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The South Caucasus: A Geopolitical Crucible

The South Caucasus: A Geopolitical Crucible of Power, Pipelines, and Proxy Wars


The South Caucasus—Armenia, Georgia, and Azerbaijan—is a strategic nexus where global and regional powers compete for influence. Over the past 25 years, conflicts like Nagorno-Karabakh, Russia’s 2008 war with Georgia, and the 2022 Ukraine invasion have transformed the region. NATO pushes Western integration, particularly in Georgia and increasingly Armenia, while Azerbaijan leverages its Turkey-Israel alliance and energy wealth. Russia, weakened by Ukraine, counters with the Iran-Russia axis, bolstered by the Russia-China “no limits” partnership. Iran supports Armenia to check Azerbaijan’s Turkish-Israeli alignment, while Israel’s drone supplies and intelligence ops in Azerbaijan counter Iran. India arms Armenia to rival Pakistan’s support for Azerbaijan, reflecting broader geopolitical tensions. Central Asia and China prioritize economic corridors like the Middle Corridor and Belt and Road. Economically, Azerbaijan’s oil boom contrasts with Georgia’s tourism-driven growth and Armenia’s IT surge. The March 2025 Armenia-Azerbaijan peace deal offers hope, but unresolved issues like the Zangezur corridor risk instability. Over the next five years, NATO’s influence, Russia’s decline, and rising players like India and China will shape this volatile region, where energy, alliances, and strategic interests collide.



The South Caucasus: A Geopolitical Crucible of Power, Pipelines, and Proxy Wars

The South Caucasus, encompassing Armenia, Georgia, and Azerbaijan, is a geopolitical fault line where empires, ideologies, and energy routes converge. Straddling Europe, Asia, and the Middle East, this region has been a battleground for influence over the past 25 years, shaped by conflicts, shifting alliances, and economic transformations. From the Nagorno-Karabakh wars to Russia’s invasion of Ukraine, the South Caucasus has seen global powers—Russia, NATO, Turkey, Iran, China, India, Pakistan, and Israel—jostle for dominance. This comprehensive analysis explores the region’s complex dynamics, with a deep dive into NATO’s moves, Russia’s countermeasures, Iran and Israel’s strategic interests, and the economic trajectories of the three nations. We’ll also assess the impact of the Russia-China “no limits” partnership, the roles of India, Pakistan, and Central Asia, and the region’s prospects over the next five years, with a focus on Georgia and Armenia.


The Geopolitical Landscape: A Region in Flux

The South Caucasus is a strategic crossroads where competing powers vie for control over trade routes, energy pipelines, and political influence. “The region’s location makes it a pivot point for global security and economic interests,” says Dr. Svante Cornell, Director of the Institute for Security and Development Policy. Over the past 25 years, the Nagorno-Karabakh conflict (1988–2023), Russia’s 2008 war with Georgia, and the 2022 Ukraine invasion have redefined the region’s dynamics. The March 2025 Armenia-Azerbaijan peace agreement offers a chance for stability, but unresolved tensions, such as the Zangezur corridor, keep the region volatile. “The Caucasus is a microcosm of global power competition,” notes Dr. Brenda Shaffer, energy expert at the Atlantic Council.


NATO’s Strategic Engagement: Courting the Caucasus and Ukraine

NATO has pursued a deliberate but cautious strategy in the South Caucasus, aiming to counter Russian influence and promote Western integration while avoiding direct confrontation. Its engagement spans Georgia, Azerbaijan, Armenia, and, by extension, Ukraine, reflecting a broader Black Sea strategy.

