Putin’s war in Ukraine may cost him control of the south Caucasus

FOR MOST people, geopolitics is an abstraction. For those living in the south Caucasus, which consists of Azerbaijan, Armenia and Georgia, it is a daily experience. The region between the Black and Caspian seas, Europe and Asia, sits at the crossroads of old empires: Ottoman, Persian and Russian. Situated alongside the belligerents of today’s most dangerous wars—Russia’s against Ukraine and the Iranian-Israeli conflict—it illustrates like few other regions the rise of middle powers and retreat of big ones.

These two wars are redefining the region more consequentially than anything since the collapse of the Soviet Union, which showed its first cracks here in the late 1980s. Mr Putin’s war against Ukraine inadvertently led to an end to the hitherto intractable conflict between Azerbaijan and Armenia, which is now struggling to break free of Russia’s grip and make peace with Turkey. Meanwhile, the conflict between Israel and Iran has boosted the status of oil-rich Azerbaijan, the largest and militarily strongest of the three countries, as an ascending regional power, able to stand up to its bigger neighbours. Backed by Turkey and Israel, which sees it as a strategic ally in its conflict with Iran, Azerbaijan is contemplating joining the Abraham Accords. Only Georgia, once the darling of the West, is moving in the other direction as it slides into an ugly, anti-Western autocracy aligned with Russia.

“We live in a windy place,” says Elchin Amirbayov, a special representative of Ilham Aliyev, Azerbaijan’s president, of the changes sweeping the region as he looks over the Caspian Sea from a swanky office in Baku, the capital. A whirlwind of high-level diplomacy reflects the change.

On July 10th, as The Economist went to press, the leaders of Armenia and Azerbaijan—which have been at war for over 30 years—were meeting for their first-ever direct talks without any mediators or intermediaries. That follows a historic visit last month by Nikol Pashinyan, Armenia’s prime minister, to Istanbul, where he was ceremoniously received by President Recep Tayyip Erdogan. Influential recent visitors to the south Caucasus have included Steve Witkoff, Donald Trump’s special representative; Masoud Pezeshkian, the president of Iran; and Kaja Kallas, the EU foreign-policy chief.

What happens next will be felt far beyond the region. Peace between Armenia and Azerbaijan would integrate Armenia into the so-called “middle corridor” for trade and energy that links China and Central Asia to Europe, bypassing Russia. That is particularly vital for Europe’s energy security because Georgia is becoming a less reliable partner.

Russia is trying to stop this by putting pressure on the south Caucasian trio, which it still sees as being in its sphere of influence. Yet the speed of Russia’s loss of clout is striking, considering the dominant position it had gained five years ago as the result of a 44-day war between Armenia and Azerbaijan over Nagorno-Karabakh and its surroundings—Azerbaijani territory that had been occupied by Armenia since the early 1990s (see map).

The enclave’s occupation, like many of the other “frozen” conflicts in the former USSR, had been a key element in Russia’s influence. Yet when Azerbaijan attacked to take it back in 2020, Russia refused to help defend Armenia, partly in retribution for a popular uprising two years earlier that had swept Mr Pashinyan, a democrat, to power, and partly as a chance to deploy Russian troops elsewhere in the region.

Mr Putin allowed Azerbaijan to take some territory around Nagorno-Karabakh, before imposing a ceasefire that allowed Russia to put troops in Azerbaijan under the guise of peacekeepers, and which made Armenia more vulnerable and dependent on it. The armistice agreement also aimed to re-establish transport connections in the region by creating a road and rail link that would cross sovereign Armenian territory to connect the main part of Azerbaijan with Nakhchivan, Azerbaijan’s exclave bordering Iran and Turkey. Most importantly, however, Mr Putin imposed a condition that the FSB, Russia’s security service, control the corridor.

Yet all these machinations unravelled after Mr Putin’s full-scale invasion of Ukraine in 2022. In 2023, with Russia distracted by its own war, Azerbaijan recaptured all of Nagorno-Karabakh in less than 24 hours, while Russian peacekeepers stood impotently by. With no pretext for them to stay, Russia was compelled to withdraw them. Buoyed by its victory, Azerbaijan “sought to deal with Moscow as an equal, not as a subordinate, thus challenging Russia’s view of the south Caucasus as its playground”, says Zaur Shiriyev, a Baku-based expert at the Carnegie Endowment for International Peace, a think-tank.

Azerbaijan has flexed its muscles more of late, making clear that it does not want the FSB to control the corridor between two parts of Azerbaijan. Instead it wants it to be administered by a neutral international body, possibly involving America. Russia’s declining influence in the region is a worry for Mr Putin, who has intensified plans to build sanctions-proof transport links through it, such as a rail line to Iran, an important supplier of arms to Russia for its war against Ukraine and for any potential conflict against the West.

