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The Limits of China’s Involvement in South Caucasus

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As the Second Karabakh War ended, all regional players’ interests were scrutinized in detail. One power however, China, was largely absent from the analysis. Official rhetoric from Beijing indicates the continuation of China’s non-intervention policy in the region. However, its position also indicates the limits of China’s involvement in the South Caucasus.

Great expectations

There is a good deal of ambivalence in the Chinese position on the South Caucasus. The country’s ambassadors to the region’s three states – Armenia, Azerbaijan, and Georgia – often announce how important the Caucasus is, but Beijing’s investment policies and political moves reflect little of the vocalized grand geopolitical thinking.

As late as 2017 the prospects seemed rosier, with each South Caucasian state hoping for a larger Chinese presence. In 2017, China and Georgia signed a free trade agreement. Georgian government hoped the country’s location on the Black Sea. With several ports such as Batumi, Poti and the then-planned Anaklia deep sea port, Baku-Tbilisi-Kars (BTK) railway and East-West Highway, would allow it to operate as a logistics and transit hub for the expanding Belt and Road Initiative – a near-trillion US dollar Chinese initiative aimed at linking the Indo-Pacific region with the European market.

Moreover, there was  a geopolitical aspect to the Georgian-Chinese cooperation. Deeper economic penetration into Georgia could spell a  greater stake in Georgia’s stability and security for Beijing. For Tbilisi, relations with China were in a way a means to mitigate Russian geopolitical pressure following the invasion of Georgia in 2008. 

A similar understanding was behind Armenia’s and Azerbaijan’s calculations. Chinese investment, especially in infrastructure, was to be the main driver of the nascent cooperation in both cases. After all, most of the infrastructure hails from the Soviet era, making financing for new construction badly needed.  

Baku in particular was enthusiastic about infrastructure development in Central Asia as well as a steady growth of shipments from China, as it could provide a boost for the South Caucasus transport and energy corridor. Over the past years the ports of Baku and a small city of Alat have invested into improving their infrastructure. Alat is especially promising as an estimated transshipment of the new port complex potentially reaches 25 million tons of cargo and 1 million twenty-foot equivalent unit (TEU) per year.

As was the case with Georgia, Armenia and Azerbaijan too looked at China as a source for diversification of their foreign policy orientation. Baku and Yerevan enjoy deep economic and military cooperation with Moscow, but uneasiness in both capitals about Russian geopolitical pressure persists. As such, China could have played a pivotal role in mitigating their fears of dependence on Moscow.

Last, but not least, Armenia also pinned its hopes on the economic involvement of China in the country. Though sandwiched between the rival Turkey and Azerbaijan and having only two borders open – in the north with Georgia and in the south with Iran – the country has been positioning itself as a potential transit corridor for Chinese goods from Iran to the Black Sea.

Reality check

None of the hopes of the South Caucasus countries regarding China have materialized. Perhaps the hope for more active Trans-Caspian transshipment could still be realized in one form or another, but overall, the South Caucasus has seen little Chinese investment or general geopolitical attention from Beijing. Trade with the three states has grown, but it has not so far been a game changer. Moreover, official BRI documents published in China over the past years too do not mention the region as a potential corridor to the European Union.

For China, the South Caucasus plays a modest role. In terms of BRI, the Russian corridor is a logical option for China-Europe links. Rather than transporting goods via the Caspian and Black Seas a direct Russian route may be longer in terms of distance, but is more feasible in practice. Other aspects of geography put limits on Chinese engagement in the South Caucasus as well. Unlike Central Asia, the region does not border on China. It also does not represent a primary security concern for Beijing, which would have necessitated larger engagement similar to Chinese actions in Tajikistan.

In a way, this physical distance does provide a certain advantage. Beijing can approach the region unencumbered by the problems its faces in Central Asia. Mistrust towards and fear of Chinese expansionism pervade the moods of political elites and the general public of Central Asian states, but this is not the case in the South Caucasus. Further, China has not so far gotten embroiled in internal affairs of the region’s three states and  has not awarded special preference to governments on ideological grounds. Ideally this would pave the way for a more active Chinese involvement. However, we have not seen Beijing tapping into this opportunity so far.

The rationale for China’s reluctance to engage the South Caucasus could be Russia, which regards the region as its sphere of influence. Considering the budding partnership between Moscow and Beijing, the latter might be unwilling to challenge Russia’s geopolitical preeminence. However, the Russia factor is not sufficient to explain Chinese abstention. After all, China does challenge Russia’s position in Central Asia and Moscow has been very careful not to voice its concerns openly. 

