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Karabakh conflict: How the status-quo changed after a quarter of a century

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This piece mainly argues that the fact that with respect to the Karabakh conflict, the economic, military, and geopolitical balance of power has changed in a quarter of a century or so in favor of Azerbaijan and Turkey but at the expense of Armenia produced a victory for Azerbaijan in the war over Karabakh in September-November 2020. Thanks to its hydrocarbon resources, over the years, Azerbaijan has invested in the armed forces massively. In the meantime, both Azerbaijan and Turkey have cultivated closer ties with Russia. Armenia’s over-reliance on Russia along with its weak economic and military capabilities, on the other hand, has put it in a disadvantaged position against Azerbaijan and in the region. The color revolution, which swept pro-European Union Nikol Pashinyan into power as prime minister in Armenia in 2018 helped distance Moscow from Yerevan. Unlike in the past, the United States was disengaged from the region, mainly because of its partial withdrawal from the international stage. The European Union has been traditionally relatively uninvolved in the conflict and France preferred to remain neutral in the dispute not to jeopardize its impartiality towards the warring parties. Squeezed between the geopolitical interests in the region and its ethnic Azeris’ sympathy with Azerbaijan, Iran was unable to play a key role in the conflict. The confluence of these factors changed the hitherto prevailing balance of power and produced a victory for Azerbaijan, overturning the 26-year old status-quo in the region.

The Origins of the Karabakh Conflict

Inhabited to a large extent by the Armenians, Karabakh was granted to Soviet Azerbaijan by the Soviet Union in 1921. Towards the end of the Cold War, Karabakh wanted to split from Azerbaijan, leading to the first clashes between the parties. The first Karabakh War started in 1992 and ended in 1994, leaving 25,000 dead and 724,000 Azeris and 300,000 – 500,000 Armenians displaced. At the end of the war, Armenians seized Karabakh and all of five as well as a large part of two other districts (rayons) of Azerbaijan, surrounding Karabakh, representing thirteen percent of Azerbaijan’s territory. Following the May 1994 ceasefire brokered by Russia, the Minsk Group under OSCE led the peace negotiations, albeit with no success. Given that Armenia’s and Azerbaijan’s demands were highly irreconcilable – respect for territorial integrity (Azerbaijan) and the right of self-determination (Armenia), it proved difficult to find a common ground despite years of negotiations.  Ending this protracted conflict through a peace agreement was not possible also due to the fact that both sides believed that time would enhance their respective positions. Armenians in Karabakh thought that over time their self-declared de-facto independent republic will gradually gain international recognition while Azerbaijan believed that their military build-up would strengthen its leverage over the Armenians. 

The Flare-up of the Conflict and the Peace Deal

Violence flared up in Karabakh on 27 September 2020 after a tense year between Armenia and Azerbaijan. Following the 44-day fighting, with the loss of the strategically important town of Shusha in Karabakh to Azerbaijan, Armenia decided to lay down its arms. The conflict left 2,425 Armenians and 2,783 Azeris dead. After the fighting ended with a Russia-brokered ceasefire, 1,960 Russian peacekeepers were deployed in the region to monitor the ceasefire. The peace deal signed on 9 November 2020 ensured the transfer of all the seven Armenia-occupied districts, adjacent to Karabakh to Azerbaijan, division of Karabakh into two parts, controlled by Armenia and Azerbaijan respectively, the right of return of internally displaced people and refugees in the 1990s to the region, opening of a corridor from Azerbaijan to its autonomous republic of Nakhchivan, bordering Turkey, connection of Karabakh to Armenia through Lachin corridor. The deal did not determine the core issue of the final status of Karabakh, which will be decided through negotiations between Armenia and Azerbaijan later.

Cultivation of Close Ties between Azerbaijan and Russia

An important factor that contributed to Azerbaijan’s victory over Armenia in the 44-day long war was Azerbaijan’s cultivation of close ties with Russia. Striving for the expansion of its influence in its “near abroad” after Vladimir Putin came to power in 2000, Russia did not want to push Azerbaijan, a geostrategically important and energy exporting country to the embrace of the West. As for Azerbaijan, even if it did not join the Russia-dominated Collective Security Treaty Organization (CSTO) and Eurasian Economic Union (EAEU), it did not turn Russia into an enemy unlike Georgia or Ukraine did. Unlike Georgia, Azerbaijan has never vocally expressed its desire to join NATO. So, even though Armenia was not an official ally of Russia, there was no reason for Moscow to punish Baku.

