Baku Dialoguesbaku Dialogues Policy Perspectives on the Silk Road Region

BAKU DIALOGUESBAKU DIALOGUES POLICY PERSPECTIVES ON THE SILK ROAD REGION

Vol. 4 | No. 3 | Spring 2021

The Second Karabakh War: Further Reflections Seeing Beyond Victory Laurence Broers From Struggle to Permanent Failure Azer Babayev

Energy and the Silk Road Region: Geostrategic Considerations Hydrocarbon Energy Complexes SGC’s Strategic Benefits Robert M. Cutler Vitaly Baylarbayov Oil Pipelines in the Silk Road Region SGC and the Geopolitics of Climate Change Rodrigo Labardini Morena Skalamera Beijing’s Long Road to the Gulf Region Fuad Shahbazov

The Ties That Bind: The South Caucasus and its Immediate Neighborhood Trilateral Cooperation Between Azerbaijan, Turkey, and Georgia Richard Weitz Ukraine’s Strategic Relations with the South Caucasus Taras Kuzio

Investment Attractiveness Along the Silk Road Development or Regression? Stanislas Pritchin

1 Vol. 4 | No. 3 | Spring 2021

ISSN Print: 2709-1848 ISSN Online: 2709-1856 BAKU DIALOGUES BAKU DIALOGUESBAKU DIALOGUES POLICY PERSPECTIVES ON THE SILK ROAD REGION

Vol. 4 | No. 3 | Spring 2021

The Second Karabakh War: Further Reflections Seeing Beyond Victory Laurence Broers From Struggle to Permanent Failure Azer Babayev

Investment Attractiveness Along the Silk Road Development or Regression? Stanislas Pritchin

Vol. 4 | No. 3 | Spring 2021 2 3 Vol. 4 | No. 3 | Spring 2021 BAKU DIALOGUES BAKU DIALOGUESBAKU DIALOGUES POLICY PERSPECTIVES ON THE SILK ROAD REGION bakudialogues.ada.edu.az

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Baku Dialogues is an independent policy journal. The content of each issue of the journal (e.g. essays, interviews, profiles, etc.) thus does not represent any institutional viewpoint. The analyses provided and viewpoints expressed by the authors featured in Baku Dialogues do not necessarily reflect those of its publisher, editors, consultants, Editorial Advisory Council members, and anyone else affiliated with ADA University orBaku Dialogues. Our sole acceptance of Vol. 4 | No. 3 | Spring 2021 4 responsibility is the provision of a forum dedicated5 to intellectual discussionVol. 4 | No.and debate.3 | Spring 2021 BAKU DIALOGUES Table of ContentsBAKU DIALOGUES Vol. 4 | No. 3 | Spring 2021

8 Seeing Beyond Victory Laurence Broers

26 From Struggle to Permanent Failure Azer Babayev

38 Hydrocarbon Energy Complexes Robert M. Cutler

58 The Strategic Benefits of the Southern Gas Corridor Vitaly Baylarbayov

70 The Southern Gas Corridor and the New Geopolitics of Climate Change Morena Skalamera

86 Oil Pipelines in the Silk Road Region Rodrigo Labardini

108 Beijing’s Long Way to the Gulf Region Fuad Shahbazov

124 Trilateral Cooperation Between Azerbaijan, Turkey, and Georgia Richard Weitz

138 Ukraine’s Strategic Relations with the South Caucasus Taras Kuzio

154 Development or Regression? Stanislas Pritchin

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normalization initiative that Restoration of sovereignty over Seeing Beyond Victory took place in 2008-2009. Nev- de-occupied areas translates into the ertheless, while the Armenian- personal liberations of hundreds of Azerbaijani conflict is now seen by thousands of Azerbaijanis displaced Azerbaijan’s Pathways After the many in Azerbaijan as resolved, it from those territories in 1992-1993. has in fact been repackaged and The fate of this population has been Second Karabakh War embedded in a new, highly com- a continual concern in Azerbaijan, plex, and unpredictable web of with fears that the construction of linkages. new settlements would lead to a de Laurence Broers facto integration of these communities and, by implication, acceptance n the aftermath of the Second relations between Moscow and Three Liberations of forced displacement. Although Karabakh War, Azerbaijan Ankara in the era of Recep Tayyip the challenges of rehabilitating stands at a critical moment Erdogan and Vladimir Putin. his is not to under- and reconstructing the de-occu- inI its history. The war has re- The conflict is now one link in a Testimate the signifi- pied territories are formidable, the solved many of the issues driving string of conflict theatres where cance of the war’s outcomes in prospect of return is now an attain- Azerbaijani grievances over the last Russia and Turkey are involved, Azerbaijan. Victory in the Second able goal. A strategy for the “great three decades. Yet it leaves others and across which Moscow and Karabakh War can be read in return” has already been published, both unresolved and entangled Ankara may negotiate trade-offs terms of three liberations for and working groups are elaborating within a new regional configura- that have little to do with the in- Azerbaijan. The first of these is its operationalization. tion that more than ever hinges on terests of local parties. To be sure, territorial. Through the military the interactions of external great Azerbaijan’s closeness to Turkey advance along the southern flank The third liberation is affective: powers and the fractured local assuages concerns over Russian in- in October and November 2020, emancipation from the humiliation politics of the South Caucasus. fluence for now. And the strategic, and then in accordance with of a devastating military defeat in rather than tactical, outlook on the terms of the 1994. No other con- The regionalization of the Azerbaijani-Turkish partnership November 2020 flict in the former Armenian-Azerbaijani conflict— means that few in Azerbaijan be- Russian-Armenian- Victory in the Second Soviet Union fea- meaning its transition to a lieve that Turkey would ever engage Azerbaijani Karabakh War can be tured such drastic Russian-Turkish condominium— in trade-offs that cross Azerbaijani trilateral declara- read in terms of three lib- overspill beyond ultimately links the conflict to the red lines. This belief is reflected tion, Azerbaijan erations for Azerbaijan. the territory origi- vagaries of what Pavel Baev and in the experience of the Turkish- restored control nally disputed. An Kemal Kirişci call the “serpentine” Armenian “football diplomacy” over all of the equivalent scenario seven districts occupied by in Georgia, for instance, would Laurence Broers is the South Caucasus Programme Director at the London-based Armenian forces in 1992- have seen a swathe of western peacebuilding organization Conciliation Resources, Associate Fellow in the Russia 1993, with the exception of a Georgia at least as big again as and Eurasia Programme at Chatham House, co-founder and co-editor-in-chief of narrow corridor connecting Abkhazia itself occupied and its the journal Caucasus Survey, the author of Armenia and Azerbaijan: Anatomy of a Nagorno-Karabakh and Armenia. population driven out. Further- Rivalry (2019), and co-editor of The Routledge Handbook of the Caucasus (2020) and Armenia’s Velvet Revolution: Authoritarian Decline and Civil Resistance in a Azerbaijan thereby all but restored more, as American journalist Multipolar World (2020). its territorial integrity. Thomas Goltz documents in his

