Ukrainian Crisis, Turkey and Eurasia: Who Wins?
The military conflict between Russia and Ukraine has led to an unprecedented shake-up of the world order that has prevailed over the last 30 years. It has generated colossal losses and risks for both countries. There is a high probability that hostilities will drag on. Apparently, the parties are preparing for a decisive new battle. Its outcome is not predetermined and it is too early to sum up results. However, we can already talk about some consequences for foreign countries. We have already provided such estimates for major players — the US, the EU, India, China, and Japan. And now let’s outline the possible trajectories for some states of Eurasia, located in close proximity to the borders of Russia.
Turkey appears to be one of the key beneficiaries of the conflict. Ankara skilfully manoeuvres, benefiting from everyone. Turkish diplomacy opposes the Russian military operation, condemns Russian actions and shows solidarity with NATO allies. In relations with the United States and other allies, the country’s position has strengthened. Before the start of the operation, an uncomfortable light had been cast on Turkey by a number of difficult moments. There were Russian arms purchases, and related US sanctions, and tensions with the EU over exploration in the Eastern Mediterranean, and a wary attitude towards Turkey’s role in Syria and Libya, and human rights claims. Against the backdrop of the events in Ukraine, all these concerns faded. Apparently, Ankara is actively supplying Ukraine with weapons, including Bayraktar UAVs. Their role can hardly be called as prominent as in the Karabakh conflict, but for the Turkish military-industrial complex, the conflict expands the market and opportunities to show equipment in action.
At the same time, Ankara maintains constructive relations with Moscow. Recep Tayyip Erdogan has refused to implement sanctions against Russia. Turkish companies are preparing to occupy a whole range of niches vacated after the withdrawal of Western firms from the Russian market. Companies are being created that are focused directly on interaction with the northern neighbour. Turkey is becoming a unique traffic hub. Its role as an economic mediator in relations between Russia and the West is growing immensely. The role of an intermediary promises huge profits. Of course, some of the transactions will be shady in nature and will cause discontent among allies. However, this is unlikely to reduce the appetites of the business. At the same time, Turkey has demonstrated flexibility in financial relations with Moscow. The key conditions for successful trading in the new conditions have been created. Turkey accepts Mir cards (Russia’s version of Visa or MasterCard). Most likely, bilateral financial transactions and trade will not be a problem.
At the same time, Ankara is trying to play a mediating role in resolving the conflict. So far, these efforts have not been successful. But not a single Western player, despite some being formally neutral (Switzerland, Finland, Sweden), today can take on such a job. It is unlikely that the post-Soviet countries will cope with it either. Turkey, on the other hand, has sufficient political weight, it is part of the Western security community, and at the same time plays an independent role. The Ukrainian crisis has strengthened the status of Ankara.
Azerbaijan is another winning player. Baku maintains partnership relations with Moscow, but it does not have excessive obligations. The current crisis has sharply increased demand for Azerbaijani oil. The country will receive significant income. At the same time, Azerbaijan remains a partner of the US, UK, EU and other Western players. The Ukrainian crisis could also divert Russia’s attention away from the Karabakh issue. Azerbaijan is unlikely to abuse such a switch, but both Baku and Ankara are closely monitoring the situation.
Armenia also receives its bonuses from the conflict. Tens of thousands of Russians are moving to Yerevan. We are talking, among other things, about active and passionate businessmen working in the IT sector. Armenia has become a convenient hub for them, offering a comfortable cultural environment, the possibility of a long visa-free stay, relatively convenient procedures for obtaining a residence permit, and the availability of financial services. Yerevan has become the optimal solution for small and medium-sized entrepreneurs working to export their intellectual services. The country receives an influx of human capital, and with it a possible economic effect. At the same time, Armenia remains a vulnerable country. Excessive international turbulence and fluctuating commodity prices are not in its interests.
Part of the migration flow from Russia has also rushed to Georgia. Tbilisi has distanced itself from the sanctions war, not wanting to suffer losses in the Russian market. The country remains oriented towards the West, but clearly does not want to aggravate relations with Moscow. Georgia’s key interest is to prevent the reopening of territorial conflicts amis the developments in Ukraine. The balance of losses and gains for Georgia is not yet obvious.