Aware of the role that Russia could play in the resolution of the frozen Karabakh conflict, Azerbaijan courted with Moscow although it, at the same time, viewed Russia as a threat. Azerbaijan cooperated with Russia at the expense of its relations with the West, which was another factor gaining the sympathy of Russia for Azerbaijan. A watershed event in Azerbaijan’s growing cooperation with Russia was the August 2008 Russian-Georgian war that demonstrated that Russia is the dominant actor in the region and the West was not willing to counter Russia. This led Azerbaijan to increase economic cooperation with the border region North Caucasus in the Russian Federation and led to expansion of Russian soft power, including an increase in education provided in Russian language, and proliferation pro-Russia media outlets and politically engaged initiatives in Azerbaijan. Azerbaijan expected that these steps as well as its multi-billion dollar acquisition of arms and military equipment from Russia would neutralize Moscow in case of flare-up of a war with Armenia as was the case in the April 2016 conflict, which Moscow did not interfere promptly.

Growing Military Disparity between Azerbaijan and Armenia

Azerbaijan has used hydrocarbon-revenues for the expansion of its weapons and military equipment massively, creating a major disparity between the Armenian and Azerbaijani armed forces over the years. Azerbaijani military budget has started to grow dramatically in 2006 when Baku Tbilisi Ceyhan (BTC) oil pipeline became operational. By 2010, Azerbaijan’s defense expenditure alone surpassed Armenia state’s whole budget. After the first Karabakh conflict ended, Azerbaijan’s military expenditure totalled $70 million in 1995. Over the years, however, there was a dramatic jump in its military expenditure, rising to $1.7 billion in 2018. Armenia’s military spending was, on the other hand, $50 million in 1995 while it totalled $610 million in 2018. That is, Azerbaijan’s military spending was three times higher than that of Armenia. As a result of this wide imbalance in military spending, Armenia acquired only Russian weapons at subsidized prices or second-hand arms free of charge, Azerbaijan purchased high-tech arms not only from Russia but also from other suppliers such as Israel and Turkey. Apparently, Azerbaijan military’s intensive use of unmanned drones also played a decisive role in its victory.

Shifting Armenian Position

Armenia’s shifting position was another determinant in the fate of the Karabakh war. Armenia’s asymmetrical relationship with its ally Russia has deteriorated at Erivan’s expense in that it became heavily dependent on Russia in terms of economy, security and energy supply. Its closed borders, a weak manufacturing sector, its inability to attract foreign direct investment (FDI), and its channelling of limited economic resources to military expenditure put the brakes on the economic growth of Armenia. The country did not benefit economically either from joining the EAEU since its rationale is geopolitical. By implication, Armenia did not possess sufficient military arsenal at par with that of Azerbaijan. Nor did it turn into an economic success story that could attract the attention of major powers.

Change of hands at the helm of the Armenian state after the Velvet Revolution in 2018 was another development that changed the balance of power at the expense of Armenia. Considering the new Armenian leader Pashinyan, who overthrew the old guard close to the Kremlin, as “the man of Soros”, Russia wanted to replace him with a more loyal politician.  Besides, realizing that the balance in the conflict has shifted in favour of Azerbaijan in 26 years, Russia expected Armenia to be more flexible at the peace negotiations before the flare-up of the conflict in September 2020. Since Armenia did not agree to change its position, Russia did not want to assume the geopolitical cost of Armenia’s intransigence by interfering in the conflict that broke out in September 2020 in an untimely manner. That is why, Russia dragged its feet to involve in the conflict.

Turkey’s Rapprochement with Russia and Alliance with Azerbaijan

Turkish-Russian rapprochement was another factor that tilted the balance of power in the region in favour of Azerbaijan. Strained relations with the West pushed Moscow and Ankara to forge a close partnership with each other. Having competed with Russia in the first half of the 1990s in Eurasia, Turkey opted to cooperate with it after the second half of the 1990s, developing a multi-dimensional relationship with this country. The volume of bilateral trade reached $26.3 billion in 2019. Although they have some differences in geostrategic issues like in Syria, Libya and the Eastern Mediterranean, they both benefit from this partnership that encompasses trade, energy, investment, pipeline politics, tourism, arms supply and regional issues. In short, when the conflict broke out in September, Turkey was a partner for Russia more than a rival. That is why Russia remained silent to Turkey’s vocal support to Azerbaijan in the conflict in September unlike in the first Karabakh war at the beginning of the 1990s.