Vol. 4 | No. 3 | Spring 2021 8 9 Vol. 4 | No. 3 | Spring 2021 BAKU DIALOGUES BAKU DIALOGUES famous memoir Azerbaijan Diary in the Minsk Process mediated by battleships in battle. The paradigm which we are only starting to un- (1998), Azerbaijan’s defeat derived the Organization of Security and had changed, and like the prover- derstand now. as much from internal divisions Co-operation in Europe (OSCE). bial generals anticipating yester- and political turmoil in Baku that International lip-service to the res- day’s war, Japan had prepared for rmenia was also, in its own resulted in a disorganized war ef- toration of Azerbaijan’s territorial the wrong battle. Away, overwhelmed by vic- fort and the loss of several regions integrity has been exposed for what tory in 1994. For a nation with a without a fight. it was, and Azerbaijan has achieved Great Britain emerged twice vic- long history of military defeats, the its goals its own way. torious in the world wars of the outcome of the First Karabakh War pparent international in- twentieth century. Yet as Irish jour- was a stunning reversal. Through Adifference to Azerbaijan’s nalist Fintan O’Toole argues in his the trope of “victory for the vic- tragedy added insult to injury. The Limits of Victory book Heroic Failure (2018), the tims,” that outcome was suffused Other conflicts consistently United Kingdom was alone among with a sense of historical justice overshadowed the Armenian- ictory is of course intoxi- the winning parties of World War that became very difficult to inter- Azerbaijani conflict, whether in Vcating. Yet many—if cer- II in failing to find a new pur- rogate internally. Over time, attach- the Balkans and Chechnya in the tainly not all—victories contain pose or mission in the decades ments grew to the wider territorial 1990s, South Ossetia/Georgia in within themselves the seeds of fu- that followed. British identity re- identity of what I call “augmented 2008, Ukraine and Syria in the ture defeats, whether on or off the mained attached to the “spirit of Armenia”—encompassing the 2010s. Unlike these confrontations, battlefield. In 1905 Japan scored a 1940” that merged over time with Republic of Armenia, Nagorno- the Armenian-Azerbaijani conflict stunning victory over Russia. In a imperial nostalgia into a sense of Karabakh, and the surrounding never sustained prolonged inter- set-piece sea battle at Tsushima in especially English exceptionalism. occupied territories. The latter national attention. American and May of that year, a Japanese fleet To this day, wartime tropes and were increasingly referred to by European attention to the conflict under Admiral Togo destroyed memes are embarrassingly trotted Armenians as “liberated territories” has declined over time, amid the a Russian expeditionary force, out in the tabloid press every time in an escalating scale of perceived sense of fatigue palpable in U.S. sinking eight battleships in two England plays territorial own- Secretary of State John Kerry’s days. Over the following four de- Germany in inter- ership. Armenia comments, made at the Atlantic cades, Japan’s naval doctrine cen- national football, Victories easily become was increasingly and Aspen Institute in September tered on preparation for another while the slogan fixed in the stories that dragged into a 2016 just five months after April’s set-piece confrontation, leading “Keep Calm and strategically un- Four-Day War that killed more than the country to construct the largest Carry On,” accom- nations tell about them- winnable project 200: “you can’t quite see [a way for- ever capital ships in the history of panied by World selves, but the conditions of territorial ag- ward] right now because the leaders naval warfare: the super-battleships War II symbols that brought them into grandizement in [of Armenia and Azerbaijan] aren’t Yamato and Musashi. Yet despite and artwork, is being do not always last. a context where ready, because the tensions aren’t the fact that they outgunned any a staple meme in Azerbaijan had re- there.” possible rival, Yamato and Musashi popular culture. sources to re-equip never fought their Tsushima. This sense of exceptionalism, cat- and re-arm. These dynamics pro- For many in Azerbaijan, there is Like the vast majority of ships in alyzed by a multitude of other in- vided the backdrop for the Second now a sense that strategic patience the Imperial Japanese Navy, they fluences, led eventually to Brex- Karabakh War, in which Turkish has been vindicated over the diplo- were sunk by American air power it—a major strategic setback for support converted Azerbaijani matic concessions expected of Baku having never once engaged enemy the United Kingdom, the price of preponderance into dominance,

