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7 December 2015

The Caucasus: imperial realpolitik or historic retreat?

The Russian policy in the South Caucasus in an era of wars in Syria and Ukraine

Actions undertaken by Russia in Ukraine since February 2014 and in Syria since September 2015 have diverted attention from its foreign policy in the South Caucasus. And it is precisely here that Moscow has expertly implemented its entire arsenal of tools within a short historical period: from various forms of cooperation and its official role as peace-keeper in local conflicts to the waging of war, occupation and establishment of unrecognized republics. However, a new stage of developments could be observed in Russian policy in this region when Moscow reached the line between contracted dependence of Abkhazia and South Ossetia and their annexation, and started to ‘make advances’ towards Azerbaijan in 2015. And this Kremlin realpolitik, despite all its Jesuitism, is in fact indicative of its further historic retreat from the region.

A short leash for the Kremlin vassals

The lack of a fully-fledged political and economic agenda has been Russia’s main problem in the South Caucasus since 2008. It is due to the fact that its role of broker in regional frozen conflicts was largely neutralized by the issue of the recognition of Abkhazia and South Ossetia as independent states. By and large, we are witnessing the game of the imperial legacy fraught only with renewed deadlock.

Thus, Russia aimed to ensure international recognition of the independence of these two territories. It is true that it proved to be uninterested in (and incapable of) helping them build viable economies, without which the sought after independence is unthinkable. In fact, Moscow has come to signing agreements on alliances with Abkhazia and South Ossetia, which, alongside the hypertrophied role of the Russian army in the life of both unrecognized republics, makes them internal Russian issues to a large extent.

At the same time, from the point of view of neighbors and the rest of the world, Russia continues to operate on the territory of Georgia. Thus, a political dissonance between the Kremlin and other players exacerbates; and this dissonance is essentially insoluble in the existing international system. Moreover, it is highly probable that Russia is no longer interested in wide international recognition of Abkhazia and South Ossetia, since such recognition would begin to erode their total dependence on Moscow.

Russia is also pursuing a policy of maximum possible political dependence with Armenia. Let us recall the country’s participation in the formation of the Collective Rapid Response Force within the framework of the Collective Security Treaty Organization (2009), an extension of an agreement on the Russian military base on its territory until mid-century (2010) and its membership in the Russian integration projects: the Customs Union (2014) and the Eurasian Economic Union (2015).

The paradox lies in the fact that this faux military and economic union which is in fact the preservation of political vassalage of the Armenian elite, has no serious benefit for Moscow in terms of foreign policy. It can only be capitalized within Russia as such, and its relations with Azerbaijan over the issue of Nagorno-Karabakh. The latter is possible only within relatively narrow confines, since Russia is not seriously interested in its final settlement and all possible options here in fact lead to nowhere.

As a result, Moscow’s relations with its three closest allies in the region, of which only Armenia is a state in the conventional sense, are characterized by political inertia which can be overcome only with serious change in Russia itself and when it ceases acting as a metropolis

Dispelling imperial illusions

In order to understand the real situation with Russia in the South Caucasus, one should stop assessing it only from the point of view of military presence and pay attention to trade. It is trade, and not the number of bayonets, which reflects the long-term processes which inevitably affect the political landscape.

It is clear that Baku is Moscow’s key trade partner in the region: their turnover totalled $1.96 billion in 2014. This is comparable with the figures for 2008-2010 ($1.93 billion, $1.82 billion and $1.92 billion, respectively); although it is much less than from 2011-2013 ($2.83 billion, $2.34 billion and $2.58 billion, respectively). However, for Azerbaijan, Russia is an important partner but, by far, not the main partner. Azerbaijan’s key partners are Italy (over $5 billion) and Germany ($2.63 billion). The position of Russia is comparable to that of Indonesia (over $2 billion), Israel ($1.79 billion), Turkey ($1.79 billion) and France ($1.76 billion). Obviously, levels of trade with these countries are symptomatic of growth or decline year on year, but it is telling that Russia lost its position as Azerbaijan’s main trade partner post 2008, entirely logical given the unpredictability of the neighbor.

For Georgia, Russia is the third largest trading partner in terms of turnover (nearly $ 853 million) as of 2014, trailing Turkey ($1.96 billion) and Azerbaijan ($1.18 billion). It accounts for less than a quarter of Georgia’s trade with CIS countries ($3.59 billion). At the same time, Russia is closely followed by China ($823 million) but, due to widely reported events, Ukraine is lagging behind ($686 million). For comparison, the total trade turnover between Georgia and EU countries is just shy of $3 billion.

Armenia stands apart in this regard: Russia continues to be its main partner and accounts for nearly a quarter of all foreign trade: $1.4 billion in 2014 of roughly $6 billion.

Moscow should not place too much hope on trade links with Iran, either. Russian-Iranian trade slumped to almost a third between 2011 and 2013: from $3.4 billion to $1.17 billion, and has increased only slightly since. At the same time, two thirds of Russian exports to Iran comprise grain and ferrous metals whereas fruit and nuts make up a large part of the imports from this country. Even the tactical alliance between Moscow and Tehran in the Syrian war will not change anything in this regard in the long run. The main destinations for Iranian exports are China, Iraq, the United Arab Emirates (UAE), India and Afghanistan. The main countries in terms of value of imports are China, the UAE, South Korea and Turkey.

It should be stated here that Russia’s access to transport routes of the South Caucasus has also been curtailed. Due to the aggravation of the problem of Abkhazia and South Ossetia, Moscow has Georgian Military Road, the only road to Georgia, as well as road and rail routes to Azerbaijan. Speaking of Russian ports in the Caspian Sea, their total turnover of goods including trade with Central Asia is 10 million tons; the same capacity as the new Azerbaijani port in Aliat, launched in 2014.

In other words, the objective state of trade in the South Caucasus contradicts Russian claims to its ‘special interests’ in the region, especially as all empires began as economic enterprises and ended with bankruptcy of these enterprises.

Possible scenarios

Taking into account all of the above, one can attempt to formulate three possible scenarios for Russia’s policy in the region of the South Caucasus in the coming years:

  1. A conservative scenario: Moscow will try to maintain the current status quo in the region, try to buy the loyalty of the local elite, and create obstacles for the republics, should they continue to expand their relations in foreign policy and foreign trade without Russia’s intermediation. This is the most likely scenario - especially if no new ‘irritants’ for the Kremlin emerge. However, in the absence of a constructive agenda, its role in the region will gradually diminish.
  2. A radical reaction scenario: Russia’s growing political unease could lead to radical steps in the region including military action, especially if the situation in other areas of foreign policy is deemed unsatisfactory. The likelihood of this scenario is much lower than that of conservative scenario. However, one should not rule it out: a conservative scenario may develop into a radical one with painful consequences for all.
  3. A scenario of economic pragmatism: Due to the growing political and economic costs of its traditional approach in foreign policy and/or internal political changes, Russia can make the interests of its businesses in the region a top priority. If a wise approach is adopted, it can also rely on the economic potential of Azerbaijani, Georgian and Armenian diasporas. It is important that current processes in the region do not contradict Russian economic interests. However, for obvious reasons, this scenario is the least likely.

Ultimately, Russia’s further historic retreat in the South Caucasus seems inevitable – Russia will have to give up on its desire for political dominance and its exceptional role in the region, which will benefit all local players, including Russia itself. 

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