Kazakhstan also plays the role of a hub for Russian business. Here, too, a significant influx of human capital from Russia is possible. Kazakhstan is a big market. A lot has also been done here to develop the financial infrastructure, including the establishment of the Astana International Financial Centre. Kazakhstan has a long border with the Russian Federation, which creates opportunities for the re-export of goods to Russia. The country’s authorities have said they would not circumvent Western sanctions. But they may well fill the niches abandoned by Western companies due to corporate boycotts. Ample opportunities remain for the supply of their products to Russia through Kazakhstan without the sanctions regimes being violated. Their skilful implementation will benefit the country. Like Azerbaijan, Kazakhstan is benefiting from rising energy prices.
Armenia, Georgia and Kazakhstan can be considered the main beneficiaries from migration from Russia. At the same time, the question of the stability of such a flow remains open. The Russian government has sent two important signals. The first is that the country does not plan to turn into a repressive state with a mobilisation and a command economy, in which there will be no place for the market. The second is in creating conditions for market liberalisation. After the shock of the early days of the conflict, such signals could encourage a reverse flow of human capital back into Russia. Access to financial services for international transactions remains a challenge. However, over time this problem will be solved. Having built “alternate airfields” in neighbouring countries, business may well return to Russia.
Turkmenistan is likely to benefit tangibly from rising gas prices. Kyrgyzstan and Tajikistan, on the contrary, may lose due to the reduction in the inflow of remittances from Russia due to the contraction of the market. Uzbekistan is more stable in this regard due to the larger scale of the economy.
The Republic of Belarus will experience the impact of Western sanctions. In part, they will be offset by deepening trade ties with Russia. But due to the contraction of the Russian market, the effect of such a partnership may be lower than expected. In addition, the structure of relations between the Republic of Belarus and the EU differ from similar relations with Russia.
The Republic of Moldova is a “loser” in this crisis. The country has received a large number of refugees from Ukraine. Brussels will provide financial assistance to Moldova to work with refugees. But the social burden on the economy can still be significant. In addition, Moldova is facing a significant increase in fuel prices, which will also inevitably affect economic growth.
Finally, two other neighbouring countries, Iran and North Korea, should be mentioned. Tehran has a unique window of opportunity. The risk of a shortage of oil in the world market may force the US to make some indulgences in the sanctions regime. Iran may take an initially tough stance and then reduce its demands to reach a compromise acceptable to Washington. The big question is how long the US will ease its pressure on Iran, if at all. However, the very fact of such a possibility is indisputable. As for North Korea, it benefits at least from the fact that the losses are borne by its key opponents — the United States, Japan, South Korea, etc. Their losses are not fatal, and they are not automatically converted into dividends for Pyongyang. But the West appears now as a much more dangerous adversary, which has turned into the main “world villain” for it, covering the DPRK with its giant shadow. It is possible that in relations with Russia, North Korea will try to achieve tactical advantages. For example, Western pressure may encourage Moscow to turn a blind eye to oil supplies to its neighbour, to the employment of Korean workers, to the influx of foreign exchange earnings, to access to manufactured goods, and so on. Russia is unlikely to get fully involved in such cooperation. Still, it is a co-author of restrictive measures by the UN Security Council in response to Pyongyang’s nuclear missile programme. But certain tolerances in Russian politics are quite possible. They are also possible in Chinese politics.
For most of Russia’s neighbours, the conflict between Moscow and Kiev opens up great opportunities. Time will tell how exactly they will use them. However, all of them should keep in mind the scenario of an escalation to the level of a military clash between Russia and NATO. Such a collision could nullify many of the benefits discussed above.
From our partner RIAC
Education: Armenia’s Path to Stronger Economic Growth
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
The dilemma of China’s role as Mediator in the case of Ukraine
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.
Erosion of Russia’s Hegemonic Stability in the South Caucasus and Transition to Risky Instability
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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