Vol. 4 | No. 3 | Spring 2021 10 11 Vol. 4 | No. 3 | Spring 2021 BAKU DIALOGUES BAKU DIALOGUES leading to what was for Armenia a This is evident first in the Azerbaijani communities into their populated by sparse, economically devastating military defeat in 2020. November 2020 trilateral decla- closest proximity for decades. In dependent, and still mutually hos- ration that brought the war to a the former Nagorno-Karabakh tile communities. There is nothing inevitable close. This document is in many oblast, returnees to Shusha (known about such processes and this is ways a strange hybrid between the as Shushi to Armenians) will over- or vibrant and secure com- not to forecast a one-way trajec- minimalism of a ceasefire agree- look the territory’s capital Stepa- Fmunities of Azerbaijani re- tory to future mil- ment and the ex- nakert (known as Khankendi to turnees in Nagorno-Karabakh and itary setbacks for pansive vision of Azerbaijanis), and control the lat- the de-occupied territories—and Azerbaijan. It is, The November 2020 tri- a comprehensive ter’s former water supply. Some of for transit corridors to become real rather, to high- lateral declaration is in peace settlement. the de-occupied territories, such as vehicles of regional development light that victories It sets out a highly Kelbajar and Lachin, are remote, beyond “safe passage” through easily become fixed many ways a strange ambitious agenda being hemmed in by mountain “enemy territory”—the optimal in the stories that hybrid between the min- for opening up the ranges and surrounded on several scenario is a transformation in nations tell about imalism of a ceasefire closed borders, sides by Armenian-populated ter- Armenian-Azerbaijani relations themselves, but agreement and the expan- blockades, and the ritories in the Republic of Armenia also providing for vibrant and the conditions that sive vision of a compre- contorted, work- and in Nagorno-Karabakh, and by secure Armenian communities. brought them into around transit the Lachin corridor. The extent to which such a trans- being do not al- hensive peace settlement. routes of the formation is seen as necessary in ways last. Even as post-Soviet South These geographies impose the Azerbaijan is moot (and this author the euphoria of victory continues, Caucasus. Most significantly for question of whether rehabilitation, has not had the opportunity to visit it is prudent for any winning party Azerbaijan, the declaration man- reconstruction, and return are to the country since the onset of the to ask itself whether there are risks dates the construction of a new assume the continued segregation global pandemic). Yet as the long of becoming too comfortable with a transit route connecting western of communities, or their gradual history of Armenian-Azerbaijani victor’s identity. Azerbaijan with its Nakhchivan integration via security dilemmas exclave and by extension Turkey, common infra- shows, for com- across Armenia’s southernmost re- structure, markets, The return of displaced munities in close Segregation, Interaction, gion of Syunik (known as Zangezur and institutions. communities to the areas proximity to one and Interests to Azerbaijanis). This transit cor- Segregation can, restored to Azerbaijani another real se- ridor has potentially far-reaching of course, be built jurisdiction will bring curity can only be zerbaijan’s horizons fol- consequences as a second east-west into infrastructure, Armenian and Azerbai- shared. There is an lowing its late 2020 victory A corridor that would reconfigure as the elaborate jani communities into opportunity now are in some ways very distinct from Armenia as a transit state critical design of sole-use to craft an integra- those of Armenia in 1994. Whereas to the successful functioning of the installations on their closest proximity for tive peace weaving Armenia’s outlook in 1994 accepted corridor. the West Bank decades. the defeated party the long-distance segregation of shows. However, into a new regional Armenian and Azerbaijani com- he return of displaced com- the risk is that 10 or 20 years from infrastructure, meeting sufficient munities as a condition of secu- Tmunities to the areas re- now, what we may see in south- needs to remove a future basis for rity, Azerbaijan’s outlook in 2021 stored to Azerbaijani jurisdic- west Azerbaijan is a heavily secu- the contestation of that structure— presumes their interaction. tion will bring Armenian and ritized and segregated periphery, thereby safeguarding the future of

Vol. 4 | No. 3 | Spring 2021 12 13 Vol. 4 | No. 3 | Spring 2021 BAKU DIALOGUES BAKU DIALOGUES another generation memories of vi- that Azerbaijan claims as its own in this relationship that ultimately of Armenians and If it may be too early olence and death citizens. After the late-1990s, account for the turn of events of Azerbaijanis from to speak of conciliatory too resilient. Yet Azerbaijan largely eschewed dia- the last three decades, and which yet another devas- gestures, there are three if it may be too logue with Karabakh Armenians now provide the framework within tating war. moves that Azerbaijan early to speak of for fear of tacit recognition of their which it is possible for a substantial conciliatory ges- self-determination claim. The only Russian peacekeeping operation to The alternatives can make now that can tures, there are kind of dialogue admissible from be fielded in Azerbaijan. And the would appear to contribute at least to three moves that Baku’s perspective was that between more problematic—indeed, con- range from a kind more nuanced relations Azerbaijan can Karabakh Armenians and the Kara- flictual—that this relationship is, of hard peace, im- that will ultimately also make now that can bakh Azerbaijani population dis- the easier it will be to justify the con- plying a lowest serve its interests better. contribute at least placed from Nagorno-Karabakh in tinued presence of peacekeepers. common denom- to more nuanced 1992. This format, in turn, was re- inator of transac- relations that will jected by Karabakh Armenians as a It is now more than ever in tional interactions across the nar- ultimately also serve its interests negation of their self-determination Azerbaijan’s interest to craft a rowest possible spectrum of issues, better. claim and electoral majority. This distinct relationship with the and a punitive peace, involving the impasse continued for years. Armenians of Nagorno-Karabakh. kind of long-term humiliation that irst, differentiated relations Baku now has the opportunity to Azerbaijan itself had to endure for Fwith distinct Armenian com- The context for this relationship do this without the fear of tacit rec- more than a quarter of a century. munities. Conflict discourses tend has now changed immeasurably. A ognition. The challenges are formi- Yet when the interests and needs of to totalize the adversary. Antag- key outcome of the 2020 war from dable—not least that the Karabakh the future generations that will live onistic rhetoric sets up hard self/ Azerbaijan’s perspective is that the Armenian wartime leadership have with the legacies of this moment are other dichotomies, diminishing status of Nagorno-Karabakh has been charged in Azerbaijan in con- considered, surely neither of these difference both within and across been taken off the agenda—under- nection with war crimes, notably scenarios can be seen as optimal. the conflict divide. A first move pinning rhetoric to the effect that the missile strikes on Ganja and Surely, what we ultimately wish for that Azerbaijani can make is to shift the conflict is over. It is difficult at Barda that claimed the lives of is Armenian and Azerbaijani cit- from a mythologized view of Ar- present to envisage when or under dozens of Azerbaijani civilians. Yet izens who not only transact, but menians as a monolithic “enemy” what conditions it is crucial to dif- who trust one another. to differentiated perspectives on the relationship ferentiate between a variety of real-world Armenian between Karabakh It is now more than leadership and communities: the Armenians of Armenians and the ever in Azerbaijan’s in- populace, between Transforming the Nagorno-Karabakh, the Republic of Azerbaijani state— terest to craft a distinct a political project Relationship Armenia, and the Armenian diaspora. however we frame relationship with the in secessionist Each of these communities presents it—will again be- state-making, and o one expects an over- a different set of challenges—and come a subject Armenians of Nagorno- a human commu- Nnight transformation of the interests—for Azerbaijani policy. of dialogue, yet it Karabakh. Baku now has nity with fears, Armenian-Azerbaijani relation- remains the core the opportunity to do this needs, and griev- ship. Across the divide, the losses It is ironic that the least devel- underlying issue without the fear of tacit ances, radicalized are too great, the wounds too oped of these relationships is with that is in conten- recognition. by the recent ex- fresh, and identities shaped by the that community of Armenians tion. It is problems perience of war