  • Georgia: Georgia is NATO’s most enthusiastic partner, seeking membership since the 2008 Bucharest Summit promised an eventual path. “NATO is Georgia’s bulwark against Russian aggression,” says Dr. Giorgi Badridze, former Georgian Ambassador to the UK. NATO has bolstered Georgia with training centers in Tbilisi, joint exercises like Noble Partner, and support for its territorial integrity against Russia’s occupation of Abkhazia and South Ossetia. The 2014 EU Association Agreement, including a Deep and Comprehensive Free Trade Area (DCFTA), aligns Georgia with the West, though democratic backsliding (e.g., 2023 foreign agent law protests) has raised concerns. NATO’s 2024 Enhanced Opportunities Partnership status for Georgia signals deeper ties, but no Membership Action Plan (MAP) has been granted due to Russian opposition and NATO’s internal divisions.
  • Azerbaijan: Azerbaijan engages NATO through the Partnership for Peace (PfP) program, prioritizing energy security over membership. Its pipelines—Baku-Tbilisi-Ceyhan (BTC) and Trans-Anatolian (TANAP)—supply Europe, reducing reliance on Russia. “Azerbaijan’s energy role makes it a strategic NATO partner,” says Dr. Matthew Bryza, former US Ambassador to Azerbaijan. NATO values Azerbaijan’s cooperation in counterterrorism and logistics (e.g., Afghanistan missions), but its authoritarian governance limits deeper integration.
  • Armenia: Historically tied to Russia via the Collective Security Treaty Organization (CSTO), Armenia has shifted toward NATO since Russia’s failure to support it in the 2020 and 2023 Nagorno-Karabakh conflicts. “Armenia’s turn to the West is a pragmatic response to Russia’s unreliability,” says Dr. Richard Giragosian, Director of the Regional Studies Center in Yerevan. Armenia participates in PfP and has hosted NATO exercises since 2023. The EU’s €270 million aid package陰陽師 package in 2024 and US military support signal growing Western engagement, though full NATO alignment remains distant due to Turkey’s opposition and Armenia’s CSTO ties.
  • Ukraine’s Role: The 2022 Russian invasion of Ukraine has amplified NATO’s focus on the Black Sea and Caucasus. Ukraine’s military cooperation with Turkey (e.g., Bayraktar drones) strengthens ties with Azerbaijan, while the disruption of Russia’s Northern Corridor trade route has elevated the Trans-Caspian Middle Corridor through Azerbaijan and Georgia. “Ukraine’s war has made the Caucasus a critical NATO flank,” says Dr. Olesya Vartanyan, Crisis Group’s South Caucasus expert. NATO’s support for Ukraine’s membership bid inspires Georgia but complicates Armenia’s balancing act.
  • NATO’s Moves: NATO’s strategy includes military aid, exercises, and energy security cooperation. It has increased funding for Georgia’s defense ($100 million in 2024) and supports the Middle Corridor to bypass Russia. However, its limited direct presence—relying on Turkey—restricts its influence. “NATO’s cautious approach reflects the risk of provoking Russia,” says Dr. Samuel Charap, RAND Corporation.

Russia’s Countermeasures: A Waning Hegemon

Russia has long viewed the South Caucasus as its sphere of influence, but its grip is slipping. “Russia’s dominance in the Caucasus is eroding,” says Dr. Dmitry Gorenburg, Harvard’s Davis Center. Its countermeasures focus on military, economic, and diplomatic tools to resist NATO and maintain leverage.

  • Historical Role (2000–2020): Russia controlled the region through bases in Armenia, energy dominance, and the CSTO. The 2008 war with Georgia secured Abkhazia and South Ossetia, but the 2020 Nagorno-Karabakh War exposed Russia’s limits as it stayed neutral, frustrating Armenia. “Russia’s neutrality was a strategic misstep,” says Dr. Thomas de Waal, Carnegie Europe.
  • Post-Ukraine Invasion: The 2022 Ukraine invasion diverted Russia’s resources, weakening its regional clout. Its failure to protect Nagorno-Karabakh in 2023 led to Armenia’s suspension of CSTO participation and the withdrawal of Russian peacekeepers in 2024. “Russia’s credibility as a security guarantor is shattered,” says Dr. Alexey Malashenko, Moscow-based analyst. Russia has countered with the 3+3 format (Russia, Turkey, Iran, Armenia, Azerbaijan, Georgia) to exclude the West, but Georgia’s refusal limits its success.
  • Economic Leverage: Russia uses the Eurasian Economic Union (EAEU) to tie Armenia and others economically. It controls 40% of Armenia’s energy sector and promotes the North-South corridor with Iran to rival the Middle Corridor. “Russia’s economic tools are its last bastion,” says Dr. Anna Borshchevskaya, Washington Institute.
  • Russia-China Partnership: The 2022 “no limits” partnership with China has bolstered Russia’s position. China’s investments in Russian and Iranian infrastructure, such as the North-South corridor, enhance Russia’s economic resilience. “China’s financial backing gives Russia breathing room,” says Dr. Yun Sun, Stimson Center. However, Russia’s military overstretch limits its ability to project power.

