This article was originally published in the Stockholm Centre for Easter European Studies Guest Report No. 2, 2024.
Executive Summary
Following the break-up of the Soviet Union, Russia positioned itself to control the balance of power in the South Caucasus. It took a leading role in local economies and was the main security provider, maintaining the key to conflict resolution. These factors ensured it a dominant position in the region. Today, however, Russia is not the only power determining the regional balance and mediating conflicts. The famous Russian mantra on the post-Soviet states, “they are not going anywhere”, has never been less relevant.
Changes in Russia’s approach to the South Caucasus
For many years, Russia viewed the South Caucasus as part of its post-Soviet space. It adopted a uniform approach to the region, using economic, military, and other tools of domination. Today’s uncertain environment has led to a revision of its regional priorities. Armenia and the Nagorno-Karabakh conflict have become secondary, and Russia now views its South Caucasus agenda through the prism of its confrontation with the West. Moscow no longer has a clear strategy in the region. The Kremlin’s 2016 Foreign Policy Concept references the Nagorno-Karabakh settlement but the current version, published in 2023, makes no mention of Russia’s approach to Nagorno-Karabakh.
A lack of a strategic vision, together with limited resources due to the war in Ukraine, has led Moscow to take a reactive approach in the region, as illustrated by its failure to fulfil its security guarantees to Armenia during the Azerbaijani attacks of May 2021 and September 2022, and the absence of any reaction either during or following Baku’s military assault on Nagorno-Karabakh in September 2023. This led to ethnic cleansing and the death of some Russian peacekeepers in the process. Growing dependence on Türkiye and Azerbaijan has created a situation in which the above events are at least partially beyond Russia’s control.
Russia’s main condition for accepting these changes is the exclusion of any Western presence. Keeping Brussels and Washington away from engaging in the South Caucasus will not only ensure that Russia’s local interests are met but also guarantee it a dominant position, alone or with non-Western actors, in the post-Ukraine war order.
How Will Russia Protect Its Position in the Region?
The signing of a peace agreement between Armenia and Azerbaijan through European or US facilitation will signal the loss of Russia’s position as the main peace broker and mediator in the post-conflict phase, in favour of the West. For Russia, this must be avoided.
Politically, Russia has tried to maintain its leadership position by involving Iran and Türkiye in the region. During the 2022 Nagorno-Karabakh war, Moscow resisted attempts by Tehran and Ankara to engage in the negotiation process. Turkey’s direct involvement in the conflict on the side of Azerbaijan led it subsequently to formalise its presence on the ground through the joint Russian-Turkish Monitoring Centre. Iran had remained outside of the process, but this all changed in 2023. Russia now supports the “3+3” format – the conflict negotiation platform involving the three Caucasian countries (Armenia, Georgia, and Azerbaijan) and the three regional powers (Russia, Iran, and Turkey), thereby setting the stage for the direct participation of Tehran and Ankara in determining the future of the region.
Russia sees maintaining the trilateral negotiating platform (Armenia-Azerbaijan-Russia) as an added tool for preserving its position. Some agreements were reached in the European and US formats but since September 2023, Azerbaijan appears to have rejected the EU’s, and possibly the US’s, invitations to negotiate, stated its preference for holding the negotiations on a bilateral basis or with regional powers. Azerbaijan refused to participate in the meeting on the margins of the European Policy Community meeting in Granada in October 2023. It had agreed to a gathering of foreign affairs ministers in Washington, DC, in January 2024, but then refused to invite US State Department Senior Advisor Louis Bono to Baku, making the prospects for reactivating the US platform none too promising.
Russia’s second instrument for maintaining its pre-eminence in the region is its long-term involvement in connectivity, one area being Armenian-Azerbaijani communications. The Trilateral Statement of 10 November 2020 states that “control over transport communications between Azerbaijan and its exclave [Nakhijevan/Nakhchivan] through the territory of Armenia shall be exercised by the Border Guard Service bodies of the FSS/FSB [Federal Security Service] of Russia”. Similarly, control of the Lachin corridor connecting Nagorno-Karabakh and Armenia was maintained by Russian peacekeepers. Yerevan’s proposed Crossroads for Peace announced in October 2023, advocates unblocking communications based on the principle of sovereignty, which excludes Russian control. This is because the 2020 Statement is now irrelevant in the wake of Azerbaijan’s takeover of all of Nagorno-Karabakh, making the Lachin corridor void, and Russia’s inaction during the military assault on the Armenians of Nagorno-Karabagh. If the negotiation process between Armenia and Azerbaijan continues on the Russian platform, as Russia and Azerbaijan prefer, Russia is more likely to secure control over the communications routes between Armenia and Azerbaijan.