Vol. 4 | No. 3 | Spring 2021 14 15 Vol. 4 | No. 3 | Spring 2021 BAKU DIALOGUES BAKU DIALOGUES and its own forced displacement. “geostrategic curse”: the capacity Azerbaijan want to deal with a re- localized bouts of violence, yet Submerging this population within to live off the rents provided by ex- vanchist Armenia committed to India and China have a multi- a wider, singular narrative of hos- ternal actors due to location and renewed military competition, or faceted relationship in which these tile Armenians—or isolating it so geostrategic importance in the to facilitate a transition to a dif- issues do not preclude mutually that it has no choice but to depend wider foreign policy goals of great ferent kind of bilateral relation- beneficial cooperation on other ison outside actors—does not ulti- powers. In Pakistan’s case, the geo- ship? Clearly, a totalized rivalry sues. Even India and Pakistan trade mately serve the goal of transforming strategic curse generated rents for a heightening insecurity will fuel and work together to manage nat- a relationship that has troubled military elite, underpinning their the arguments of those advocating ural resources. Azerbaijan for more than a cen- domestic political dominance and the pathway of building a “gar- tury. And in the new situation, Pakistan’s identity as a “warrior rison state” in Armenia. Weaving t the third layer, the the isolation of the Armenians of state.” Armenia into a new regional eco- AArmenian diaspora is of Nagorno-Karabakh under conditions nomic structure generating devel- course not one community but where Armenia’s capacities are radi- Armenia does not depict itself opment, opportunity, and inter- many, each with its own specific cally weakened will by default advance as a warrior state, yet particularly dependencies for all will weaken experience. In the Azerbaijani their reliance on Russia. with regard to the borrowing of those arguments. imagination, the Armenian dias- Russian power there are aspects pora has played t is with the Republic of to the resourcing of a long-term Consider India’s a very significant IArmenia that the conflict has rivalry that resemble the geostra- other major ri- What kind of Arme- role in facilitating played out over the last quar- tegic curse. In the aftermath of the valry—namely, the nia does Baku want to secessionism in ter-century. Decisively defeated Second Karabakh War, Armenian one with China. see? Through its actions, Nagorno- in the Second Karabakh War, society is debating what lessons it Despite the fact Karabakh—by Armenia’s doctrines of deterrence, is most appropriate to draw from that the two coun- what kind of influence both supporting it strategic depth, and military self- the defeat. One side in this debate tries fought a brief can Baku exercise now with material re- reliance in Nagorno-Karabakh have concludes that Armenia should be- war in 1962, con- over the internal debate sources and pro- been routed and the country’s mil- come a “garrison state,” privileging tinue to contest in Armenia in ways that moting it through itary capacity devastated. As of this the allocation of resources to a new more than 135,000 best serve Azerbaijani a diasporic nation- moment it is difficult to imagine domestic military-industrial com- square kilome- interests? Does Azerbai- alism that is seen how Armenia might ever challenge plex capable of producing advanced ters in three dif- in Azerbaijani de- Azerbaijan again. Yet it is worth weaponry. This would presumably ferent locations, jan want to deal with a bates as alien to the noting the experience of another entail substantial external support. and compete for revanchist Armenia com- South Caucasus. notorious and asymmetric rivalry. control over nat- mitted to renewed mil- In Azerbaijani per- Despite successive defeats in actual This debate raises critical ques- ural resources, itary competition, or to spectives, diasporic wars, including a crushing defeat tions for Azerbaijan. What kind trade between facilitate a transition to a Armenian nation- in 1971 that led to the loss of East of Armenia does Baku want to them has grown alism is also seen Pakistan (now Bangladesh), see? Through its actions, what steadily since the different kind of bilateral as the most chal- Pakistan has sustained its rivalry kind of influence can Baku -exer 1990s to the point relationship? lenging variety of with India. Scholar T.V. Paul has cise now over the internal debate where China is Armenian identity, indeed identified Pakistan as suf- in Armenia in ways that best serve India’s leading trading partner. Their since it is not structured by material fering from what he terms the Azerbaijani interests? Does rivalry persists with regular but interests in the South Caucasus or