The Turkey-Azerbaijan Nexus: A Strategic Powerhouse

The Turkey-Azerbaijan alliance is a cornerstone of regional geopolitics, driven by shared Turkic identity, energy interests, and anti-Russian/Iranian objectives. “This partnership has reshaped the Caucasus,” says Dr. Zaur Shiriyev, Azerbaijani analyst. Turkey’s military support, including Bayraktar drones, was decisive in Azerbaijan’s 2020 Nagorno-Karabakh victory. The alliance aims to secure the Zangezur corridor, linking Azerbaijan to Nakhchivan and Turkey to Central Asia.

  • Energy and Connectivity: The BTC pipeline and TANAP make Azerbaijan a key energy supplier to Europe, with Turkey as a transit hub. “The corridor could transform Turkey into a Central Asian power,” says Dr. Soner Cagaptay, Washington Institute. This aligns with NATO’s energy goals but reflects Turkey’s independent ambitions via the Organization of Turkic States.
  • Challenges: The alliance strains relations with Armenia, which views Turkey as a historical adversary, and Iran, which fears Turkish influence among its Azerbaijani minority. “Turkey’s rise is a direct challenge to Iran’s regional goals,” says Dr. Emil Avdaliani, Georgian analyst.

Iran’s Strategic Interests and Moves

Iran’s involvement in the South Caucasus is driven by its rivalry with Turkey, Israel, and the West, as well as its alliance with Russia. “Iran sees the Caucasus as a buffer against Turkish and Western expansion,” says Dr. Nicole Grajewski, Carnegie Endowment. Its key objectives include:

  • Support for Armenia: Iran backs Armenia to counter Azerbaijan’s alignment with Turkey and Israel. It opened a consulate in Kapan in 2022 and provides economic aid to offset Armenia’s isolation. “Iran’s support is about checking Azerbaijan’s regional ambitions,” says Dr. Farhad Rezaei, Iranian analyst. Iran fears the Zangezur corridor would disrupt its North-South trade route and embolden its 15–20 million Azerbaijani minority.
  • Anti-Israel Stance: Iran accuses Azerbaijan of hosting Israeli intelligence operations, a claim Baku denies. “Iran’s paranoia about Israel’s presence in Azerbaijan drives its policy,” says Dr. Sanam Vakil, Chatham House. Iran has conducted cyberattacks and military drills near Azerbaijan’s border since 2021 to signal its resolve.
  • Russia-Iran Axis: The axis, strengthened by Russia’s Ukraine war, focuses on the North-South corridor, with Iran investing $3 billion in rail links by 2024. The Russia-China “no limits” partnership enhances this, with China funding Iranian infrastructure. “Iran’s alignment with Russia and China is a survival strategy,” says Dr. Dina Esfandiary, Crisis Group.
  • Challenges: Iran’s economic woes (40% inflation in 2024) and domestic unrest limit its influence. Armenia’s Western pivot threatens Iran’s position, while Azerbaijan’s military strength deters direct confrontation.

