, August 25, 2018).Also, China has borders with two biggest members of EEU and could easily reach EEU markets through them. 

In the case of Georgia, China is the biggest foreign investor. China’s Hualing Group controls Kutaisi free industrial zone (FIZ), owns Basis Bank, hotels, wine export enterprise. It also constructs “Tbilisi Sea New City” near Tbilisi Sea in which company has already invested around 150 million dollars (hualing.ge).Another Chinese company CEFC Energy owns 75% of Poti FIZ (Cbw.ge, March 20).

Unlike the Georgia, mostly state-owned Chinese companies have invested in Azerbaijan. One of these companies CTIEC Group constructed biggest cement factory in Azerbaijan in 2014.China also has a great interest on Baku International Sea Trade Port as it is one of the main ports within BRI. Based on intergovernmental grant agreement China transferred $2 million worth equipment to the port (Azernews, April 4, 2018).

Despite fact that Azerbaijan is China’s key trade partner in the South Caucasus (it accounts 43 percent of China’s trade turnover in the region) it has massive investments in Georgia (Azernews, April 25). It mostly related to political orientation of these countries. Georgia follows more western orientation that made it more attractive for China while Azerbaijan implements balanced strategy and it does not want to feel China’s pressure. Besides, Azerbaijan is not in need of financial assistance like Armenia and Georgia as it has enough financial reserves.

However, recent developments of Sino-Azeri economic relations within the framework of the Second Belt and Road Forum creates new perspectives for China’s presence in South Caucasus. During the forum 10 agreements worth of 821 million USD has been signed  (Azvision.az, April 24). These contracts cover different economic spheres of non-oil sector including the construction of a tire factory in the Sumgayit chemical-industrial park, the creation of a 300-hectare greenhouse complex in the Kurdamir region of Azerbaijan, and the construction of agrological industrial parks in the Guba, Goychay and Khachmaz regions (Turan.az April 24).If we take in account that Chinese investors have invested800 million USD in the economy of Azerbaijan since independence, obtained agreements in the forum worth of same amount shows China’s growing interest in Azerbaijan.

Nevertheless, it does not mean that China’s preference of Georgia has changed. Within the BRI project both Azerbaijan and Georgia are of geopolitical importance for China. It is in China’s interest to boost bilateral relations with both of countries. It is apparent that China already has considerable investments in Georgia and now it is time to deepen cooperation with Azerbaijan. At the same time Azerbaijan is not going to cross limits of its balanced policy. Chinese companies that signed agreements in second forum are government affiliated companies as well. It again shows that Azerbaijan is willing to deepen cooperation without creating room for pressure in its domestic economy.

Orkhan Baghirov is a leading research fellow in Baku based think tank named Center of Analysis of International Relations. He is PHD candidate in Public finance and fiscal policy. His areas of research include regional and international economic relations.

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Eastern Europe

Thorny path towards peace and reconciliation in Karabakh

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On January 11 the leaders of Russia, Azerbaijan and Armenia signed a deal to develop cross-border transportation routes and boost economic growth to benefit the South Caucasus and the Wider Region. This meeting took place two months after the Moscow-brokered armistice between Armenia and Azerbaijan ended a 44-day war over Nagorno-Karabakh.

This ethno-territorial conflict over Nagorno-Karabakh has drawn dividing lines between Armenia and Azerbaijan for almost 30 years. Some estimates put the number of deaths on both sides at 30,000 after the First Karabakh war before a ceasefire was reached in May 1994. As a result of this war, one fifth of the internationally recognized territory of Azerbaijan was occupied and the entire Azerbaijani population of the former Nagorno-Karabakh Autonomous Oblast (NKAO) and seven adjacent districts (Lachin, Kalbajar, Agdam, Fizuly, Jabrail, Gubatli and Zangilan) was forcibly expelled by the Armenian armed forces. Incidentally, due to sporadic frontline skirmishes and clashes, both military personnel and civilians have been killed along the Line of Contact, devoid of any peacekeeping force, since 1994.