Vol. 4 | No. 3 | Spring 2021 16 17 Vol. 4 | No. 3 | Spring 2021 BAKU DIALOGUES BAKU DIALOGUES the pragmatics of prospective every contested issues in one of these or otherwise) or Jewish; or ethnic rade. Opposition politician Ilgar day encounters. Instead it is seen, relationships spilling over into Azerbaijani, Talysh, or Russian. Mammadov also proposed the idea in Benedict Anderson’s famous for- the others. It goes without saying that Armenia might cede Syunik to mulation, as a “long-distance na- that a more critical and differenti- Since the mid-2000s, however, Azerbaijan by way of reparations. tionalism” to be neutralized rather ated view of “the other” is needed Azerbaijanism has increasingly Instability in defining an Armenian- than engaged with. Competitive across the divide. The sublimation co-existed alongside another geo- Azerbaijani border has become an dynamics in the communal re- by Armenians of Azerbaijanis and political tradition that I call “wide aspect of political rhetoric. Political lations between Armenians and Turks, and also of various Azer- Azerbaijanism.” This tradition ar- elites, of course, perform speech Azerbaijanis in various diaspora baijani stakeholder communities— ticulates a lateral widening of the acts according to occasion, audi- theatres reached new lows in 2020 such as refugees from Armenia space identified as “Azerbaijan” to ence, and interests. Yet “wide Azer- with clashes, vandalism, and street and Karabakh Azerbaijanis—into a the west and argues that Armenia baijanism” as a theory of the recent violence in both July and October- single overarching and antagonistic is actually a recent and artificial arrival of Armenians in the South November 2020. This amplifica- identity category of “the Turk” construct on what had previously Caucasus is also taught in schools, tion of local struggles in the South represents a similarly problematic been Azerbaijani lands. Visible in narrated in museums, and subtly Caucasus into a globalized rivalry— identity practice. cartography, historical textbooks, visualized in maps. It has become implicating all Armenians and and some touristic products, this part of the nation-building process, Azerbaijanis wherever they live in a econd, constructing Azer- tradition also made its way into and as such may not be straight-for- hardened identity politics—serves Sbaijani identity in ways that the speeches of political elites, who ward to control. the interests of neither nation-state. mitigate, not aggravate, conflict. have evoked historical geographies While such horizons may seem be- Azerbaijan can, entirely unilaterally, to suggest that areas in the east and “Wide Azerbaijanism” is both a yond the scope of what is possible project a vision of itself that is com- south of the Republic of Armenia product of the conflict and a feed- at present, there are other exam- patible with the plans afoot for re- in particular can be identified as back loop reinforcing the con- ples from across the world where gional development and, over time, Azerbaijani. flict dynamic. It reflects back to diasporas have contributed towards transformed Armenian-Azerbaijani Armenians their own geopo- reducing such trends, for example relations. Azerbaijan prides itself It is important to acknowledge litical vision of an “augmented through economic investment in on its inclusive civic nationalism. that claims on the territory of the Armenia” comprising the Republic of inclusive and sustainable develop- Azerbaijanism (Azərbaycançılıq) is Republic of Armenia are not part of Armenia, Nagorno-Karabakh, and ment initiatives or through the ini- the state’s formal identity doctrine. any formal doctrine or state strategy. the surrounding occupied terri- tiation of “post-national” debates It is an idea focused on the territory President Ilham Aliyev’s foreign tories. “Augmented Armenia” was seeking to de-construct the hard of the republic, thereby differen- policy advisor, Hikmet Hajiyev, never formalized as a doctrine of identity politics fueling conflict. tiating an Azerbaijani nation-state has recently spoken of the need for Armenian statehood, yet it was space from the wider Azerbaijani Armenia and Azerbaijan to re- tolerated and encouraged both In short, differentiating among ethno-space that reaches deep establish relations “within their symbolically in cartography and Armenian communities is critical into Iran. As an idea focused on sovereign borders.” Yet Presi- popular culture and structurally to a more nuanced appreciation territory, Azerbaijanism frames dent Aliyev included references in new infrastructure and devel- of distinct interests vis-à-vis each an inclusive approach towards to Zangezur (roughly Armenia’s opment projects. Public usage of of them. This is an important first the citizenry living on that terri- southernmost Syunik province) its corollary—namely, the concep- step towards transformed relations tory—whether Muslim (Shia or and even Yerevan in his speech at tualization of occupied territories with each of them—and preventing Sunni) or Christian (Orthodox the November 2020 victory pa- as “liberated territories”—moved

Vol. 4 | No. 3 | Spring 2021 18 19 Vol. 4 | No. 3 | Spring 2021 BAKU DIALOGUES BAKU DIALOGUES over time from indicating a rad- Yet the persistence of “wide (and containing the scope for the conflict began in 1988. - Dia ical position to a mainstream one. Azerbaijanism” obstructs and de- Azerbaijani irredentism focused on logue and people-to-people con- Geopolitical constructs can as- lays a final stabilization of borders Iranian Azerbaijan), Azerbaijanism tacts fell into sharp decline from sume their own momentum over between Armenia and Azerbaijan emphasizes both civic inclusiveness the early 2010s. Track-II initiatives time. Moreover, both “augmented in three ways. First, its questioning and a defined territoriality with were increasingly securitized, as Armenia” and “wide Azerbaijanism” of Armenian statehood can inev- clear borders. As a national project cross-border visits became very are dangerously associated with itably only add to insecurity and it offers a more promising horizon rare and highly choreographed recursive practices of cultural era- strengthen arguments in Armenia for the re-negotiation of relations events. Already in decline, dialogue sure that are highly incendiary for on the need for a “garrison state.” with distinct Armenian commu- never recovered after the April 2016 Armenian-Azerbaijani relations. Building a sense of self that under- nities, and offers more space to Four-Day War. mines a neighboring state’s right alternatives to a “garrison state” in fter the Second Karabakh to exist will deepen, rather than Armenia itself. Azerbaijan has historically re- AWar, “wide Azerbaijanism” assuage, Armenian-Azerbaijani garded Track-II peacebuilding no longer confronts “augmented security dilemmas. Resonant though the idea of with concern as potentially leading Armenia.” A post-war poll con- “one nation, two states” may be, to acceptance and normalization ducted in Armenia in February Second, in its projection of especially in the glow of victory, of an unacceptable status quo. Yet 2021 by MPG/Gallup Interna- a Turkic unity stretching from Azerbaijani problems should be diplomatic summits in distant cap- tional (with a sample of 801) sug- Anatolia to the Caspian—power- resolved through the framework of itals have emphatically failed to gests a dramatic fully reinforced by Azerbaijani statehood, rather than appreciably challenge Armenian- decline in popular the joint Turkish- an expansive Turkic ethno-space Azerbaijani security dilemmas. attachments to the After the Second Azerbaijani effort submerging local detail, nuance, Elite-level interactions have not expansive space Karabakh War, “wide to win the Second and difference. been able—and will remain un- of “augmented Azerbaijanism” no lon- Karabakh War— able—to achieve a lasting break- Armenia.” Whereas ger confronts “augmented there is a risk of im- hird, open up to dia- through for as long as the strategic in 2017 86.4 per- porting elements of Tlogue. This last move that culture of rivalry persists. There is cent of those sur- Armenia.” Turkish identity Azerbaijan can make in the after- of course the riposte that war has veyed supported politics into the al- math of the Second Karabakh War resolved what dialogue could not, a maximally defined Nagorno- ready complex negotiation of the centers on dialogue beyond the but this both assumes that the un- Karabakh within the de facto Armenian-Azerbaijani relationship. state. This is without any doubt derlying conflict is resolved and boundaries created by the First one of the most important pre- exaggerates the extent to which Karabakh War and were opposed In a third and related point, requisites to a transformation of Armenia and Azerbaijan en- to any territorial concessions, in “wide Azerbaijanism” undermines Armenian-Azerbaijani relations, gaged in serious and potentially the 2021 poll only 30.7 percent the potential for new pathways to yet it had all but died out in the productive dialogue—especially supported such a definition of Armenian-Azerbaijani relations years preceding the war. Research over the last 15 years. But as al - Karabakh—a drop of nearly 56 to be found in the framework of conducted by the Yerevan Press ready noted, for new regional percent. This is a highly significant Azerbaijanism. Introduced by Club and Yeni Nesil in 2019 found development plans to be both shift away from overlapping and Heydar Aliyev in 1993 as a prag- that informal dialogue between the viable and sustainable for com- incompatible conceptualizations of matic approach to rebuilding parties to the Karabakh conflict munities on the ground their homeland. the fragmented Azerbaijani state had reached its lowest level since participation will be necessary—