Soon a new spat ensued involving Azerbaijan’s roughly 2m-strong diaspora, when Russian police rounded up some 50 ethnic Azerbaijanis in the Urals, linking them to a 20-year-old unsolved case. Two Azerbaijani men were tortured and beaten to death during the arrests.

Azerbaijan retaliated, storming the office of Sputnik, Russia’s state propaganda outlet, and detaining two employees it accused of being FSB agents. (Russia denies this.) Its security forces also arrested and beat up eight Russians who had moved to Baku after Russia invaded Ukraine.

The leader in Baku cares about human rights as little as Mr Putin does, but the row put a nail into the idea of Russia’s military presence in the transport corridor between Azerbaijan and Armenia. The dispute between the two autocrats may subside. But the inherent tensions between an emerging regional power and a former imperial master will not. Azerbaijan, which is armed by both Turkey and Israel, is too powerful for Russia to fight openly. So Mr Putin’s best hope to regain influence may be through Armenia, which depends on Russia’s energy and food imports, and where Russia still has a military base.

What Russia lacks in Armenia, however, is popular support. Having been so overtly betrayed, few Armenians see Mr Putin as an ally. Yet, paradoxically, the loss of Nagorno-Karabakh and the exodus of 100,000 ethnic Armenians from the disputed territory—painful as it was—has also liberated Armenia from a conflict that had shut its border with Turkey, had forced it to outsource its security to Russia and also made its politics hostage to the Nagorno-Karabakh clans that had close ties with Moscow. “Armenia was de facto a half-colony of Moscow, which treated it as an asset in its relationship with Turkey and Azerbaijan,” says Mikayel Zolyan, a historian and analyst in Yerevan, Armenia’s capital.

Since losing the war with Azerbaijan, Armenia has been trying to break free of Russia’s influence and draw closer to the EU. More important, it has intensified attempts to normalise its relationship with Turkey, which had been poisoned by the memory of the genocide of Armenians inflicted by Ottoman forces in 1915-16.

Mr Pashinyan has tried to move Armenia beyond its trauma and lament for the loss of its historical homeland, symbolised by mount Ararat (now in Turkey). He has emphasised “reconciliation over resentment”. Areg Kochinyan, the head of a security think-tank in Yerevan, says Russia was long viewed in Armenia as its only protection against Turkey. Now it is Russia that is viewed as a threat. Reopening the border between Turkey and Armenia, which has been closed since 1993, would cement Turkey’s role as the “rising star in the south Caucasus” and the guarantor of the region’s security, says Mr Kochinyan. Turkey, however, seems reluctant to reopen the border without the consent of Azerbaijan, which has also invested heavily in Turkey.

Azerbaijan is stalling and imposing new demands. It wants Armenia to hold a referendum to remove a residual claim to Nagorno-Karabakh from its constitution. And it wants unimpeded access through southern Armenia to Nakhchivan. These demands reveal not only Azerbaijan’s deep-rooted mistrust of its former foe, but also its economic insecurity. Despite all its oil riches, Azerbaijan’s GDP per person is below that of Armenia, which has none of its natural resources.

Yet these demands risk scuppering the deal. Armenians would be more likely to agree to a constitutional change after they have seen the benefits of trade and open borders, than before. Armenia wants to synchronise the opening of the Armenia-Turkey border with the agreement that would establish a corridor across its territory, even if this comes before a formal peace agreement with Azerbaijan.

Privately Ilham Aliyev, the president of Azerbaijan since 2003, knows that Mr Pashinyan is the best Armenian partner he could have in trying to strike a peace deal, yet publicly he has not shown him any support. Azerbaijan risks destabilising Armenia, a country a third of its size, by putting unnecessary pressure on it even as it is being menaced by Russia.

Mr Putin’s government has spared no effort to get rid of Mr Pashinyan, who faces elections next year, one way or another. It is hoping for the repeat of the Georgian scenario, in which Bidzina Ivanishvili, a Moscow-friendly oligarch, and the church, halted the country’s Westward trajectory and delivered it into Russia’s orbit. In June Mr Pashinyan said his government had foiled an attempted coup planned for September. It arrested Samvel Karapetian, a Russian-Armenian billionaire, on charges of making public calls to seize power in the country illegally, which he denies. Margarita Simonyan, the boss of RT, another Russian propaganda channel, called Mr Pashinyan an “Antichrist” and traitor to ethnic Armenians such as herself.

Russia’s malign activity both in Azerbaijan and in Armenia adds urgency to the peace process, says Mr Shiriyev. The window of opportunity is narrow. Missing it could throw the region once again into dangerous geopolitical uncertainty. ■