This is the contribution from the editor of the special, Stefan Meister. For the contributions by Laurence Broers (Conciliation Resources and Chatham House), Katja Kalkschmied (Ruhr University Bochum), and Vali Kaleji (Teheran), and the article by Stefan Meister including Footnotes refer to the complete PDF here.
Introduction
Russia’s invasion in Ukraine and the Second Nagorno-Karabakh War in 2020 have a huge impact on security, connectivity and the conflict zones in the South Caucasus. With the comprehensive Western sanctions against Russia, Europe’s interest in the Middle corridor towards Asia through the South Caucasus (circumventing Russia) is growing. For Russia, the North-South corridor via Iran to the Middle East and transit routes to Turkey via the South Caucasus are becoming more important. For the EU, connectivity is the new catchword in its Eastern Neighbourhood Policy: beside resilience and energy security, it will become a key element of the policy towards the wider Eastern neighbourhood. There is not only an interest to replace Russia as the main land trading route between Asia and Europe, but also an increasing interest in oil and gas purchase from Central Asia and the Caspian region. All of this will necessitate huge infrastructure investment in the South Caucasus coming from international banks, but also more China-EU cooperation and coordination.
Besides the huge opportunity for the countries of the South Caucasus to become a key segment in Asia-Europe trade flows, there are also growing risks posed by the increasing insecurity in the region, where no functioning security mechanism currently exists. With the ceasefire agreement after the Second Nagorno-Karabakh war, a corridor between Azerbaijan and its exclave Nakhichevan through the territory of Armenia was agreed. But the conditions for access to this corridor are contested and have the potential to undermine the sovereignty of the Armenian state, as well as its connection to Iran. At the same time, Azerbaijan is increasingly questioning the free access from Armenia to Nagorno-Karabakh through the Lachin Corridor. Azerbaijan, Russia and Turkey have an interest in transit through Southern Armenia. But to use or threaten with force to extort the Armenian government into an agreement on the conditions of the corridor would undermine the very idea of connectivity and sustainable peace.
Connectivity and disruption are key elements in analysing the impact of the Russian large-scale war against Ukraine on the South Caucasus. Connectivity is here understood in a wider sense than just physical infrastructure and trade routes, also including societal ties, transnational networks, interactions that embody a networked connectivity among societies. Laurence Broers analyses the simplified, securitised and conservative thinking about connectivity in the South Caucasus. Instead of understanding it in a holistic way which could help to create peace through interdependence, it is rather focused on a state-centric approach. Exactly this state-centric understanding of connectivity cannot guarantee peace in the absence of a wider political transformation in state and society relations or change of key power asymmetries. For Katja Kalkschmied, with the de facto closing of the northern transit route between Europe and China through Russia, China’s interest in the Trans-Caspian International Transport Route has increased. Despite Chinese infrastructure investment in this corridor in the past 20 years, there is still a need to enhance infrastructure to increase the volume of goods flowing along this route. This will only work if China and the EU improve their coordination and cooperation in infrastructure and regional stability is provided. Both are rather unlikely. Vali Kaleji argues that, with the Second Nagorno-Karabakh war and Russia’s 2022 full-scale invasion of Ukraine, the security balance in the South Caucasus has shifted away from Iran. While Iran is not part of the Middle Corridor, it is actively participating in the INSTC and ITC corridors and aims to create a ‘transit balance’ in the South Caucasus in the framework of its balancing foreign policy approach.
With a focus on Armenia and Azerbaijan in the context of the increased Russian aggression against Ukraine since 2022, Stefan Meister argues that there is an ongoing reshuffle of the regional security balance and geopolitical interests in the South Caucasus. While Russia has an increasing interest in the North-South transit route, Europe and China are interested in the Middle Corridor connecting Central Asia with the Black Sea. The author argues that, without solving the regional conflicts in an internationalised framework, connectivity is embedded in geopolitical and power competition, rather than serving the interests of the societies and nations of the region.
Geopolitics of Infrastructure and Connectivity in the South Caucasus: The Case of Armenia and Azerbaijan
by Stefan Meister
Russia’s large-scale invasion of Ukraine since February 2022 and the Second Nagorno-Karabakh War in autumn 2020 have changed the power and security balance in the South Caucasus. Both events have had a strong impact on connectivity and infrastructure in the region and beyond. As a result, the role of the South Caucasus in connecting Asia and Europe, as well as Russia and the Middle East, will increase. Simultaneously, the imbalance between Armenia and Azerbaijan in the conflict over Nagorno-Karabakh and the confrontation between Russia and the West will undermine cooperation and connectivity in the region. Rather than serving the interests of the societies and countries of the South Caucasus, the weaponisation of corridors and infrastructure is embedded in processes of geopolitical and power competition.