On Azerbaijan’s position on the route between its main territory and enclave – the so-called Zangezur Corridor, Russia does not officially support the demands of control-free passage between Azerbaijan and its enclave. This was stated by Special Envoy Alexey Overchuk in September 2022, repeated by Ambassador Sergey Kopyrkin in February 2023, and reiterated by Minister for Foreign Affairs Sergey Lavrov in January 2024. However, Moscow looks positively at the opening of this route, based on the 2020 Trilateral Statement, and given that it will bring stability to the region.
Russia has tried to put the issue of railway communications with Armenia through Georgia on the agenda to counter the West’s plans to isolate it through sanctions. However, this was immediately disavowed by Tbilisi. Given Russia’s interest in open communications with Georgia, Armenia’s approach to unblocking all communications in the region through the Crossroads of Peace project might be supported by Russia. There are currently no substantive negotiations on this issue.
The third instrument – and the most attractive to Russia – is economic. Georgia serves as an example for Moscow of how – despite the political crisis between the two governments – economic cooperation has a positive impact on relations. Foreign direct investment from Russia to Georgia in 2022 was a record US$108 million; trade turnover increased by 48 percent from US$1.47 billion before the war in Ukraine to US$2.19 billion by the end of 2023. Today, Russia is Georgia’s second-largest trading partner.
Similar economic dynamics can be observed in Armenia-Russia relations, although the level of Armenia’s dependency on Russia blurs the picture. Moscow is Yerevan’s largest trading partner. Trade turnover between the countries in January–October 2023 increased by more than 40 percent to US$5.4 billion. In the first half of 2023, Armenia had a trade surplus with Russia for the first time in 20 years. Russia accounts for 52 percent of Armenian exports and about 50 percent of its tourists. These indicators have contributed to boosting Armenia’s gross domestic product (by 14.2 percent in 2022). At the same time, while Armenia is seeking to diversify its sources of trade, energy, and investment, it remains heavily dependent on Russia.
Russia’s greatest interest in the field of economics and communications is Azerbaijan. One of the North–South routes most important to Russia runs through Azerbaijan. In 2023, Russia and Iran signed an agreement on the construction of a railway between Resht and Astara. This project will provide Russia with direct access to the Persian Gulf through Azerbaijan and Iran, with subsequent access to India and other Asian countries. In addition, Moscow has traditionally tried to involve Azerbaijan in its international organisations. The new Russian ambassador to Azerbaijan was the head of the First Commonwealth of Independent States (CIS) Department in the Foreign Ministry for 12 years, responsible for integration in the Eurasian space (the CIS, the Collective Security Treaty Organisation [CSTO] and the Eurasian Economic Union [EAEU]). Taken together, the free trade zone agreement between Iran and the EAEU, as well as the finalisation of the North-South railway route will increase Azerbaijan’s geo-economic importance to Russia. The Declaration on Allied Interaction signed the day before the launch of the invasion of Ukraine in 2022, will serve as a basis for this. This prospect is separate from the increased energy relation between Russia and Azerbaijan, triggered by Azerbaijan’s limited ability to meet its gas export obligations under the memorandum of understanding signed with the EU in July 2022.
Finally, although weakened, Russia’s military is still relevant as a tool for securing its interests in the region. Moscow is not currently capable of acting as an exclusive security provider. The Russian deterrent is less important as a factor in Armenian security architecture against Azerbaijan and Turkey. Moscow is also unable to maintain its presence in Armenia through its military-technical cooperation. The war in Ukraine means that armaments ordered and paid for by Armenia have not been delivered by Russia. (A small number of weapons were delivered in January 2024.) For the past two years, Armenia has been intensifying its security-related diplomatic efforts for new security partners. India and France have emerged as Armenia’s key partners in military-technical and military cooperation. The EU civilian mission on the border with Azerbaijan has been expanded. In November 2022, Armenia did not accept the CSTO’s offer to dispatch a mission and opted to ask the EU instead. Moscow appears to be slowly accepting a configuration change, as new non-regional actors emerge to influence the balance of power in the South Caucasus. Russia will probably feel comfortable as long as the three pillars of its security architecture in Armenia are maintained: the 102nd military base, border troops, and Armenia’s CSTO membership.
Conclusion
Since September 2023, Russia has reduced its presence on the ground in the South Caucasus, while engagement by the EU, Turkey, Iran, India, and France has intensified. In the long term, Russia will focus on economic cooperation as a means of maintaining its local leadership. Its experience in Georgia can serve as a successful model for cooperation with Armenia and Azerbaijan. At the same time, Moscow will try to maintain the “3+3” negotiating platform, to become the main peace broker between Armenia and Azerbaijan, and a strong drive to participate in the implementation of peace agreements.