Over the years, Armenia and the separatist regime that emerged in the occupied Azerbaijani territories refused any final status short of independence for Nagorno-Karabakh and tried to preserve this status quo and achieve international security guarantees on the non-resumption of hostilities while avoiding the withdrawal of its armed forces from the occupied territories and preventing the safe return of expelled Azerbaijani inhabitants to their permanent places of residence. However, such a policy, in its turn, polarized the region and reduced to naught any meaningful regional cooperation between the three South Caucasus states.

The Second Karabakh war, which took place from September 27 to November 9, 2020, and the subsequent Russia-brokered peace deal on November 10, significantly changed the facts on the ground and created a new political reality that replaced the “no war, no peace” situation that had been hanging over the region for almost 30 years. As a result of this war, more than 6,000 soldiers died on both sides in fighting.

This war came to an end because of a clear victory for Azerbaijan, which has restored its territorial integrity and sovereignty. Owing to the humiliating defeat of Armenia,the myth of the invincibility of the Armenian armed forces has been shattered and the Prime Minister of this country has been under continuous pressure from the opposition to step down.

Thus, after the Second Karabakh war, the pendulum has swung from devastating war towards actual peace. The question, is, however, whether the conflicting parties will be able to achieve lasting peace in the coming years: How can a relationship that has been completely destroyed owing to this protracted armed conflict and previous wars be restored?

The fate of all inhabitants of both the highlands and lowlands of Karabakh, irrespective of their ethnic origin, is crucial in this context. Security arrangements for the Armenian minority residing in this area are currently organized through the deployment of 1,960 Russian peacekeepers for at least five years to monitor the implementation of the trilateral statement signed by the heads of state of Azerbaijan, Armenia, and the Russian Federation on November 10 (hereafter, the trilateral statement). At the same time, the return of the former Azerbaijani inhabitants to their permanent places of residence previously occupied by the Armenian armed forces is envisaged by the trilateral statement and the UNHCR has been assigned to oversee this task.

It is paramount that Azerbaijan has to demonstrate a policy of “strategic patience” in the coming years to entice the Armenians of Karabakh region into closer incorporation through attractive political, economic, social, and other development.

On the other hand, Armenia has to concentrate on its own internationally recognized sovereign territory. Today, it is important that this country changes its external minority policy and withdraws its territorial claims against Azerbaijan. As a next step, both Armenia and Azerbaijan can recognize the territorial integrity of one other.

Such rapprochement can lead to the opening of the borders between Armenia and Turkey and Armenia and Azerbaijan, which would increase economic opportunities for landlocked Armenia. It can thereby contribute to regional stability, development, and trans-regional cooperation among the three South Caucasian states. At the same time, it would create an enabling environment that could be more conducive for future dialogue and interactions between Armenians and Azerbaijanis.

We must face the fact that a stable equilibrium between these two nations has never previously been achieved. However, despite ups and downs, there was peaceful coexistence between the Armenian and Azerbaijani communities in Karabakh as well as Armenia and Azerbaijan’s respective minorities in Azerbaijan and Armenia. This protracted conflict has, however, led Armenians and Azerbaijanis to live in parallel realities for almost 30 years.

In light of the recent past, we cannot soon reconcile our different narratives. It is a long process; however, reconciliation is not only an outcome, it is also a process. Although the gestation period might be long, the process of reconciliation itself can be extremely rewarding.

In fact, the Armenian and Azerbaijani inhabitants of Karabakh have lived together in this region in the past. However, for almost 30 years this was impossible. Will and determination should be put to good use in order to arrive at such a peaceful coexistence once again.

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Eastern Europe

Dawn of great power competition in South Caucasus

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The pace of geopolitical change in the South Caucasus is staggering, with the recent Karabakh war only underlining several major geopolitical trends in the region.

The first noticeable trend being the undercutting of democratic ideals and achievements of the region’s states. Take Armenia, its young democracy had high hopes following the 2018 revolution, but now it will be more even more dependent on Russia.

It is not a matter of whether a democratic model is better or not, the matter lies in the incompatibility of an aspiring democracy with a powerful nondemocracy such as Russia.

The Armenian leadership will now have to make extensive concessions to Moscow to shore up its military, backtracking on its democratic values. Building a fair political system cannot go hand in hand with the Russian political model.