In many ways China’s relative inconspicuousness in the South Caucasus is dictated by its position on the Black Sea, a strategic location providing connection to Eastern, Central, Southern Europe, and Russia. It also allows access to the Mediterranean through the Bosphorus and Dardanelles Straits. Being involved in this sea would offer serious geopolitical opportunities to China, but much depends on energy availability. As the demand for oil and gas resources in China increases, so does Beijing’s quest to find new energy sources and safe avenues for import. 

However,  trends indicate that the Black Sea does not stand out in this regard. Black Sea adjacent states, with the significant exception of Russia (though even the latter exports gas and oil to China from its deposits in Siberia), have little to no direct energy trade with China. Overall, the resource potential of the Black Sea is too uncertain to invite deeper Chinese involvement. Even with Turkey which recently made gas discoveries in the Black Sea, the Chinese stance is unlikely to change as the potential gas deposits would mostly be consumed by Turkey’s growing internal demands.

Instead, the region seems to be much more important for other actors, mainly the EU and Russia .China does not seem motivated to compete with these other players when the potential benefits remain uncertain. The South Caucasus is of critical importance to the EU’s energy security as a transport corridor through which as much as 10 percent of Europe’s oil and oil import transit. The EU is also heavily involved in the region through its Eastern Partnership and the Transport Corridor Europe-Caucasus-Asia (TRACECA) projects. Besides, Russia’s growing military involvement in the Black Sea also limits Chinese potential involvement in the region. A geopolitically overcrowded Black Sea region provides little incentive for Chinese companies.

No breakthrough in sight

Looking ahead, the picture is not promising for the realization of the South Caucasus states expectations. It appears instead that both global and regional trends will limit China’s involvement in the region. 

Though China has performed much better than others economically following the negative effects of the COVID-19 pandemic, its growth remains unstable and government debt is soaring. This will put pressure on China’s willingness to lend money abroad, which does not portend well for the South Caucasus. Most likely, the region will remain overshadowed by other regions of primary importance for BRI – Southeast Asia, Central Asia and the Middle East.

A changing balance of power in the Black Sea and the Russo-Turkish geopolitical pre-eminence in the South Caucasus following the second Karabakh War will further limit Chinese companies’ willingness to invest or participate in region-wide projects. The South Caucasus will remain a major fault line between Russia and the West, and increasingly between Turkey and Russia as of late. Engaging this geopolitically fraught region will be risky for Chinese companies and therefore likely undesirable.

Finally, one must account for US pressure on the South Caucasus states. As the region will be subject to the great power competition between China and the US, Georgia and, to a certain extent Azerbaijan, will face a dilemma of damaging bilateral relations with Washington should they invite large Chinese investments into the countries’ critical infrastructure.

Author’s note: first published in chinaobservers

Emil Avdaliani specializes on former Soviet space and wider Eurasia with particular focus on Russia's internal and foreign policy, relations with Iran, China, the EU and the US. He teaches history and international relations at Tbilisi State University and Ilia State University (Georgia).

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Eastern Europe

Lithuania is left in the dust

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The nearly completed Nord Stream 2 is again in focus. It has become known that the U.S. Senate on January 13 failed to pass a bill to slap sanctions on Russia’s Nord Stream 2 natural gas pipeline sponsored by Republican Senator Ted Cruz. The tally was 55 in favor and 44 against the bill that needed 60 votes to pass. Those who voted against his bill said it risked breaking unity in Washington and in Europe. U.S. senators said also Cruz sanctions on Nord Stream 2 could harm relations with Germany which is very important for the U.S. foreign policy and economy.

Top Ukrainian officials, as well as Lithuanian government supported Cruz’s bill, arguing the United States should do everything in its power to halt the pipeline project.

The link is designed to export gas from Russia directly to Germany by bypassing Ukraine, through which Russia has sent gas to Europe for decades. That would deprive Ukraine of lucrative transit fees and potentially undermine its struggle against alleged Russian aggression. The decision will allow the completion of the gas pipeline to Europe without the imposition of further US sanctions. Earlier Lithuanian Foreign Minister Gabrielius Landsbergis said that the a deal between the United States and Germany on the Nord Stream 2 pipeline was a “mistake”. It is interesting that the vote came as U.S. and European officials held high-level talks with their Russian counterparts. It is quite possible that the decision about Nord Stream 2 pipeline was the result of these negotiations.

This fact has sparked anger and has become great political disappointment for the Lithuanian officials who view the project as a security threat.

Lithuania, positioning itself as the main Ukraine’s patron in Europe, is confused with such U.S. decision. Lithuania promotes the U.S. interests and support all American initiatives even to the detriment of its own interests. Only this month Lithuania took a number of steps to prove its commitment to US policy. Lithuania even has dared to challenge China, one the main US strategic competitors. It continues to spend millions of dollars on military purchases from the U.S. using the narrative of “the threat from the East”. In December Lithuania signed an agreement with the U.S. to improve military interoperability.

