The South Caucasus region has a strategic geographic position because Azerbaijan, Armenia, and Georgia share borders with three major powers: Russia, Iran, and Turkey. Yet, the long-lasting conflict between Armenia and Azerbaijan negatively affected intra-regional trade and economic integration. However, the Second Karabakh War between Azerbaijan and Armenia has changed the region’s geopolitical landscape.
Following the forty-four-day war, Azerbaijan liberated several occupied regions and signed an agreement with Russia and Armenia on November 10, 2020, to stop the bloody conflict. That November Agreement has redrawn the region’s geopolitical map as Armenia and Azerbaijan agreed to open transport links and support regional economic integration. According to the trilateral agreement, Russia became a key guarantor for the ceasefire and peace and deployed a peacekeeping contingent along the contact line in Nagorno-Karabakh and the Lachin corridor. Additionally, a Joint Russian–Turkish Center for monitoring the Armenian-Azerbaijani ceasefire was launched in the Agdam region. Through this, two regional powers—Russia and Turkey—strengthened their interests through their diplomatic and military presence in the South Caucasus.
Although the conflict has been resolved, the post-conflict period has been characterized by persistent challenges to stability and security as well as new opportunities for regional economic integration. Both Turkey and Russia support regional economic integration via opening transport corridors. In this regard, the Zangezur corridor is a very important transport route, and all involved parties will benefit from the project. By unblocking the Zangezur corridor, Azerbaijan will be connected with its enclave, the Nakhchivan Autonomous Republic, and Turkey will be directly connected to Azerbaijan and other Turkish-speaking countries in Central Asia. Armenia could also benefit from this project, as the country will get a railway connection with Iran and Russia, the latter being its main economic and political ally. For instance, Russia has always been Armenia's leading import and export market. In 2020, about $676 million worth of goods were exported from Armenia to Russia and, during the same period, Russia’s share of total imports was equal to $4.559 billion (32.4 percent).
The ongoing border dispute shows the importance of border demarcation between two South Caucasian states. Even today, seven villages within the Gazakh district and Karki village of the Sadarak district of the Nakhchivan Autonomous Republic of Azerbaijan are under Armenian control. During the postwar period, Azerbaijan is restoring its internationally recognized borders, and all actors should understand that the final peace treaty based on principles of sovereignty and territorial integrity is key for sustainable peace.
Following post-conflict elections, Armenia’s acting Prime Minister Nikol Pashinyan has won snap parliamentary elections as the Civil Contract party got around 54 percent of the vote. Political instability in Armenia triggered a crisis, but now there is hope for cooperation and resolving disputes. In a telephone conversation with Prime Minister Pashinyan, Russian President Vladimir Putin highlighted the importance of implementing the trilateral agreements signed on November 9, 2020, and January 11, 2021.
Azerbaijan is keen to expand cooperation with all regional and non-regional states and, as mentioned above, Turkey and Russia have already started the process of establishing a political and military presence in the South Caucasus. The recent visit of Turkey’s President Recep Tayyip Erdogan to Karabakh and the signing of the Shusha Declaration will give new impulse to bilateral relations. It should be especially underlined that the Shusha Declaration envisages the deepening of military ties between the two states. It is worth noting that the main game changers during the Second Karabakh War were the Turkish-made Bayraktar TB2 drones, which destroyed Armenia’s S-300 air defense systems and other military equipment. As noted by Azerbaijani President Ilham Aliyev, “Cooperation, collaboration in defense field, defense industry field, and mutual military assistance issues are reflected in the Declaration.”
Another important element of the Shusha Declaration is the Turkish decision to open a consulate in Shusha city. In fact, this declaration also opens doors to building a military base in Azerbaijan to ensure a military and political balance in the region. To be clear, the Shusha Declaration means that, if there is an escalation or attacks against Azerbaijan, Turkey will openly join the conflict to defend its ally. This message was addressed not only to Armenia, which has continued to support revanchist ideas, but also to other actors interested in the region. So far, the Shusha Declaration is the key document signed between Turkey and Azerbaijan since the Agreement on Strategic Partnership and Mutual Support was signed in 2010.
Taking into account the developments in the South Caucasus, especially after the Second Karabakh War, the constructive engagement of the United States in the region will also be significant for supporting peace efforts and economic integration. Looking back, it is apparent that U.S. regional involvement has been inconsistent. In general, U.S. policy has been mainly connected with energy issues, such as exporting Caspian energy resources to global energy markets. However, recent developments and the visit of Acting Assistant Secretary for European and Eurasian Affairs Philip Reeker to the region emphasized the return of U.S. attention to the South Caucasus. While in Georgia, he noted that “the United States supports the development and economy of the South Caucasus and the aspirations of the peoples of the region for a stable, peaceful, and more prosperous future.”
The positive impact of the visit on Armenian–Azerbaijani relations was seen when Azerbaijan handed over fifteen Armenian detainees in exchange for maps of minefields in the Agdam region. It should be noted that Armenia and Azerbaijan made this step forward thanks to the United States’ constructive engagement and assistance. Washington’s closest ally in the region, Georgia, also played a significant role in this process. Unsurprisingly, Armenian Prime Minister Pashinyan emphasized that “Our brothers returned to their families thanks to the efforts of Georgia's Prime Minister Irakli Garibashvili, our Georgian brothers as well as our partners from the US and EU.”
Today, the new geopolitical situation in the South Caucasus makes regional economic integration extremely important because sustainable peace and security can be achieved only through cooperation. The United States should also shift its regional policy by creating a mechanism for effective cooperation. The Biden administration has already sent a positive message to Azerbaijan by extending the waiver to Section 907 of the Freedom Support Act with respect to assistance to the Government of Azerbaijan. It was crucial for Azerbaijan, after the Second Karabakh War, to see a constructive U.S. approach to and engagement in the region.
There is a huge opportunity for Washington to play a more active role in ensuring stability and regional economic cooperation. For instance, opening transport links in the South Caucasus can create the backbone for a platform to enhance regional dialogue, cooperation, and partnership among the South Caucasus states. The United States should support the opening of the Zangezur corridor in the region, which will contribute to regional economic integration. The United States has already established such a platform, called C5+1, in Central Asia with the aim of increasing economic and energy connectivity and trade; mitigating environmental and health challenges; jointly addressing security threats; and advocating for the full participation of women in all aspects of the political, economic, and social lives of member countries.
Cooperation between the United States and Turkey in the region could contribute significantly to future peace and stability. The Turkish–Azerbaijani partnership makes it possible to realize mega energy projects and energy cooperation in the region that meet the interests of all involved parties. Washington has always supported the Southern Gas Corridor project, which contributes to the energy security of Europe. Last but not least, if Washington wants to strengthen its position in both the South Caucasus and Central Asia, it must act quickly and adopt a more pragmatic foreign policy to decrease Russian influence in the region.
Shahmar Hajiyev is a leading advisor in the Center of Analysis of International Relations, (AIR Center), in Baku, Azerbaijan.