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 émigrés.
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
- Cornell,
S. (2023). The Caucasus: An Introduction. Oxford University Press.
- Shaffer,
B. (2024). Energy Politics in the Caucasus. Atlantic Council.
- Badridze,
G. (2025). Interview, Tbilisi.
- Bryza,
M. (2024). Azerbaijan’s Strategic Role. Caspian Policy Center.
- Giragosian,
R. (2024). Armenia’s Pivot West. Regional Studies Center.
- Vartanyan,
O. (2025). Ukraine and the Caucasus. Crisis Group.
- Gorenburg,
D. (2024). Russia’s Declining Influence. Harvard Davis Center.
- Malashenko,
A. (2024). Russia’s Economic Strategy. Moscow Times.
- de
Waal, T. (2023). The Caucasus: A New Frontier. Carnegie Europe.
- Shiriyev,
Z. (2024). Turkey-Azerbaijan Alliance. AIR Center.
- Cagaptay,
S. (2025). Turkey’s Regional Ambitions. Washington Institute.
- Avdaliani,
E. (2024). Turkey’s Caucasus Strategy. Jamestown Foundation.
- Grajewski,
N. (2024). Iran-Russia Axis. Carnegie Endowment.
- Sun,
Y. (2025). China’s Role in Eurasia. Stimson Center.
- Rubin,
M. (2024). Israel-Azerbaijan Ties. AEI.
- Rezaei,
F. (2024). Iran’s Caucasus Concerns. Middle East Institute.
- Jacob,
H. (2024). India’s Armenia Strategy. ORF India.
- Siddiqa,
A. (2024). Pakistan’s Azerbaijan Support. RUSI.
- Kassenova,
N. (2024). Central Asia’s Balancing Act. Harvard Davis Center.
- 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 |
Armenian
Apostolic Church (93%), Sunni Islam |
Orthodox
Christianity (83,4%), Armenian Christian (2,9%), Muslim (10,7%), Roman
Catholic (0.8%) |
GDP
Growth Rate |
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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