Reshaping the Security Balance
While the Russian-brokered ceasefire agreement after the Second Nagorno-Karabakh War between Armenia and Azerbaijan in November 2020 and the deployment of nearly 2000 ‘peacekeepers’ lacking international recognition to the disputed region have strengthened Mos-cow’s role in the South Caucasus, the war in Ukraine since February 2022 has weakened Russia’s broader position as a security player.1 Russia has sent parts of its ‘peace forces’ from Nagorno-Karabakh and regular troops from its military base in Armenia to Ukraine, replacing these professional troops with conscripts. Russia will still remain a key security actor with its military presence in Armenia, Azerbaijan, and Georgia, and will maintain its capability to impact regional security. Yet, with its (military) resources bound up in Ukraine and with Western sanctions leading to a shift of transit routes and Russian priorities, Moscow will have to make more compromises with Azerbaijan and Turkey in the South Caucasus likely at the costs of Armenia. Simultaneously, Russian leader-ship will undermine any European or US attempt to help solve regional conflicts and to increase the Western role in regional security and connectivity, as this would further challenge its position as regional hegemon.
Moscow’s criticism of the facilitation format provided by European Council President Charles Michel, who organised several meetings between the leaders of Armenia and Azerbaijan, and the EU monitoring mission on the Armenian border with Azerbaijan shows how much the Kremlin sees the EU as a competitor in the region (Kucera 2023a; Rzayev/ Mammadov 2023). The key multilateral format on the conflict in Nagorno- Karabakh, the OSCE Minsk group (with its co-chairs France, Russia and the US), stopped functioning because of disagreements between Russia and the two Western countries and Azerbaijani disinterest in French participation in the negotiations.2 Turkey has increased its importance in regional security as the key military supporter of Azerbaijan and through its role as a node for trade and transit for both Russia and the EU. Iran, the third major regional player, has seen its influence diminish due to the rise of Turkey and its closest regional partner, Armenia, losing the war. Teheran’s policy of maintaining the status quo in the region has failed to come to terms with the current dynamics, and domestically, the regime faces a deep legitimisation crisis. Iran is concerned about Azerbaijan’s possible control of the so- called ‘Zangezur corridor’ on the Armenian side of the border with Iran (Rzayev/ Mammatov 2023), and the conflict with Baku has been further exacerbated after an attack on the Azerbaijani embassy in Teheran (Globe 2023). All of these changes will contribute to the creation of a new regional order and security balance. What role the EU will play in this reshaping with its Eastern Partnership policy (EaP), is not yet decided.
Changing Interests in Transit and Connectivity
Although the new geopolitical and security situation provides opportunities, it also creates new constraints for connectivity in the region. As parts of the Middle Corridor, the Caspian Sea and Kazakhstan (Trans-Caspian International Transport Route) are gaining increasing importance in regard to trade between Europe and Asia, as well as alternative sources to Russian oil and gas supply to the EU via the South Caucasus. With comprehensive Western sanctions against Russia and the near shutdown of the Northern Transit Route between Europe and Asia via Russia, the need for new trade routes between Asia and Europe means greater engagement with countries such as Kazakhstan, Azerbaijan, and Georgia in areas such as infrastructure investment, customs regime harmonization, and border management and governance. Security, connectivity, and energy policy will become major interrelated areas of the EU neighbourhood policy towards the South Caucasus. While these aspects are so far not sufficiently reflected in the EaP ‘Connectivity and Central Asia’ strategy, they are discussed by the member states and the EU institutions as key areas for EU cooperation with the Eastern neighbours (European Parliament 2022). The current debate about updating the EU’s neighbourhood and enlargement policy, which includes a discussion about connectivity, infrastructure and energy transit, is still lacking substantial new policy elements (Meister et al. 2023).
Both Russia and the EU have an interest in investing in infrastructure in the region. At the same time, Russia and the West’s contradictory perceptions of security and order are reflected in regional conflicts, particularly the conflict over Nagorno-Karabakh, and carry a disruptive effect for any investment. With its victory in the Second Nagorno-Karabakh War, Azerbaijan has not only gained back the seven surrounding regions, but now controls parts of the region itself, including the symbolically important city of Shusha. Only the Russian-backed ceasefire agreement prevented Baku from taking the whole region inhabited by Karabakh Armenians. The agreement furthermore allowed Russia to deploy ‘peace forces’ on Azerbaijani land and to become a guarantor of security for the Lachin corridor as the only link between Armenia and Nagorno-Kara- bakh, as well as a possible new corridor through Southern Armenia along the border with Iran.