The more so, the Lithuanian government has decided to accelerate its planned purchase of a multiple launch rocket system (MLRS) amid Russia’s military buildup on its border with Ukraine. The decision to buy US’ Lockheed Martin system in 2026, two years earlier than Vilnius previously planned.

The country also regularly holds political consultations with the U.S. officials to coordinate its further actions. But the U.S. in its turn does not pay attention to Lithuania’s opinion and makes decision in its favour.

Lithuanian government should gain Lithuanians’ support and pay attention to their needs. The matter is discontent in Lithuanian society is growing every day. Thus, on January 13, the usual commemoration of Freedom Defenders saw loud booing and heckles from the crowd of protesters who called on the government (and the parliament) to resign.

It is obviously that the threat from the East is not so real as threat to be fired due to loss of confidence in near future.

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Eastern Europe

Rebuilding of Karabakh: Results of 2021

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Image source: azerfocus.com

The restoration work in Karabakh entered the active phase in 2021 as several projects had been completed and the foundations for new ones were laid down. The restoration process in Karabakh started right after the November 10th declaration that ended the 44-Day War between Armenia and Azerbaijan. After the war, Azerbaijan liberated its territories that constituted about 20% of the total territory of Azerbaijan and were occupied by Armenian forces in the early 90s.

During the occupation, about thirty years, Karabakh was subject to ruthless destruction and looting by the occupants. As a result, most of the social infrastructure, including residential buildings, schools, and hospitals, were totally destroyed, and most parts of the occupied territories were left empty. Despite the fact that the total destruction in Karabakh makes the restoration process complex and time-consuming, Azerbaijan immediately started the restoration process. For this purpose, the plan for socio-economic development of the liberated territories was prepared, and for the implementation of this plan, “Coordination Headquarters” and 17 working groups on different areas were established. In 2021, $2.2 billion was allocated from the state budget for the restoration process. The same amount of funds is planned to be directed to the restoration process in 2022 as well. The allocation of the necessary financial resources and the establishment of the state bodies for the efficient organization of the recovery process led to the rapid implementation of projects in 2021.

The most notable project that was almost completed in 2021 was the Fuzuli International Airport. The inauguration of the airport took place in Azerbaijan’s liberated city of Fuzuli in Karabakh on October 26. It was the first airport built by Azerbaijan in the liberated areas, and its construction took only eight months. It was built in accordance with the highest international standards, which enables it to accommodate any type of aircraft. A runway with a length of 3000 meters and a width of 60 meters has been put into operation at the airport. The first test flight to Fuzuli International Airport was performed on September 5, 2021, when the largest passenger aircraft of Azerbaijan Airlines, named Karabakh, landed at the airport. Because of its location, the new airport is considered as an “air gate of Karabakh”. Along with Fuzuli airport, the foundations of the other two airports in Lachin and Zangilan districts were also laid down in 2021.

The year 2021 was also marked by the establishment of the Horadiz-Jabrayil-Zangilan-Agband highway. The foundation of this road was laid on October 26, with the participation of the leaders of Azerbaijan and Turkey. With a length of 124 km, it is part of the Zangezur Corridor, the establishment of which was envisioned in the November 10 declaration. The Zangezur Corridor is a very important project that is going to change the transportation architecture of the South Caucasus and its neighborhood. Its proximity to the Karabakh and connection to the main roads in the region will accelerate the restoration and development of the Karabakh.

Within the framework of the restoration process, another important event in 2021 was the foundation of the first “smart village” in Agali village in the Zangilan district on April 26. As of October, the construction work on more than 110 hectares in Agali village was underway. It includes the construction of 200 ecological houses, 4 non-residential buildings, a smart school for about 360 students, and a kindergarten for 60 children. Work on establishing smart agricultural infrastructure on approximately 600 hectares of land is also ongoing. According to the restoration program, it is planned to re-establish cities and villages in the liberated territories based on the “smart city” and “smart village” concepts. Thus, after the Agali village, this concept will be implemented in other areas of Karabakh.

In 2021, the highway that connects the Fuzuli and Shusha cities was also opened. As this highway passes through the territory that was used to liberate Shusha city, it has a symbolic meaning for Azerbaijan, and therefore it is named “The Road to Victory.” The Fuzuli-Shusha highway is part of the Ahmadbeyli-Fuzuli-Shusha highway, one of the main highways in Karabakh. It is 101.5 km in length and reduces the distance from the capital Baku to Shusha to about 363 km. The foundation of another important transport project, the Horadiz–Agband railway, was also laid in 2021 and its construction continues. This railway is 100 kilometers long and has strategic importance as it will connect the mainland of Azerbaijan with Nakhchivan, Azerbaijan’s landlocked exclave, through the Zangezur corridor.

