The South Caucasus has historically been an arena of conflict. Much like the Balkans, it is a region where East and West meet and three great empires — the Russian, the Ottoman, and the Safavids (Persians) — clashed in earlier times.
Today, it is a region where other fires burn. These are the fires of economic ambition and growth, of political transformation and unrest, and of violent conflict resulting from the uncontrolled assertion of identity and religion. With the discovery of oil in Azerbaijan in the late 19th Century, Russian ambitions to control the region intensified. The manipulation of ethno-religious differences by Russia and other external actors has long been part of imperial ambitions from the Tsarist times, through the Bolshevik era, to the fall of the Berlin Wall.
The South Caucasus is also a region which illustrates, on a broader scale, how regional and global geopolitical tectonic plates are shifting, creating new opportunities for social, economic, and political interaction, while simultaneously igniting old tensions and rivalries.
Three states — Azerbaijan, Georgia, and Armenia — form this region whose geographical boundaries are delineated to the north by Russia, to the southeast and southwest by Iran and Turkey respectively, and to the east and west by the vast, dark, brooding inland waters of the Black and Caspian seas. Although some would argue that a region should be defined by common values, shared interests, and a keen sense of identity, such elements do not exist here.
What we do find is a “region” that is characterized by deeply-rooted, highly interdependent relationships which have been shaped over the years by the collision of culture and history, along with shifting patterns of trade, investment, social migration and interaction. It is also an “open” region because of the special relationships that the countries of the region have forged with their neighbours and others — Azerbaijan with Turkey and Georgia, Armenia with Russia, and Georgia with Azerbaijan and the West.
Azerbaijan is the region’s most remarkable success story due to its rich oil and gas resources. The ancient Persians called it Atupatakan, “a place where sacred fire is preserved.” In Greek mythology, Prometheus was chained to the Caucasus Mountains on Zeus’ orders because he had stolen fire from the gods. Today, there are a still number of sites in the South Caucasus where whole mountainsides are on fire, where escaping gases from the ground have been ignited.
Azerbaijan has a large, Turkic-majority, Muslim-majority population, but is also one of the most moderate Muslim countries in the world. The country’s commitment to secularism is no doubt the product of years of Communist rule and Soviet hostility to Islamic culture and traditions. But the government also worries about cross-border fundamentalist pressures because almost one-third of neighbouring Iran’s population is formed by the Azeri minority concentrated around Tabriz.
Before gaining its independence from the Soviets in 1991, Azerbaijan enjoyed brief independence in the period 1918-1921. Azerbaijan’s GDP, which today is nearing $100 billion (USD), dwarfs that of its neighbours. It has enjoyed double-digit levels of economic growth in recent years, notwithstanding the recent global recession, because of its booming oil exports which have also contributed to growth in construction, banking, transportation and real estate.
Much of Azerbaijan’s oil is exported through the Baku-Tbilisi-Ceyhan Pipeline, which crosses the territories of Georgia and Turkey, where it is shipped by tanker to points westwards. Plans are afoot to boost Azerbaijan’s natural gas production with the discovery of reservoirs deep underneath the Caspian Sea.
In recent years, the government has made a concerted effort to use its oil and gas revenues to diversify the country’s economic base in order to promote sustainable, long-term growth. The country has become a magnet for Chinese, Korean and other sources of foreign investment and it is making progress in introducing market-based reforms. To be sure, years of Soviet rule left a legacy of entitlement and corruption in the public and private sectors that is hard to shake. However, what strikes every visitor is the vigorous animation of its people, especially the young, who identify strongly with Western culture and values and aspire to live in a country that is democratic and committed to human rights.
Georgia was seized by the Russian tsars in the 19th Century. It enjoyed a brief period of independence from 1918-1921, but then fell under Soviet rule. When the Soviet Union collapsed, Georgia struggled to assert its independence. Its current president, Mikheil Saakashvili, was elected to power in 2004.
Although the country has embarked on a series of widespread reforms to liberalize and open the economy to foreign investment and to promote democratic development, it has struggled against Russian support for secessionist movements in Abkhazia and South Ossetia. Following military action by the Georgian military in South Ossetia, Russian forces intervened in 2008. Though Russian troops have since been “withdrawn,” Russia has unilaterally chosen to recognize the independence of these two breakaway regions.
Like Azerbaijan, the Georgian economy in recent years has witnessed unprecedented growth, supported, in part, by its role as a transit point for Azeri oil and gas exports. Mining (manganese and copper, in particular) and agriculture are the staples of the economy, although construction and financial services are becoming important new sectors.
Armenia possesses the weakest economy in the region and was hard hit by the global recession, notwithstanding the fact that it enjoyed high growth rates before the crisis. The country has paid a high economic price for its ongoing conflict with Azerbaijan. Following its invasion of Nagorno-Karabakh in 1994, Turkey closed its border with Armenia. Countervailing pressures from Azerbaijan have thwarted recent Turkish efforts, instigated by the U.S., to open its border with Armenia and improve relations. Armenia continues to depend heavily on its commercial and aid linkages with Russia, as well as the remittances it receives from the large Armenian diaspora around the globe.
The foreign policies of countries in the South Caucasus region are increasingly assertive and independent, being driven by changing conceptions of their own national interest and their new-found sources of power and leverage. They are moving from being pawns in the global power game to being independent and influential actors in their own right. Azerbaijan and Georgia, in particular, are looking to expand and strengthen their ties with the European and the Atlantic region via energy exports, trade, investment, the development of new transportation corridors, and security cooperation. Azerbaijan’s policies are driven by the strength of its energy sector, its desire to diversify its economy, and the fact that it, like Georgia, sees itself as a bridge between Europe and Asia. Its influence also derives from its close relations with Turkey.
Armenia’s influence comes largely from the strength of its diaspora, which is seen by many to be an obstacle to the resolution of the Nagorno-Karabakh dispute. However, it is also the case that the peace process in Nagorno-Karabakh has been derailed by the conflicting motivations of members of the so-called Minsk group (comprised of representatives from a dozen countries and co-chaired by France, Russia and the United States), which was set up to mediate a resolution to the conflict.
Some believe that Russia is also using the continuing dispute to exert pressure on Baku, which has been trying to reduce Russian influence over its energy sector and export markets. The European Union, which could potentially play an important role in resolving the conflict, has been kept at bay by France and Russia — the latter has objected to the deployment of a full-scale EU mission. The United States has been less engaged in conflict management and security of the region in recent years, distracted by its ongoing problems in Afghanistan and Iraq and its own economic difficulties. As Thomas de Waal, a close observer of this conflict writes: “Although the Minsk Process has appeared poised to deliver success on several occasions, it seems stuck in a perpetual cycle of frustration and disappointment.”
These festering conflicts are not simply matters of local concern; their escalation would have global consequences, not least because of the region’s geostrategic importance and its key role as an energy producer with critical supply lines to the West. Complacency is not an option. There is a risk that the conflict will be manipulated by elites who see opportunity for personal political gain and/or by external actors who don’t want to see the countries of the region become stronger. The region will not live up to its full potential until these problems are addressed.
Fen Osler Hampson is Chancellor’s Professor and Director of The Norman Paterson School of International Affairs Carleton University.