The ceasefire agreement stipulated that Russian ‘peace forces’ would guarantee transit and communication between Armenia and Nagorno-Karabakh and that a corridor between Azerbaijan and its exclave Nakhichevan crossing Armenian territory would be created. While Russian ‘peace forces’ have not been able to guarantee transit through the Lachin corridor since December 2022, the agreed so called ‘Zangezur corridor’ through the Southern Armenian region Syunik has not yet been created because of differences in terms of status and border controls for entering the transit route (Kucera 2023b).
Since December 2022, so-called environmental activists have blocked access through the Lachin corridor, creating a shortage of food and fuel supply for the Karabakh Armenians living there (Kitachayev 2023). This blockade has ended only in May 2023 with the establishment of a checkpoint by Azerbaijan on the entrance of the new road to the Lachin corridor close to the Armenian border. While the official number of people living in Nagorny-Karabakh is 120,000 people, the real number is most likely much smaller. The main dispute concerns the control over access through and along the corridor. Baku demands transit to its exclave without border controls, while the Armenian government is only willing to accept access to its territory controlled by its own customs and border forces. Russia taking full control of the corridor or Armenia not being able to control who enters the transit route could disrupt trade between Iran and Armenia. This would isolate Armenia even further, especially since its border with Turkey has been closed since 1993 in the context of the First Nagorno-Karabakh War, and the only access to its most important trading partner Russia is via an already overloaded route through Georgia. Armenia, currently the weakest actor in the region after losing the war, is thus in a very vulnerable situation lacking bargaining power.
While Russia has an interest in keeping its ‘peace forces’ in the disputed region to strengthen its bargaining position vis-a-vis Azerbaijan, the connection to Turkey via the territory of Armenia is becoming more important for all actors. The North–South transit route from Russia to Iran via Azerbaijan, as well as trade via Turkey, are key to Moscow. With Russia’s increasing interest in improving transit and trade with its key ally Iran, these routes provide access to the Middle East and, in particular, Turkey, which has also become a major trade hub for a Russia keenly interested in circumventing Western sanctions — trade between Russia and Turkey increased by 87% in 2022 (Bourcier 2022). This interest is shifting Russia’s priorities in the South Caucasus.
Securitisation of Connectivity
As long as the border between Armenia and Azerbaijan is not demarcated and there is no agreement between both countries on the status of Nagorno-Karabakh, as well as the border regime for the relevant supply corridors, every discussion about transit and infrastructure in the region will raise security and sovereignty concerns. The securitisation and weaponisation of corridors, infrastructure, and trade routes have a counterproductive effect on human security as well as connectivity and infrastructure investment. The EU’s interest in buying more oil and gas from Central Asia and the Caspian region as well as in investing in the Middle Corridor to Asia creates concerns, above all in Armenia, about the EU’s willingness to compromise on the security situation of that country as well as the rule of law and human rights in Azerbaijan (Quinn 2022). How-ever, even if these are not in fact at risk, without greater EU engagement in regional conflict resolution to help to internationalise the negotiations among the conflict parties, providing peacekeeping and monitoring missions as well as negotiation platforms, there will be no opportunity to desecuritise transit and infrastructure. If the EU does not engage in cases of regional conflict resolution as an honest broker, any infrastructure investment will be seen purely in the context of broader tensions with Russia. Looking at connectivity merely from an investment and technical perspective ignores the geopolitical implications and risks a deadlock, as is currently the case between Azerbaijan and Armenia.
Infrastructure and control over trade routes are traditionally key elements of projecting power and enforcing interests in the South Caucasus. When Azerbaijan built the South Caucasus (Gas) Pipeline (SCP) and the Baku–Tbilisi–Ceyhan (BTC) oil pipeline with the sup-port of the US government in the 1990s and 2000s, the main goal was to develop alternative transit routes to Europe to become independent from transit via Russia. The Southern Gas Corridor has the potential to make a bigger contribution to the EU’s energy security in the future. It consists of the SCP, the Trans-Anatolian Pipeline, and the Trans-Adriatic Pipeline. This infrastructure has improved Baku’s bargaining position towards Moscow and made a balancing policy between Russia and Western countries possible in the past decade. There is now a discussion to increase the volumes of oil and gas flowing through these pipelines, but there are limits to this set by production and infrastructure. Currently, Azerbaijan supplies the EU with only 2% of its gas.3 The European Commission signed in July 2022 a memorandum with Baku to double the annual supply of Azerbaijani gas to 20 billion cubic metres by 2027.4 Additionally, a new project agreed upon between the leaders of Azerbaijan, Georgia, Romania, and Hungary is the construction of an electricity cable running under the Black Sea to transport renewable energy from Azerbaijan (and possibly also Georgia) to Europe.