Vol. 4 | No. 3 | Spring 2021 20 21 Vol. 4 | No. 3 | Spring 2021 BAKU DIALOGUES BAKU DIALOGUES both through vertical dialogue contact lines established by the Partnership (integrative peace) tendency among antagonists in South with their own authorities and November 2020 tripartite agree- • Interactivity / Caucasus conflicts to leverage out- horizontal dialogue across the ment are not to live in multiple interdependencies side powers to sustain or win their divide. new micro-security dilemmas • Bilateral relations struggles with one another. The defined by fear and suspicion to - • Differentiated relations resulting outcomes build external Face-to-face contacts between wards one another. with distinct Armenian interests and power dynamics into Armenians and Azerbaijanis are communities new status quos that in their asym- crucial to breaking down the • Azerbaijanism metries cannot generate either insecurity dilemmas that fuel the Partnership or Domination? • Networked regionalism / clusive or sustainable security ar- conflict between them. What regional suture rangements. Rather, a new cycle of has effectively become a state rmenian-Azerbaijani re- • Normalization? regional fracture begins, with the monopoly on dialogue needs to Alations are at a historical security of some of the region’s ac- be opened up to a wider inter - inflection point. As the winning Domination (punitive peace) tors depending on the insecurity of face across a wider cross-sec- party of the Second Karabakh War, • Segregation / zero-sum others. This in turn sets the stage tion of Armenian Azerbaijan has thinking for future cycles of violence. and Azerbaijani scope to set in mo- • Leveraging outside influence societies. Nego- Face-to-face contacts be- tion new dynamics • Monolithic enemy imagery here is little doubt that the tiating mutually tween Armenians and in its relations • Wide Azerbaijanism Trivalry mindset and associ- acceptable and with a variety of • Hegemonic regionalism / ated zero-sum thinking patterns Azerbaijanis are crucial beneficial out- Armenian com- regional fracture will continue in both Armenia and comes requires to breaking down the munities. There • Securitized rivalry, future Azerbaijan in the short-term. The the trust and con- security dilemmas that is a fundamental conflict? experience of the Korean peninsula fidence that can fuel the conflict between choice to be made shows that even in a context where only come from them. between an ap- These choices are too often sub- it is different parts of the same na- personal encoun- proach that seeks merged in the grander narrative of tion that are in conflict, antagonistic ters. As historical to convert victory how great powers mindsets can long experience has shown—for ex- into a longer-term domination of shape and re-shape outlast the struc- ample in work facilitated by the Armenia, and an approach that South Caucasian There is little doubt tural context for peacebuilding NGO Saferworld seeks a transformation from the geopolitics. The that the rivalry mind- their original emer- between populations along the securitized rivalry of the last three emergence of a set and associated ze- gence—Cold War Tovuz/Tavush border in 2011— decades to the prospects of part- Russian-Turkish ro-sum thinking patterns polarity, in the case local communities can often nership. Azerbaijan’s choices at duopoly over will continue in both of divided Korea. demonstrate a pragmatism in- this juncture will interact critically the Armenian- The challenge formed more by immediate needs with Armenia’s own choices be- Azerbaijani con- Armenia and Azerbaijan for Armenia and and interests than national-level tween rebuilding a revanchist “gar- flict only appears in the short-term. Azerbaijan as dis- discourses and rhetoric. This rison state” or revising and, by im- to affirm this - nar tinct nations that kind of pragmatism will be nec - plication, de-securitizing its relations rative. But while only a multifactor since the restoration of their re- essary if the communities that with Azerbaijan. The choices are set analysis can explain this outcome, spective independence came to will be living along multiple new out schematically on the next page. a crucial enabling condition is the regard each other as “the other”

Vol. 4 | No. 3 | Spring 2021 22 23 Vol. 4 | No. 3 | Spring 2021 BAKU DIALOGUES BAKU DIALOGUES against which they defined them- across a broad spectrum of issues, selves is all the more daunting. without the obligatory presence of The worst-case scenario is a new international mediators. Leaders spiral of threat perception, whereby and foreign ministers would visit the each state continues to supply a other country in an effort to bring Feindbild—enemy image—for the the peace process home. Other other: an Azerbaijan intent on dom- kinds of visitors from across the inating Armenia and borrowing border would become a regular and Turkish power to do so, and an Ar- unremarkable phenomenon, and menia intent on rebirth as a revanchist Armenian and Azerbaijani journal- “garrison state.” ists would report on developments in the other country from the ground. hat, then, might be a best- Competitive commemoration of the Wcase scenario? Progress traumatic events of the past would might look like a shift from a - to increasingly co-exist with acknowl- talized, identity-driven rivalry to edgement of others’ losses. Homog- more compartmentalized relations, enized conceptualizations of history still vulnerable to periodic crises— and homeland would over the long- but not so total as to exclude a di- term yield to more complex and versifying gradient of relations en- multi-vocal traditions. Perceptions of compassing trade, shared resource outside actors as indispensable pur- management, and common re- veyors of security would recede, and gional infrastructure. Crises would new regional configurations would not spill over into total lockdowns become more imaginable. of relations, allowing interactions on specific issues to continue. Although often framed as These interactions over time could geopolitical pawns, especially lead to cross-cutting networks by each other, Armenia and acting for mutual benefit and disin- Azerbaijan have enough agency centivizing escalation. Armenia and to make this scenario more than Azerbaijan would engage in dialogue just a pipe dream. BD