Moreover, Turkey’s unconditional support to Azerbaijan, above all its military support, including its supply of unmanned drones was instrumental in determining the fate of the conflict. They concluded a Strategic Partnership and Mutual Assistance Agreement in 2010 that foresaw mutual aid in case of an attack by a third party. Turkey’s growing support to Azerbaijan stems above all not only from its growing integration with Azerbaijan, especially, in the field of energy, including the launch of Trans Anatolian Pipeline (TANAP) in 2019, shipping more Azeri gas to Turkey and the massive investment of the Azerbaijani state energy giant SOCAR in Turkey but also from its increasing assertiveness in its neighbourhood. That is, its fierce backing to Baku in the conflict is, at the same time, a corollary of its assertive foreign policy in Syria, Libya and the Eastern Mediterranean. Thanks to a dramatic growth in its economy after 2000 as a result of economic policies turning it into a “trading state” and a concomitant rise in its military capabilities, Turkey transformed into a major actor in its region.

Actors that Played a Lesser Role in the Conflict

As for the Western role in the conflict, although Armenians associate themselves with the Western civilization, Armenia does not have much strategic importance for the West. It is the smallest post-Soviet republic, does not have energy resources nor does it have energy transit routes. Given the authoritarian regime that dominated in the country in the post-Cold War period, the West has lost its interest in Armenia. Overall, the EU has been traditionally relatively disengaged from the Karabakh conflict mainly because of the dominating role of Russia in the issue as well as the risk of impartiality of the EU for Azerbaijan after most of the EU countries recognized the independence of Kosovo after 2008. Drawing a similarity between their status, Azerbaijan was concerned that EU countries could also recognize the self-proclaimed Karabakh Republic like Kosovo.

As for France, despite the pressure applied by 600,000 Armenian diaspora in the country to intervene in the conflict on behalf of Armenia, it remained impartial in the conflict, justifying this attitude with its role as co-chairman in the OSCE Minsk Group. Another reason for the inactive posture of France in the issue is that the South Caucasus is not a traditional area of influence for France unlike Africa.

Likewise, the USA remained aloof from the conflict with the exception of a few statements from the Secretary of State Mike Pompeo calling for a peaceful resolution of the conflict and hosting talks with Azeri and Armenian ministers of foreign affairs. The lack of US interest in the conflict largely stems from the partial US disengagement from international politics as a result of “America First” approach under Donald Trump Administration. Washington’s preoccupation with the presidential elections as well as the fight against COVID-19 pandemic also distracted Washington’s attention from the region.

Like the EU and the USA, another actor that played a little role in the conflict, if any, is Iran. Iran is divided between geopolitical interests in the South Caucasus and the sociological realities inside the country.On the one hand, Iran strives to counterbalance the sway of the Azerbaijan-Turkish alliance in the region, supporting the Armenia-Russia axis. Besides, Azerbaijan’s close relationship with Israel disturbs Iran. On the other hand, it is home to about seventeen million ethnic Azeris, who called for the Iranian state to support Azerbaijan against Armenia in the conflict. As a result, Iran remained largely impartial in the conflict apart from proposing a not-so effective peace plan.

In Lieu of Conclusion

The 44-day war overturned the 26-year status-quo in Karabakh. Now that the final status of Karabakh is to be determined following the negotiations to be held in the next weeks between Azerbaijan and Armenia, the next step should be to establish a permanent peace in the region. Now, it will be much easier for Turkey and Azerbaijan to open their closed borders with Armenia. To be sure, this will boost economic integration of Armenia with Azerbaijan and Turkey, bolstering its economic development. Involvement of regional powers like Russia and Iran in this kind of initiatives is also a sine qua non for the achievement of a sustainable peace in the region.

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Eastern Europe

Education: Armenia’s Path to Stronger Economic Growth

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Better education and a stronger innovation drive are crucial for achieving higher rates of economic growth and prosperity in any country. Countries that prioritize improvements in education – from the pre-primary to the university level – and innovation are better positioned to adapt to economic change and help raise the living standards for their people.