The war also put an end to any hopes of Armenia implementing a multivector foreign policy, an already highly scrutinized issue. Mistakes were made continuously along the way, the biggest being an overreliance on Russia.

In the buildup to 2020, Armenia’s multiaxial foreign policy efforts gradually deteriorated, with the 2016 fighting showing the limits. Armenian politicians attempted to develop ties with other regional powers in the aftermath, but Russian influence had already begun to incrementally increase.

Tipping the scales in a no longer balanced alliance culminated in the 2020 war with Azerbaijan thanks to Yerevan’s maneuvering. More crucially, the war has obliterated Yerevan’s multiaxial policy efforts for years to come.

Now, Armenia’s dependence on Russia would be even more pronounced with no viable geopolitical alternatives.

With no more foreign policy diversification, the three South Caucasus states are divided by larger regional powers, further fracturing the region.

The return of Turkey and the growth of the Russian military could resurrect the great power competition, in which a nation’s military power, infrastructure projects and economic might are directly translated into their geopolitical influence over the region, ultimately deterring long-term conflict resolution.

The Western stance

The Karabakh war highlighted a regression in Western peacekeeping standards. The Western approach to conflict resolution based on equality rather than geopolitical interests has been trumped by the Russian alternative.

Moscow is not looking to resolve the conflict (it never does in territorial conflicts); instead, it is seeking to prolong it under its close watch in a bid to increase its influence.

Looking at the situation from the Russian perspective, it is clear the country will continue to influence Armenia and Azerbaijan, only now to a far greater extent than before.

The West’s inability to accommodate fluid geopolitical realities in the South Caucasus also raises questions about its commitment to resolving the issues at hand. The second Karabakh war was in a way a by-product of the West’s declining engagement in the region over the past several years.

The West can no longer treat the South Caucasus as a monolithic entity, and a diversified foreign policy should be applied in line with realities on the ground.

Policies should reflect each individual state, and the West should, perhaps, be more geopolitical in its approach.

Turkey’s recent suggestion to create a six-nation pact bringing together the South Caucasus states, Russia, Turkey and Iran, shows the regression of Western influence in the region. But the geopolitical vacuum is never empty for long, and Turkey and Russia approach.

Georgia’s position

Georgia could act as the last bastion of dominant Western influence, but even there, the West should be cautious. The country is on the cusp of Europe, making it susceptible to foreign influence.

Bordered by Russia and Turkey, two powers often discerning of Europe, Georgia also feels the pressure to adapt to the changing circumstances on the ground.

The lack of Western resolve in the region and the Black Sea could propel Tbilisi if not toward a total reconsideration of its foreign policy, toward diversifying its foreign ties – one could call a “rebalancing.”

The war also solidified that the Caspian basin and South Caucasus are inextricably linked to the greater Middle East.

Russia and Turkey are basing their strategies in the region on developments in the Middle East and the Black Sea region. Not since the end of the Soviet Union has the South Caucasus been such a critical point for the West, especially the incoming Biden administration.

But time is critical and any further delay in active U.S. policy could spell disaster for Georgia, which serves as a door to the Caspian and on to Central Asia.

The West has been in regression in the region for quite some time now; the Karabakh war only brought it to the light, and it must be proactive if things are to change.

Much will depend on the U.S. and its new administration, but the West will have to come to an understanding with Turkey, even if it be limited, to salvage its deteriorating position in the region.

After all, the South Caucasus has always been the only theater where Turkish and Western interests have always coincided. Considering its limited presence in the region, the West could consider backing Turkey.

Not only would it serve as a reconciliatory gesture pleasing Ankara, but it would also limit Russia’s movement in the region. With the ink about to dry on who will influence the region, the West must immediately adapt its approach if it wishes to have any input in the rapidly changing geopolitics of the South Caucasus.

