Contrast in the Caucasus

October 7, 2013 Topic: Global Governance Region: ArmeniaRussiaAzerbaijanSouth Caucasus

Contrast in the Caucasus

Armenia and Azerbaijan have taken very different paths. So why does Washington lump them together?


Two of the countries in the South Caucasus that emerged from Soviet rule more than twenty years ago have taken very different paths, their individual relationships with Moscow diverging ever since independence. Armenia has become ever closer to Russia while Azerbaijan has grown into a staunch ally of the United States and the broader West. Why, then, does the United States continue to lump Armenia and Azerbaijan together when their strategic importance to Washington is completely imbalanced?

Soldiers from Muslim-majority Azerbaijan have contributed to U.S. missions in Kosovo, Afghanistan and Iraq. Azerbaijan has played a major part in the so-called Northern Distribution Network of supply routes to and from Afghanistan. Azerbaijan is the linchpin in achieving European energy security, a key U.S. foreign policy goal under Republican and Democratic administrations since George H. W. Bush. Its state energy company is building a series of pipelines—longer than Keystone XL—from the Caspian to Italy and thenceforth to Central Europe.


Due to its location just to the north of Iran, Azerbaijan is an important partner for information collection and will prove indispensable should conflict break out. It already has a close security relationship with Israel that includes the joint manufacture of drones. Armenia, by contrast, has close international relationships with only two countries: Russia and Iran.

In U.S. minds, however, Armenia and Azerbaijan are linked especially because of the ongoing conflict over Nagorno-Karabakh, internationally recognized Azerbaijani territory that has been in Armenia’s hands since the end of the Cold War. Lobbyists for the Armenian side have powerful friends in Congress. But that conflict should not tie together U.S. policy toward the two countries.

Two recent developments underscore the strategic implications of the contrast: in mid-August, Russian president Vladimir Putin paid a respectful visit to Azerbaijan, and in early September, Armenia decided to join Russia’s neo-Soviet Customs Union. For U.S. policy, it is important not just to understand the differences, but to predicate relationships and actions on this regional reality. To treat Azerbaijan and Armenia equally would be to akin to keeping one’s head in the sand.

Putin is rarely dutiful on his visits to former Soviet states. In front of cameras, he follows protocol, but once off-camera, he has been known to change his tune.

On his recent trip to the Azerbaijani capital Baku, however, Putin was notably deferential to President Ilham Aliyev, both publicly and privately. This seems like a sign of respect for Azerbaijan’s growing status in the region and the world. Usually, a visit by Putin sends a strong enough message from Moscow, but in Azerbaijan, the Russian president felt the need to show that Russia was interested in closer relations with the energy-rich Caspian country. Putin’s right hand man, Igor Sechin, chairman of state-controlled oil company Rosneft, made an advance visit to Baku. Six cabinet members accompanied Putin, as did some of Russia’s top CEOs. He also felt as if he had to flex Moscow’s muscle: Russian warships sailed into Baku’s port as the president visited.

Despite all this effort, he left empty handed.

This year, Azerbaijan ousted Russian military technicians from a radar facility. Earlier, it canceled oil exports through Russian territory. Presidential elections are coming up in Azerbaijan, in which Russian-funded opposition candidates might challenge President Aliyev. Yet, Putin was not able to sign a detailed gas-export agreement with Azerbaijan’s state energy company—reportedly what he wanted—going home only with a vague promise to work together (less than he got from Washington over Syria by the way). It was an ignominious showing for a Russian leader who puts a lot of store into appearing strong and always in control, especially in the post-Soviet space.

One of the main vehicles Putin uses to exhibit this strength is Russia’s Customs Union, which according to him, will eventually coalesce into a “Eurasian Union,” supposedly similar to the EU but menacingly reminiscent of the USSR. However, the Customs Union’s restrictive tariffs, favoring trade with Russia, have caused widespread skepticism among Russia’s neighbors about the enterprise. Azerbaijan, for example, has made it clear that it will not be joining. Ukraine’s normally pro-Russian government is actively fighting off Russian entreaties. Even poverty-stricken weak states like Kyrgyzstan and Tajikistan have had to be bullied by Moscow into moving toward membership.

It is notable then that on Sept. 3, Armenia rushed into joining the Customs Union, not only reversing Armenian president Sarkisian’s soft-pedaling of the issue, but shunting aside Armenia’s discussions with the EU about association and free-trade agreements. By running into the embrace of Moscow, Armenia has effectively signaled to Western institutions that it is no longer interested in reforms or European integration. The country’s economy is entirely dependent on remittances, mostly from diaspora Armenians in Russia. Kremlin-linked companies control the vast majority of the rest of the economy, including crucial energy-distribution infrastructure. Armenia’s government owes crippling debts to Moscow, and the former colonial power maintains a three-thousand-person military base in Gyumri, Armenia’s second largest city. Most ominously, Moscow is treaty-bound to defend Armenia should major conflict erupt again with Azerbaijan over Nagorno-Karabakh.

In reaction to Armenia’s choice of Russia’s Customs Union over the EU’s free trade agreement, European Enlargement Commissioner Stefan Fuele said that Armenia’s further Western integration would be “difficult to imagine.” This is the unfortunate reality of Armenian decision-making, and it should be reflected in U.S. policy that advocates for greater European integration, including with its South Caucasus neighbors.

It would be ideal to engage the South Caucasus region as a whole, to approach the small states of Azerbaijan and Armenia both as strategic partners in a difficult neighborhood and move toward conflict settlement between them. But, the reality is that Azerbaijan has staked out its sovereignty—with the help of oil and gas wealth—whereas Armenia has largely abrogated its independent policy making. This is not to say that Washington should not engage Armenia—a strong relationship with Yerevan would be most welcome given the circumstances. But, it does call for a recalibration of policy to work more closely with Azerbaijan, which would result in strategic dividends for both the United States and Azerbaijan.

Alexandros Petersen is the author of The World Island: Eurasian Geopolitics and the Fate of the West.