Education equips individuals with the knowledge and skills necessary to contribute to the economy, with the ability to learn – and unlearn – continuously. Innovation involves the creation of new products, processes, and services that expand the capacity of enterprises and economies. In fact, the most innovative countries tend to be the most successful economically.

Take the case of Estonia. In 1993, Estonia’s GDP per capita was a modest about $6,480. In comparison, Japan’s was $24,000. Fast forward 30 years. Estonia’s GDP per capita was equal to that of Japan in 2022, at nearly $43,000. Estonia now boasts the highest PISA (Programme for International Student Assessment) scores in math, science and reading in Europe. A similar ‘miracle’ happened in Korea, a country that moved from developing country status to an advanced economy in just one generation. How can countries replicate Estonia’s or Korea’s success and achieve faster economic growth and standards of living that are like to those of high-income countries?

Through education and innovation.

Here in Armenia, education has been a priority since the country’s independence in 1991. The government has made efforts to increase the number of schools, provide free education for primary and secondary schools, and promote STEM (Science, Technology, Engineering, and Mathematics) education. As a result, Armenia has a high literacy rate of over 99% and over 60% of adults have completed at least secondary education.

Yet, the education system is not producing the needed outcomes. Children born in Armenia today will be only 58% as productive during their lives as they could have been if they had received quality health and education services available. Armenian children are expected to complete 11.3 years of schooling. This decreases to 8 years if the quality of education is factored in. Pre-primary school and secondary school enrollment is low compared to peer countries in Europe and Central Asia (ECA). It is the quality of education that is the most pressing concern. Armenia’s TIMSS mathematics score – a standardized test for children in grade 4 – is one of the lowest in the region. The quality of tertiary education is below the ECA average: it is nearly 30% lower than Georgia, and half as low as the new EU member states. These outcomes are not surprising, given that public spending on education is just under 2.7% of GDP in Armenia, which is half that of the EU.

The World Bank is helping Armenia improve its education system, including through the Education Improvement Project, which is enhancing the conditions for learning across educational levels by extending preschool coverage, providing laboratory equipment, informing curriculum revisions, and improving the relevance and quality of higher education institutions. The many outcomes of the project include new preschools in rural communities, training of preschool teachers, and grants to higher education institutions through the Competitive Innovation Fund. Under the EU4Innovation Trust Fund, the World Bank is also helping improve the quality of STEM education. By September this year, Armenia will have a fully revised STEM curriculum for middle and high schools (grades 5 to 12), improved learning materials, school-based STEM laboratories and as well as enhanced student-centered instructional methodologies/teaching methods.

Education is essential but alone is not sufficient to drive economic growth. How knowledge is applied by firms, researchers and workers through innovation is critical. In Armenia, there is a disconnect between education, research, and the link to entrepreneurs and markets. For example, academic research in Armenia is dominated by the National Academy of Sciences which comprises more than 30 separate research institutes. None of these institutes are formally integrated with any teaching university in the country. There is also a proliferation of universities in Armenia, with 26 public (state) and 33 private universities; many of the latter, in name only. In Denmark, a country with almost twice the population, there are only eight state-recognized and funded universities offering research-based education.

Consolidating the universities in Armenia, merging them with the research institutes, and focusing government attention on accreditation could help address some of these challenges. It is also essential to reform the university admission process to incentivize talented high schoolers to apply. The government could also support the commercialization of research. In many advanced economies, universities are prodigious producers of knowledge and basic research output, and the private sector, the user of this research, is very vibrant. Without practical application, research may have little impact on the country’s growth potential.

Extensive work by the World Bank shows that human capital is at the core of efforts to strengthen innovation and technology adoption. In Armenia, as in many other countries, human capital is one of the main binding constraints to growth.

While the government has taken significant steps and has initiated important reforms to promote both education and innovation, more is needed to realize their potential. By making a greater investment in education and innovation, Armenia can build a knowledge-based economy that can help the country deliver a development miracle and elevate standards of living to those of high-income countries. The dialogue at the recent panel discussion on “Growth, Education, and Innovation” could help policymakers in their efforts to transform education and innovation in Armenia.