The Russo-Georgian War in 2008 confirmed to the Azerbaijani government that Western countries would not guarantee the security of any South Caucasian state. Russia even threatened the pipelines running across Georgian territory to Turkey. The consequence was a rapprochement with Russia and, to a greater extent, with Turkey. Now, with its victory in the Second Nagorno-Karabakh War and the increasing interest in transit via the South Caucasus, Azerbaijan has improved its bargaining position towards the EU. For Georgia, this new situation also provides the opportunity to establish itself as a transit hub for Russia and Azerbaijan, as well as Turkey and Europe, on both the North–South and East–West routes. For Russian leadership, Azerbaijan has become more important in terms of trade and transit.
Given that the opening of the border between Turkey and Armenia is dependent on a peace agreement on Nagorno Karabakh, there will be no opportunity for additional trade routes for Armenia other than through Georgia as long as it has not agreed on the status of the disputed region with Baku. This illustrates how the disruption of transit is linked to securitisation in the region. In 2017, the Baku–Tbilisi–Kars railroad opened, linking the Caspian Sea with Turkey via Azerbaijan and Georgia. There are plans to increase the transport capacity of this line by a factor of five (van Leijen 2022). This railway line has created a new reality: even if its border with Turkey were to be reopened, the route completely side-lines Armenia in terms of rail connectivity in the Middle Corridor. Both Caspian and Black Sea ferries and port services face limitations in terms of rail throughput capacity: even if both Azerbaijan and Georgia invested in the modernisation and the expansion of capacities of railway traffic, the bottlenecks via the two seas and ports persist. Investment in the Azerbaijani and Georgian ports is already underway, but this will improve the situation only in a couple of years (Eldem 2022). The Turkish railway system, in particular, is not ready for increased overland transit.
Outlook
The EU and European funding institutions like the European Bank for Reconstruction and Development and European Investment Bank are already major investors in infrastructure in the South Caucasus region and beyond. They aim to facilitate connectivity in Central Asia and the South Caucasus and a broader transition towards a sustainable, climate-neutral growth model. Despite growing Chinese investments in line with China’s Belt and Road Initiative (which aims to integrate economic spaces in Asia, Europe, and Africa through different kinds of connectivity investments), these European institutions and the Central Asian Development Cooperation Instrument are the biggest investors in infrastructure in Central Asia and the South Caucasus (Kalkschmied 2022). Caspian oil and gas are already playing a role in the European market, and its importance in terms of volume and diversification of suppliers will only grow (Roberts/ Bowden 2022). The Middle Corridor will potentially become more important in trade between Europe and Asia, but it will need more investment in ports, railway, and highway infrastructure. It is interlinked with the Global Gateway Initiative of the EU, which aims to invest in different kinds of infrastructure, connectivity, health, and education and compete with China’s BRI. Nevertheless, it still lacks sufficient funding (Koch 2022). The security situation in the Black Sea region will have a major impact on trade and transit routes; here, the outcome of the war against Ukraine will play a major role.
The South Caucasus as a connection between Asia and Europe, as well as Russia and the Middle East, will play a bigger role in the global trade routes. It is a region where geopolitics, security and economic interests are closely interlinked. Both the Second Nagorno Karabakh War and Russia’s aggression against Ukraine have had a strong impact on the regional security balance and infrastructure projects. The overlap of intra- regional conflicts and external actors’ interests creates a new dynamic in the context of the Russian aggression against Ukraine. Especially, infrastructure and connectivity are major areas where different actors compete, and which are used to gain more influence in the region. Therefore, connectivity cannot be developed without taking security and geopolitical interests into consideration. On the contrary, these issues are highly interlinked and can only be developed for the benefit of local and regional societies through a process of desecuritisation. The latest trends in the conflict between Armenia and Azerbaijan point in a different direction.
The stronger focus of the EU on bilateral relations with EaP countries and its redefinition as a security actor in the neighbourhood by member states follows the trends of securitisation and exclusive relations with each country. The EaP, as a framework policy for the entire neighbourhood, should explore the possibilities of linking connectivity and trade investment with the EU’s role as a peace actor in regional conflicts. It should connect the different post-Soviet regions and policies from Eastern Europe to the Black Sea, the South Caucasus and on to Central Asia. Even if there is additional potential for gas supply from Azerbaijan, Kazakhstan, and Turkmenistan to Europe, this would require huge investment, particularly for the Trans-Caspian link, which will not be available soon. Here the EU should understand this investment not purely economically, but also in geopolitical and security terms, with the goal of integrating post-Soviet countries with the EU and exporting its norms and standards to the region to increase welfare, rule of law, and good governance. The internationalisation of the conflict settlement processes through a bigger role of the EU in South Caucasian regional conflicts is a precondition for peace, investment and connectivity in the region.