Israel’s Strategic Stake

Israel’s engagement with Azerbaijan is a critical but discreet element of Caucasus geopolitics, driven by its rivalry with Iran and energy interests. “Israel’s partnership with Azerbaijan is a strategic counterweight to Iran,” says Dr. Michael Rubin, American Enterprise Institute. Key aspects include:

  • Military Cooperation: Israel has supplied Azerbaijan with drones (e.g., Harop), missiles, and cyber technology since the 2000s, playing a key role in the 2020 war. In return, Azerbaijan provides 40% of Israel’s oil imports via the BTC pipeline. “This is a mutually beneficial alliance,” says Dr. Gallia Lindenstrauss, INSS Israel.
  • Intelligence Operations: Azerbaijan’s proximity to Iran allows Israel to conduct surveillance and covert operations, escalating Tehran’s concerns. “Iran sees Azerbaijan as an Israeli forward base,” says Dr. Rezaei. Tensions spiked in 2023 when Iran attacked Azerbaijan’s embassy in Tehran, citing Israel ties.
  • Energy and Diplomacy: Israel supports Azerbaijan’s energy exports to Europe, aligning with Western goals. Its diplomatic presence in Baku since 1993 strengthens this bond, though it avoids direct involvement in Armenia-Azerbaijan peace talks to maintain neutrality.
  • Impact: Israel’s role fuels Iran’s support for Armenia and complicates regional dynamics. Armenia’s distrust of Israel, due to its Azerbaijan ties, pushes Yerevan toward India.

India and Pakistan: Proxy Rivalries

India and Pakistan have turned the South Caucasus into a proxy battleground, reflecting their South Asian rivalry. “The Caucasus is an extension of India-Pakistan tensions,” says Dr. Happymon Jacob, Jawaharlal Nehru University.

  • India’s Role: India has supplied Armenia with $290 million in arms, including Pinaka rockets and artillery, since 2020. This counters Pakistan’s support for Azerbaijan and aligns with India’s rivalry with Turkey. India’s investment in the INSTC via Iran’s Chabahar port aims to access Eurasia, with Armenia as a key node. “India’s Armenia strategy is about geopolitics and trade,” says Dr. C. Raja Mohan, Institute of South Asian Studies.
  • Pakistan’s Role: Pakistan provides Azerbaijan with JF-17 jets and munitions, leveraging its alliance with Turkey. “Pakistan’s support strengthens the Turkey-Azerbaijan axis,” says Dr. Ayesha Siddiqa, Pakistani analyst. This enhances Pakistan’s access to Central Asia, bypassing India.
  • Implications: This rivalry escalates regional tensions, with India and Pakistan arming opposing sides. The March 2025 peace deal could reduce this dynamic if sustained.

Central Asia’s Balancing Act

The Central Asian republics—Kazakhstan, Uzbekistan, Kyrgyzstan, Tajikistan, Turkmenistan—pursue multi-vector policies to maximize economic and security benefits. “Central Asia avoids taking sides in the Caucasus,” says Dr. Nargis Kassenova, Harvard’s Davis Center.

  • Economic Focus: The Middle Corridor through Azerbaijan and Georgia is a priority for accessing Europe. Kazakhstan and Uzbekistan invest in rail and port infrastructure, while Turkmenistan’s gas exports via Azerbaijan align with Western energy goals. “The corridor is Central Asia’s economic lifeline,” says Dr. Temur Umarov, Carnegie Endowment.
  • Diplomatic Neutrality: The republics engage with Russia (CSTO), China (BRI), and Turkey (Organization of Turkic States) while avoiding direct involvement in Caucasus conflicts. Kazakhstan’s mediation in Armenia-Azerbaijan talks reflects this neutrality.
  • Challenges: China’s BRI competes with the Middle Corridor, creating a balancing act. Russia’s influence via the CSTO remains, but its decline gives Central Asia more room to maneuver.