This op-ed was originally published in Banks.am via World Bank

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The dilemma of China’s role as Mediator in the case of Ukraine

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Photo credit: Ju Peng/Xinhua

Since the full-scale Russo-Ukrainian war unfolding after 24 February 2022, China has maintained so-called neutral stance on the conflict, passively calling for a peaceful resolution. But on the anniversary of Russian invasion, Beijing popped up with concrete suggestions on how to end the war: China claimed its readiness to participate in peaceful adjustment.

Beijing’s peacemaking attitude and Xi Jinping’s legitimacy as Mediator were acknowledged by Putin during Xi’s visit to Moscow and the rumors about the following soon phone call between Xi and Zelensky spread, however, it is arguable whether Kyiv is truly ready to welcome China as the broker. The US, in turn, treated Beijing’s position skeptically.   

This piece elaborates on how China became Global Mediator of the 21st century and why now Ukraine is reluctant to accept Beijing’s brokering.

For starters, China is a realist actor across the domain of international relations. Kissinger states that Chinese leaders are making profound foreign policy decisions only when they do not lack the means to achieve the goals [Kissinger, 2010], hereby Xi knew that Beijing’s possible mediation between Moscow and Kyiv during first months of the war would not be realizable. The sides were not sincerely ready for a truce, neither Russia, occupied territories and continued advancements in Donbas, nor preparing counteroffensive Ukraine, backed by vast Western support.

Moreover, from realism perspective, peace achievement lies in accepting and adapting to the irresistible existence of powers involved in security competition [Mearsheimer, 2001] and peacemaking is most likely when there is no hegemon [Morgenthau, 1946].

China adhered tenaciously to aforementioned realist position by declaring that “the security of the country should not be pursued at the expense of others”, obviously referring to NATO’s strengthening and Russian lament about bloc’s eastward expansion. But such Xi’s mediation ceasefire proposition in the heat of the war would be found senseless by Ukraine and the USA, which were publicly committed to peace restoration by beating Russia on the battlefield and reestablishing liberal world order led by predominant power – the U.S.

Beijing had to prepare before ascending as Mediator between Kyiv and Moscow.

Firstly, China gained legitimacy as a global security provider. Ukraine fights for its land, but Washington made a geostrategic mistake by being directly involved in a confrontation with Russia: by imposing enormous economic sanctions on Moscow, tolerating Nord Stream pipeline sabotage and trying to end the Russo-Ukrainian war only by military means, not diplomacy.

While China proposes negotiations, the U.S. is only committed to the war continuation.

As a result, the USA lost worldwide recognized status as the sole provider of economic prosperity and global security; the unipolar liberal world order ideology became an American tool for maintaining the U.S. leadership and Western dominance at any price, despite the economic losses of others.

Therefore, some states, especially from the Global South, did not support American efforts to isolate Russia, perceiving Washington’s strategy as destabilizing. Instead, they opted for cooperation with China as an alternative planetary center within the uprising multipolar world order model; Beijing met the demand by launching Global Security Initiative, posing itself as a stabilizing Mediator.

Secondly, Beijing successfully proved its new status. China became broker between Iran and Saudi Arabia, helping two longstanding Middle East rivals to achieve reconciliation as well as détente, giving them solid security guarantees. Tehran and Riyadh restored relations without Washington’s participation and pleasingly deepened economic interaction with China.

Thirdly, concerning the Russo-Ukrainian war, Xi Jinping can become Mediator and repeat the historical brokering successes of pacification Russia achieved by such famous statesmen like Otto Bismarck and Theodore Roosevelt.

German “iron” chancellor, apologist of realpolitik, frequently played role of mediator among leading European nations in the 19th century, balancing their interests within spheres of influence. Balkans became one of such great states’ competition arenas, where Austria and Russia struggled to gain control over newborn Bulgaria and influence in the region. The war between them was prevented because Bismarck sagaciously established “League of Three Emperors”, through which mediated disputes between two empires, therefore he was known as “honest broker”.

American president contributed to halting the war between Russia and Japan in 1905. His wise brokering helped states to sign the Treaty of Portsmouth. Serving as mediator for combatants, Roosevelt induced two countries to make concessions on the most intense issues regarding reparations and territorial disputes, thereby sides reached peace.   

But while Putin acknowledges Xi as broker, Zelensky probably does not, due to Ukrainian survival dilemma – if Kyiv accepts China as a Mediator, it loses Western vital support.