bakudialogues.ada.edu.az

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secessionist region itself but Armenia and has a military presence From Struggle to Permanent also seven surrounding territo- in the country. It has provided secu- ries. These other lands were, as a rity guarantees to Yerevan, primarily Failure whole, twice the size of Nagorno- through their shared membership Karabakh itself and contained five in the Collective Security Treaty Why the Karabakh Attempt at times the old oblast’s population, Organization (CSTO), which neu- the entirety of which was expelled tralized to a certain extent the poten- Secession Failed by the time an armistice was signed tial effects of Russian arms being sold in 1994. And that is why during this to financially strong Azerbaijan on a war the UN Security Council re- purely commercial basis. sponded by passing four resolutions Azer Babayev demanding the withdrawal of Arme- nian forces from the occupied areas From the First to the fter 44 days of fighting, conflict region took root: the “frozen of Azerbaijan. However, the UN res- Second Karabakh War the Second Karabakh conflict,” as it came to be known, olutions failed to have any effect. ollowing the end of the First War came to an end on 10 lasted for nearly three decades and Karabakh War, Armenia and NovemberA 2020 as a result of a led to conditions of neither war nor Since that time, no international F protagonists felt a strong, compelling Azerbaijan could not reach a polit- Russian-brokered ceasefire agree- peace. And during this period, it need to try to resolve the Nagorno- ical solution to the conflict: count- ment. The most important questions was feared that the longer the sides Karabakh conflict. In addition, all in- less attempts and numerous rounds here appear to be: what led to this dan- had to wait for a peace agreement ternational actors dismissed the idea of negotiation failed; an attitude of gerous military escalation, and what to be reached, the more likely the of “power mediation.” Moreover, al- resignation creeped in. Particularly, does it mean for the conflict, given conflict would re-escalate and even- though Russia as a key international as nearly three decades went by, that it seems to have now entered into tually erupt again into a hot war. As actor is directly involved in all the Azerbaijan got justifiably frustrated a (new) political phase, again? it turned out, this is exactly what conflicts on the territory of the former with a lengthy peace process that happened: an all-out six-week war Soviet Union, its involvement in produced no tangible progress. In the declining Soviet Union, what erupted again unexpectedly between the Nagorno-Karabakh dispute The OSCE Minsk Group co-chairs was originally a status dispute over the conflict parties in late September has been rather indirect: in the (France, Russia, and the United the autonomous Nagorno-Karabakh 2020, and, as a result, the Armenian Karabakh case, Moscow has been States), as the key peace brokers to region escalated into an international side more or less capitulated. both a critical and a questionable the conflict, were reproached for not violent conflict between Armenia actor. On the one hand, the Kremlin placing enough political or diplomatic and Azerbaijan in the early 1990s. ut first things first: in the First has taken a central position in me- pressure on the Armenians to with- Following the end of a bloody war in BKarabakh War, Azerbaijan diating a peaceful settlement to the draw from the occupied Azerbaijani 1994 (the First Karabakh War, 1992- suffered a major defeat, ceding conflict while, on the other hand, it territories, which especially precluded 1994), a fragile situation around the to Armenian forces not only the has been delivering weapons to both any settlement via negotiations. sides. This last represents perhaps the Azer Babayev is an Assistant Professor of Political Science at ADA University. He most striking situation regarding the Although the conflict was is, most recently, co-editor of The Nagorno-Karabakh Deadlock: Insights from international dimension of the con- sparked by the status of Nagorno- Successful Conflict Settlements (2020). flict. Russia is militarily allied with Karabakh, the issue of the occupied

Vol. 4 | No. 3 | Spring 2021 26 27 Vol. 4 | No. 3 | Spring 2021 BAKU DIALOGUES BAKU DIALOGUES surrounding territories compli- Armenia counted on the inertia (habituation effect) in the capabilities. In addition, Baku im- cated the nature of the conflict as a negotiations either coming to an conflict countries. ported high-tech modern weaponry whole. In this regard, the Nagorno- end with it having to offer minimal in large quantities, including drones Karabakh conflict brought with it the concessions or being broken off or many years after the First and loitering weapons (i.e., kami- risk of an additional shift in former with absolutely no results. The po- FKarabakh War, the offence- kaze munitions) from countries like state boundaries, in contrast to other sitions thus remained entrenched. defense balance appeared to Israel and Turkey, thus creating conflicts in the region. Overall, after The peace process was leading no- overwhelmingly favor Armenia, considerable offensive advantages. the First Karabakh War the conflict where, which was why, from time which had clear defensive ad- It came as no surprise that these situation featured a structural asym- to time, the Azerbaijani side made vantages favored by military and weapons proved to be very effective metry: Armenia wanted to use the a point of asking what the point geographical fac- in the recent war: power of facts (i.e., military control) to of the negotiation process was tors. It is no sur- within a few weeks, maintain the territory’s de facto status exactly, and threatened to use its prise that Nagorno- In the years leading up Azerbaijani troops whilst changing its de jure status; ultimate form of pressure—its Karabakh has been to the Second Karabakh were able to Azerbaijan wanted to use the force military—in order to prevent the among the most War, however, the offence- break through the of law (i.e., international law) to pre- Nagorno-Karabakh conflict from militarized regions defense balance changed Armenian defense serve the de jure status and change remaining “frozen.” in the world: heavy gradually, ultimately line at several (back) the de facto status. defensive fortifica- places and retake Overall, following the end of tions—including shifting in favor of significant swaths aving lost the First Karabakh the First Karabakh War until the many kilometers Azerbaijan. of occupied terri- HWar, Baku was particularly onset of the Second Karabakh of tunnels inter- tory. That is why dissatisfied with the seemingly per- War, a fragile situation around the linking with each other along the Azerbaijan’s President Ilham Aliyev manent occupation of its territories conflict region took root. How- ceasefire line and dense mine- proudly stated during the war that and the plight of ever, an equilib- field—offered the Armenian side “in this case, unmanned aircraft, IDPs; at the same rium favoring the a false sense of invincibility for a both Turkish and Israeli drones, of time, it interpreted Although the conflict was status quo ap- long time. course, helped us a lot.” Armenia’s nego- peared to be estab- tiating practices sparked by the status of lished around this In the years leading up to the urning next to the geopolit- as representing a Nagorno-Karabakh, the “frozen conflict” Second Karabakh War, however, the Tical context of the conflict in kind of salami-slice issue of the occupied sur- in basically three offence-defense balance changed the last decades, Russia’s role as an tactic: Yerevan was rounding territories com- ways. First, mili- gradually, ultimately shifting in external veto power has also been trying to make plicated the nature of the tarily: an offence- favor of Azerbaijan. Its extensive central in at least two respects. On only rhetorical— defense bal- military buildup, which took place the one hand, Moscow has been conflict as a whole. or at most, min- ance between over the last several years, became the only external actor that was imal—concessions Armenia and the first important indicator of this believed to be able to contain and in order to prolong negotiations Azerbaijan (favoring defense); shift. One visible element of this is actually stop a new war between because it was not at all inter- second, internationally: a regional the fact that, several years ago, the the conflict parties, as was evident ested in changing the status quo balance of power with Russia as the Azerbaijani government established during the April 2016 clashes (what established by the ceasefire that key stabilizing actor; and third, a Ministry of Defense Industry some call the Four-Day War), when ended the First Karabakh War. socio-psychologically: a political to build up the country’s military the Kremlin forced them into a