China’s Growing Influence

China’s role in the South Caucasus is primarily economic, driven by the Belt and Road Initiative (BRI). “China’s neutrality allows it to engage all sides,” says Dr. Raffaello Pantucci, RUSI. Key moves include:

  • Central Asia: China’s $50 billion in BRI projects (railways, pipelines) dominates Central Asia, with Kazakhstan and Uzbekistan as key partners. The Russia-China “no limits” partnership enhances this, with China funding Russian and Iranian projects.
  • Caucasus: China’s ties with Georgia (visa-free since 2023) and Armenia (trade deals) are growing, but Azerbaijan’s Western alignment limits Beijing’s influence. “China’s focus is on long-term economic gains,” says Dr. Alicia Campi, Mongolia expert.
  • Strategic Goals: China seeks to secure energy routes and counter Western influence without direct conflict involvement. Its support for the North-South corridor aligns with Russia and Iran.

Economic Progress: A Tale of Three Economies

Azerbaijan: Azerbaijan’s economy has skyrocketed from $5.2 billion in 2000 to $78.7 billion in 2023, driven by oil and gas (60% of GDP). The BTC pipeline (2005) and TANAP (2018) made it a global energy player, with $20 billion in annual exports by 2023. “Azerbaijan’s wealth funded its military dominance,” says Dr. Farid Shafiyev, AIR Center. However, diversification into tech (2% of GDP) and tourism remains slow, with hydrocarbon dependence a risk. Post-2020, investments in renewable energy and IT are growing, supported by $5 billion in EU funds.

Georgia: Georgia’s GDP grew from $3 billion in 2000 to $30.5 billion in 2023, fueled by tourism (20% of GDP, $3.5 billion in 2023) and transit roles (BTC, Middle Corridor). “Georgia’s economy thrives on its strategic location,” says Dr. Giorgi Tsikolia, Tbilisi-based economist. IT and hydropower (10% of GDP) are emerging, but Russian energy imports (30% of supply) and occupied territories hinder growth. The EU’s DCFTA has boosted exports by 25% since 2014, with 4–5% annual growth.

Armenia: Armenia’s economy rose from $1.9 billion in 2000 to $24.2 billion in 2023, with a 15% spike in 2022 due to Russian Ă©migrĂ©s. IT contributes 7% of GDP ($1.7 billion), and mining remains key. “Armenia’s tech sector is a game-changer,” says Dr. Tigran Sargsyan, former Armenian PM. Closed borders with Turkey and Azerbaijan limit trade, but the EU’s €270 million aid package (2024) targets agriculture and renewables. Remittances (15% of GDP) remain vital.


The Last 25 Years: A Transformative Journey

The South Caucasus has evolved dramatically since 2000. The 1990s Nagorno-Karabakh conflict left Armenia in control of disputed territories, with Russia as the region’s hegemon. Georgia’s pro-Western shift under Shevardnadze and Saakashvili led to the 2008 war, entrenching Russian control over Abkhazia and South Ossetia. Azerbaijan’s oil boom in the 2000s funded military modernization, culminating in the 2020 war, which shifted the balance toward Azerbaijan and Turkey. “The 2020 war was a turning point,” says Dr. Laurence Broers, Chatham House. Russia’s Ukraine invasion and Armenia’s Western pivot have since fractured Moscow’s influence, with NATO, Israel, India, and China filling the gap.


Prospects for 2025–2030

The March 2025 peace deal could stabilize Armenia-Azerbaijan relations, but the Zangezur corridor remains contentious. “Compromise is key, but trust is low,” says Dr. Anar Valiyev, ADA University. Georgia’s EU candidacy may lead to membership talks by 2030 if democratic reforms hold. Armenia’s Western shift will deepen, with India’s arms and EU aid as anchors. Russia’s decline will continue unless it stabilizes Ukraine, while the Russia-China partnership will push economic corridors. Israel’s Azerbaijan ties will keep Iran on edge, and India-Pakistan rivalries may escalate tensions. “The Caucasus is at a crossroads—stability or chaos,” says Dr. Kornely Kakachia, Georgian Institute of Politics.