Thus, there are three reasons why Ukraine is not enthusiastic about Beijing’s brokering, at least publicly.  

First, Zelensky has his own, approved by the West, peace plan. He wants Xi to take part in Kyiv’s “peace formula.” It assumes restoration of Ukraine’s territorial integrity and Russian troops withdrawal from occupied territories. Chinese “peace position”, on the contrary, suggests the immediate ceasefire and peace talks launch: frozen conflict, not total Ukrainian victory. Moreover, it does not stipulate the matter of Ukraine’s territorial restoration.  

Secondly, Ukraine is diplomatically, politically, militarily and economically dependent on the West, i.e. the USA. China, successfully mediating between Moscow and Kyiv, is the worst-case scenario for America, because intensifies Beijing’s global influence at the expanse of the U.S., which has different from Chinese stance on Russo-Ukraine war ending issue. The USA wants to preserve its worldwide leadership. Consequently, Washington will reduce its vital aid to Ukraine if China is chosen as broker. Kyiv needs to consider the stabilization puzzle, given the significantly suffered from the war economy.

Thirdly, Ukrainian ruling elite, opinion leaders and society are ideologically inclined as well as biased to accept West as only one party, which can help Ukraine to stop the war. NATO is seen as the sole security guarantees provider. Besides, there are many West-funded organizations and media outlets in Kyiv, influencing public narratives within Ukrainian society. So, even if Zelensky accepts mediation, economic support and post-war restoration plan from China, elites in Kyiv and Ukrainian society will oppose him, challenging his legitimacy. Zelensky risks repeating former president Yanukovych fate.

To sum up, it should be stated that China’s role as global security provider is inevitable, Beijing will continue to use its economic leverage to reconcile many conflicting rivals in the world. Thus, Beijing mediation option may be considered by Ukraine in the near future, but not today.

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Erosion of Russia’s Hegemonic Stability in the South Caucasus and Transition to Risky Instability

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Image source: kremlin.ru

In early nineteenth century, following the wars with Persian and Ottoman empires, Russia completed the invasion of the South Caucasus. The region that hosts present day Armenia, Azerbaijan and Georgia remained under the control of Moscow until the collapse of the Soviet Union in 1991, though the three countries were independent for a brief period after the World War I. Suppressing the independence movements in these countries along with the other parts of Russian Empire and later the Soviet Union in Eastern Europe and Central Asia, Moscow also acted as security provider in the region. In this role, Russia subdued conflicts between the subjects of the empire and also countered the intervention of external powers into “its” territories. This created a stability in the South Caucasus, as in other parts of the empire, dubbed by the theories of international relations as “hegemonic stability”.

In early 1990s, the Soviet Union collapsed and, subsequently, most of the newly independent states in the territories of the former empire ushered into inter- and intra-state conflicts. In the South Caucasus, Russia sought to manipulate and ultimately benefit from these flashpoints in order to preserve its influence over the region. Moscow’s support to Abkhaz separatists in Georgia and Armenia’s occupation of the Karabakh region of Azerbaijan in early 1990s helped the Kremlin recover its control over three countries of the South Caucasus. This translated into resurgence of Russia-dominated security order in the region in the post-soviet period but with more assertive independent states that sought to boost their sovereignty while minimizing Russia’s hegemony.

Armenia joined the Russia-led security and economic integration with a full membership at the Collective Security Treaty Organization (CSTO) and Eurasian Economic Union (EAEU). Azerbaijan, on the other hand, managed to build neutral and multilateral foreign policy and succeeded to resist Russia’s pressure thanks to economic independence of the country. The only country of the region, Georgia, that sought to escape Russian orbit and join the Eura-Atlantic political and military structures faced insurmountable obstacles on this path and remained in-between. Russia’s occupation of two regions of Georgia (Abkhazia and South Ossetia) in 2008 has served for the Kremlin as the Sword of Damocles over Tbilisi’s foreign policy.

The post-Soviet hegemonic stability in the South Caucasus has been, therefore, more volatile compared to earlier periods. The occasional military escalations between Baku and Yerevan along with the war in Georgia (2008) manifested such sporadic disruptions of the regional security order.  However, in both cases, Russia succeeded to act as hegemon by recovering ceasefire between Armenia and Azerbaijan and putting a de-fact veto on Georgia’s foreign policy.