Along with the mentioned roads, the opening ceremony of the 28-kilometer highway that connects the city of Tartar with the villages of Sugovushan and Talish took place in 2021. The length of this road is 28 kilometers, and as planned, the extension of this project will include 22 kilometers of highway from Talish to Naftalan. Construction and planning work on various transportation projects such as the Barda–Aghdam railroad, the Fuzuli-Shusa railway, and the Toganal-Kalbacar highway were also continued.

Comprehensive works in the energy sector were also carried out within the framework of the restoration program, based on the strategy for transforming the liberated territories into “green energy” zones and connecting the energy infrastructure in those territories to Azerbaijan’s general energy system. In 2021, with a total capacity of 20 megawatts, “Gulabird”, “Sugovushan-1” and “Sugovushan-2” small hydroelectric power stations (HPS) were reconstructed and put into operation in the liberated territories. In total, nine digital substations were built in the Karabakh and East Zangezur regions. Simultaneously, in the Aghdam and Jabrail regions, the construction of “Aghdam-1,” “Aghdam-2,” and “Jabrayil” substations as well as the Karabakh Regional Digital Management Center has been completed.

The other important project in the energy sector was the foundation of the Digital Station Management Center in Fuzuli. This project, implemented for the first time in the South Caucasus, allows through automation to reduce the impact of the human factor on the operation of the network, increase reliability and reduce losses during the transmission of electricity. All these projects in the energy sector serve to maintain the energy security in liberated territories and to transform these territories into “green energy” zone.

All the mentioned projects show that Azerbaijan has actively worked for rebuilding Karabakh in 2021. It will enable Azerbaijan to fully integrate the Karabakh economy into the Azerbaijan economy and to use its economic potential in upcoming years. As the liberated territories have great potential in sectors such as agriculture and energy, it will also positively affect the development of the non-oil sector in Azerbaijan. Implementation of all projects that were started in 2021 will not only contribute to the economic development of Azerbaijan, but will also transport Azerbaijan and Karabakh to the transport and economic center of the region.

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Eastern Europe

No borders to struggle against COVİD-19: Solidarity of humanity can help the situation

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Just as COVID-19 does not recognize borders, it is necessary to build the struggle against it on the basis of organization, solidarity, mutual assistance, the use of positive experience, and it should not recognize borders.

2021 was a year of continued struggle against the pandemic and of the emergence of new variants of the virus. The South Caucasus also was not away from COVID-19 and its variants. Azerbaijan continued its effective fight against COVID-19, making the most of the lessons of previous years and the opportunities for rapid response. The vaccination campaign, which was conducted as well as in highly developed countries, is a real sign of performance in this sector. During the year Azerbaijan gave humanitarian and financial aid to more than 30 countries in order to fight the pandemic, made a voluntary financial contribution of 10 million US dollars to the World Health Organization and freely donated 150,000 doses of vaccine to four countries.

The newly appointed head of the EU delegation to Azerbaijan, Petr Michako, also stressed the high level of vaccination in Azerbaijan. The capital – Baku is working closely with The European Union in this direction. The European Union and the World Health Organization have supported the fight against COVID-19 in Azerbaijan with the necessary medical equipment. Medical personnel in Azerbaijan have been repeatedly provided with respirators, goggles, transparent masks and overalls for this purpose. All equipment sent for the safety of medical personnel fighting the virus on the front lines was tested for compliance with quality and safety standards. Kestutis Jankauskas, Head of the EU Delegation to Azerbaijan, said that his organization, as a “Team Europe”, is helping to prevent, detect and combat the COVID-19 pandemic. “Healthcare workers are at the forefront of the fight against the COVID-19 pandemic, which increases their risk of contracting the virus,” he said. -They are our heroes and they need protection. “As part of the Team Europe initiative, the EU has launched an individual COVID-19 package with a budget of around € 32 million to support urgent needs and socio-economic recovery.

In 2021, Azerbaijan achieved major progress in combating the pandemic and the global economic crisis and in mutual cooperation. As a chair of the Non-Aligned Movement, Azerbaijan put forward an initiative to establish a UN High-Level Panel on global restoration after COVID-19. The member states of the Non-Aligned Movement took a unanimous decision to extend Azerbaijan’s chairmanship of the movement for another year, until the end of 2023.

Azerbaijan proposed a resolution at the UN Human Rights Council on behalf of the Non-Aligned Movement on equal and universal access to vaccines for all countries and the resolution was passed unanimously in March 2021. This resolution showed Azerbaijan’s stance on the increasing vaccine nationalism in the world and became an international success.

As a result of all measurements now the number of people receiving the second,third and further doses of the vaccine in Azerbaijan has exceeded 40 percent. Azerbaijan is one of the countries in the continent where the number of virus infections is rapidly declining. Azerbaijan is doing its best to observe this trend around the world. Solidarity can help the situation.

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