Author’s note: first published in dailysabah

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Eastern Europe

An Impending Revolution

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Large crowds have demonstrated their anger at the results of the presidential election in Belarus. Photo: Kseniya Halubovich

Even on the end note, the year contains surprises enough to deem it as a year of instability and chaos given every nook and cranny around the globe is riddled with a new crisis every day. Latest down in the tally is the country of Belarus that has hardly streamlined over at least half a decade but now is hosting up as a venue to rippling protests in almost all the districts of its capital, Minsk. The outrage has resulted from the massive rigging imputed on the communist party in ruling for almost three decades since the split of Soviet Union in 1994. With Europe and Russia divided on the front as the protests and violence continue to rage: a revolution is emerging as a possibility.

The historical map of Belarus is nearly as complex as the geographical landscape which might only stand next to Afghanistan in terms of the intricacies faced by a landlocked country as such. Belarus is located in the Eastern European region bordered by Russia to the north-eastern perimeter. Poland borderlines the country to the West while Ukraine shares a border in the South. The NATO members, Lithuania and Latvia, outskirt the borders of Belarus in the Northwest, making the region as a prime buffer between the Russian regime and the western world. As Belarus stands as a junction between the European Union (EU) and Russia, the proximal nature brings about interests of either parties in the internal affairs of Minsk. However, the nature of the bond shared between the trio is by no means a triangle unlike other former soviet nations since Belarus has casted its absolute loyalty to Russia since the split of Soviet Union and ultimate accession to power of president, Alexander Lukashenko, the leader of the Communist Party of Belarus. Along with the alliance, however, came the unwanted dependency since over the 26-year rule of Lukashenko, he crippled the economy and the political writ of Belarus, using every last ounce of authority to subdue the opposition and the democratic mechanism of the country, earning him the nefarious title ‘Europe’s last dictator’.

The outburst of protests today stems from this very problem that is more deep-rooted than what comes across as apparent. The excessive and draconian use of power and autonomy has invalidated the independence of Belarusians and turned them haplessly at the mercy of Russian aid and support while blocking out any western support in the name of guarding national sovereignty. The ongoing surge of dissent was triggered earlier in August when the elections turned about to be absurdly rigged in favour of Alexander Lukashenko, granting him an indelible majority of 80% of the total vote count along with a lifetime of rule over the country despite his blatant unpopularity across the country. The accusations were further solidified when one of the popular opposing candidates, Svetlana Tikhanovskaya, casted a complaint with the authorities regarding the falsification of election results. Instead of being appeased, she was detained for 7 straight hours and was even forced to exile to the neighbouring country of Lithuania. This resulted in major tide of riots and protests erupting all across Minsk, preceding over 3000 arrests over the election night.

On the official front, however, an aggressive stance was upheld along with a constant refusal of Lukashenko from stepping down from the long-held office or even considering a review of the polls counted despite exorbitant reports of unfair results. Heavy use of rubber bullets and tear gas was an eccentric protocol adopted by the local police force which instead of placating the rioters, further ignited the protests in more districts of the capital city. The anti-government relies also entitled ‘March of Neighbours’ transitioned into a high scale protest with many of the state employees resigning from their positions to stand upright against the long overdue corrupt regime. With the protests raging over months and the Lukashenko government getting more and more aggressive with their policies, the fear that once sparkled in the eyes of the natives is dwindling exceedingly and is turning into a cry for an outright revolution, which would be a ground-breaking one ever since the revolution of Iran back in 1979.

European counties have taken their conventional passive position in the crisis sinceEU is well aware of the Russian influence in Belarus and does not want to interfere with a probability of a direct conflict with Russia. However, they did call out their protest over the rigged elections, slapping sanctions over Belarus yet have not accused Lukashenko directly but instead have proposed a thorough international dialogue. Russia, on the other hand, faces a complex position since the dependence of Belarus bought Moscow a base against the West along with other regional rogues like Ukraine. However, high scale protests and rising chances of a full-blown revolution is hardly the choice Russian intends to opt. As the situation continues to unfold, economic reforms, as promised by Lukashenko, appears to be the only option that both EU and Russia could encourage as a bipartisan plan. Despite that, with six months of protests erupting as an outrage over a tyranny of 26 years, the reform-offering might be a bit late an offer since its no more about the country anymore, it’s about a struggle between a liberal or a communist Belarus.

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