Even during the full-scale military operations between Azerbaijan and Armenia in 2020, known as the Second Karabakh War, Russia appeared as the only mediator with enough authority to bring the sides to ceasefire. Deploying its troops to the Karabakh region of Azerbaijan under the name of peacekeepers, Russia managed to complete its mission of deploying its troops on the soil of each of the three countries of the region.

Hence, in the post-Soviet period, Moscow managed mostly to preserve the security order in the region under hegemony of Russia. The Kremlin, however, has had to swallow growing security ties between Azerbaijan and Turkiye, but reacted more calmly to these ties as Baku demonstrated deference to Russia’s core national interests and concerns in the region.

In the wake of Russia’s invasion of Ukraine in February 2022, Moscow’s dominance established over the South Caucasus in early nineteenth century came under jeopardy for the third time after the post-WWI and early years of the post-Soviet periods. Facing an unexpected military debacle in Ukraine and massive economic troubles at home, Russia encounters challenges against its dominance in the South Caucasus, the region that has overarching geopolitical significance for Moscow.

This time the challenge to Russian power originates in Armenia and Azerbaijan, as Georgia avoids provoking Moscow and seemingly drifts away from its pro-Western aspirations. On the one hand, Azerbaijan criticizes Russia’s support to the separatist regime in the Karabakh region, tries to end the mission of the peacekeeping contingent, deepens its strategic alliance with Turkiye, increases its contributions to the energy security of Europe, and relies more on the EU’s mediation in the peace process with Armenia. On the other hand, Armenia defies Russia’s authority by distancing itself from Russia’s military bloc, builds closer relations with the European countries and the United States and invited a mission of the EU to monitor the security situation along Armenia’s border with Azerbaijan. The Kremlin reacted rather furiously to these developments and blamed the West on attempts to squeeze Russia out of the South Caucasus.

To the disappointment of Moscow, this signifies a decline in Russia’s dominance over the region, although it is now premature to say how this process will go on and whether this will end up with Russia’s withdrawal from the South Caucasus. The decline of Russian influence over the region creates a period which can be seen through the lens of the power-transition theory of international relations. According to this conceptual framework, the decline of the dominant power might lead to a conflict or war with the rising power as the latter becomes more assertive seeking to challenge the dominance of the declining power. This can be observed also as the emergence of a power vacuum in the respective region which other powerful state(s) might try to fill in which again leads to a conflict or war between the dominant power and rising power(s).

The present situation in the South Caucasus, thus, resembles the period described by the power transition theory. Other external powers, including Iran, Turkiye, the EU and United States try to benefit from Russia’s diminishing influence over the region and increases their power. Particularly, for Iran, the “encroachment” of the external players into the South Caucasus is inadmissible. The Russia-Ukraine war complicated the regional geopolitics for Iran as the European Union (EU) and United States have increased their influence in the South Caucasus by boosting their mediating role in the Armenia-Azerbaijan peace process, effectively sidelining Russia therein and deploying a monitoring mission to the Armenia-Azerbaijan border in the aftermath of Prague summit (October 6). Against this background, increasingly closer relations between Israel and Azerbaijan and the emerging possibility of the formation of Israel-Turkiye-Azerbaijan trilateral cooperation platform further enrage the Iranian authorities.

Tehran is determined to use military and other instruments to fill in the power vacuum emerges in the region in the wake of Russia’s decline. In this endeavor Iran effectively enjoys the support of Armenia whose leaders try to use the Iranian card against their common enemies of Azerbaijan and Turkiye. The recently growing ties between Armenia and Iran have provided Tehran a useful chance to get into the South Caucasus more assertively and form a de-facto alliance against the two Turkic states. Towards this end, Yerevan and Tehran are clearly building up their cooperation in various spheres, including military and economy. Apart from aiming to boost bilateral trade turnover from $700 million to $3 billion, Iran is also discussing supplying combat drones to Armenia.

That said, the hegemony Russia acquired over the South Caucasus in early nineteenth century is fading and with it the security order it built in the region is rapidly eroding. This process might be accompanied by violent conflicts and wars amongst different regional and external actors. For now, the major security threat to the regional stability is Iran and the alliance it builds with Armenia.

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