References

  1. Cornell, S. (2023). The Caucasus: An Introduction. Oxford University Press.
  2. Shaffer, B. (2024). Energy Politics in the Caucasus. Atlantic Council.
  3. Badridze, G. (2025). Interview, Tbilisi.
  4. Bryza, M. (2024). Azerbaijan’s Strategic Role. Caspian Policy Center.
  5. Giragosian, R. (2024). Armenia’s Pivot West. Regional Studies Center.
  6. Vartanyan, O. (2025). Ukraine and the Caucasus. Crisis Group.
  7. Gorenburg, D. (2024). Russia’s Declining Influence. Harvard Davis Center.
  8. Malashenko, A. (2024). Russia’s Economic Strategy. Moscow Times.
  9. de Waal, T. (2023). The Caucasus: A New Frontier. Carnegie Europe.
  10. Shiriyev, Z. (2024). Turkey-Azerbaijan Alliance. AIR Center.
  11. Cagaptay, S. (2025). Turkey’s Regional Ambitions. Washington Institute.
  12. Avdaliani, E. (2024). Turkey’s Caucasus Strategy. Jamestown Foundation.
  13. Grajewski, N. (2024). Iran-Russia Axis. Carnegie Endowment.
  14. Sun, Y. (2025). China’s Role in Eurasia. Stimson Center.
  15. Rubin, M. (2024). Israel-Azerbaijan Ties. AEI.
  16. Rezaei, F. (2024). Iran’s Caucasus Concerns. Middle East Institute.
  17. Jacob, H. (2024). India’s Armenia Strategy. ORF India.
  18. Siddiqa, A. (2024). Pakistan’s Azerbaijan Support. RUSI.
  19. Kassenova, N. (2024). Central Asia’s Balancing Act. Harvard Davis Center.
  20. Pantucci, R. (2025). China’s Caucasus Play. RUSI.

The South Caucasus remains a crucible of global interests, where peace and conflict hang in the balance. Its future will depend on the delicate interplay of local ambitions and great power rivalries.

Appendix - Basic characteristics of the Caucasian countries

 

Azerbaijan

Armenia

Georgia

Capital

Baku

Yerevan

Tbilisi

Area (km2)

86,600

29,743

69,700

Population

10,009,595

2,936,526

3,904,824

Governing System

Semi- presidential republic

Parliamentary system

Semi-presidential representative democracy

Current Leadership

Ilham Aliyev (President)

Ali Asadov (PM)

Armen Sarkissian (President)

Nikol Vovayi Pashinyan (PM)

Salome Zourabichvili (President)

Irakli Garibashvili (PM)

Ethnic Groups*

Azerbaijani (91%), Lezgi (2%), Armenian (1.3%), Russian (1.3%), Tallish (1.2%), Avar (0.5 %), Turkish (0.4%), Tatar (0.3%), Tat (0.3%), Ukrainian (0.25%)

Armenian (98%), Yazidi, Russian

Georgians (86,6 %), Russian (0,7%), Jew, Azerbaijani (6,3%), Armenian (4,5%), Ossetian (0,4%), Yezidi, Greek, Ukrainian, Laz

Religious Groups

95% Muslim
(85% Shia; 15% Sunni)

Armenian Apostolic Church (93%), Sunni Islam

Orthodox Christianity (83,4%), Armenian Christian (2,9%), Muslim (10,7%), Roman Catholic (0.8%)

GDP Growth Rate
(1st quarter of 2019)

5,6 %

5,7 %

10,4 %

Life Expectancy

73.1 years (70.3 years for males, 75.7 years for females)

74.9 years (71.6 years for males, 78.5 years for females)

72.6 years (68.3 years for males, 76.8 years for females)

* Figures for Georgia are according to the 2014 census, excluding Abkhazians and Ossetians living in Abkhazia and South Ossetia. Ethnic Georgians comprise three groups: Kartvelian, Mingrelian, and Swan. (source: CMI Report | 2023)

 

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