Vol. 4 | No. 3 | Spring 2021 28 29 Vol. 4 | No. 3 | Spring 2021 BAKU DIALOGUES BAKU DIALOGUES ceasefire. On the other hand, any both Armenia and Azerbaijan. And expectations—hopes, even—in In general, the increasingly amicable resolution to the conflict a decades-old conflict situation, Azerbaijan for progress in ne- provocative statements and ac- that goes against Moscow’s will is un- coupled with unsuccessful negoti- gotiations. Initially, it looked as tions by the new Armenian imaginable. As such, Russia appeared ations, created a lasting condition though “he was an open interloc - leadership were probably moti- to create a state of geostrategic stability of “No War, No Peace,” which the utor ready to discuss thorny is - vated by reasons of domestic power or balance around the military and adversaries appeared to accept sues,” as Robert Cutler put it in an consolidation: they sought to political status quo on the ground. implicitly and gradually. Most im- October 2020 Foreign Policy essay. increase their legitimacy by at- portantly, over time it led to the Yet, gradually, quite the opposite tempting to appear more national- In recent years, Turkey’s rapid effect that they appeared to avoid happened. Tensions escalated, istic than the forces they had de- rise in power and Ankara’s intro- new costs or “extreme” measures as the democratically elected posed. But by doing so—whatever duction of a more assertive foreign in terms of both military escalation Armenian government started the reason—Yerevan came to be policy in its neighborhood, resulted and substantive compromises. In making increasingly populist seen as taking a harder and thus in a gradual shift in the region’s bal- other words, the willingness to take statements with respect to the dangerously populist line on the ance-of-power system that came high risks declined continuously Nagorno-Karabakh conflict. Most Karabakh issue. And, most im- to favor Azerbaijan. Specifically, on both sides. Being full of uncer- prominently, Prime Minister portantly, these moves were per- Turkey and Azer- tainties and inse- Pashinyan said in his address ceived in Azerbaijan as insulting baijan built a very curities, “No War, at the opening ceremony of the and hurtful to the country’s na - effective alliance— Paradoxically as it may No Peace” implied Pan-Armenian games held in tional pride, thus amounting encapsulated in sound, “stable instabili- a potential source Nagorno-Karabakh in August to, as the saying goes, adding Heydar Aliyev’s ty” worked in practice for of instability—but 2019: “Artsakh is Armenia. Pe- insult to injury in the pub - “one nation, two decades: the conflict par- what amounted riod.” He also repeatedly led the lic’s perception. It can be ar - states” phrase— ties got used to this in- to a “stable” one. crowd in chants of “miatsum” (the gued that such actions by the which in turn weak- between situation. Paradoxically as it Armenian word Armenian author- ened the “stabi- may sound, “stable for “unifica- ities upset both lizing” impact of the instability” worked tion”)—a pan-na- After Armenia’s mili- the people and Armenia-Russia alliance that had in practice for decades: the conflict tionalist slogan tary defeat in the Second government of been effectively designed to perpet- parties got used to this in-between that gained pop- Azerbaijan, which uate the status quo. But Baku also situation. Thus, “No War, No Peace” ularity during the Karabakh War, it can be in turn upset the tried to maintain close relations became a new normal of sorts and original escala- argued that Nagorno- political inertia with Russia as part of its “balanced” established its own particular form tion of the con- Karabakh’s struggle for that had char- and “multivectoral” foreign policy, of equilibrium. And this inertia be- flict in the late secession has now been acterized each which had a constraining effect on came more sustainable the longer it 1980s. In this way, transformed from a country’s posture the scope of Russian commitments lasted. to refer to another unilateral attempt to a towards the other towards Armenia. Cutler formula- beginning in the But then a revolution took tion, Pashinyan permanent failure. years that followed n addition to military and geo- place in Armenia: a new oppo - apparently yielded the end of the First Ipolitical factors, starting in the sition leader, Nikol Pashinyan, to an “irredentist nationalism Karabakh War. As Aliyev made clear second half of the 1990s, political came to power after a popular seemingly required to survive in during the Second Karabakh War, stability set in also domestically in uprising in 2018, also raising Armenian domestic politics.” “insulting the Azerbaijani people”

Vol. 4 | No. 3 | Spring 2021 30 31 Vol. 4 | No. 3 | Spring 2021 BAKU DIALOGUES BAKU DIALOGUES proved to be “too costly” for the to providing an explanation for conflict, which was at bottom territorial compromise in the in- Armenian government. the ultimate failure of Nagorno- about the region’s political status, terwar period. Interestingly enough, Karabakh’s attempt at secession. into a territorial conflict that - in back in 1921 the Soviet leadership verall, the Nagorno- volved the desire to shift state bor- cited Nagorno-Karabakh’s constant OKarabakh conflict had ders. On the other hand, the issue connections with Lower Karabakh been a typical dispute in the in- Geography of the surrounding territories com- and the rest of Azerbaijan as its offi- terwar period (1994-2020), having plicated the nature of the conflict as a cial reason for retaining the region reached an advanced stage of at- overing an area of just whole, in contrast to other conflicts in within the borders of Azerbaijan. tempted secession that had been C4,400 square kilometers, the the region. In particular, the perma- brought about by military force Nagorno-Karabakh region is rela- nent occupation of these districts by What is more, geographic used by a neighboring patron state. tively small. As such, it comprises Armenian troops precluded any locations at times also constitute Despite these military-political only 5 percent of Azerbaijan’s state peaceful settlement in the last decades. a reference point of one’s national advantages, however, Nagorno- territory. Along with this great identity. The relevant territory is Karabakh could not become in- asymmetry between Azerbaijan There is a further geographical seen as a site which solidifies the dependent. And after Armenia’s proper and Nagorno-Karabakh, the factor playing an important role nation’s collective memory into military defeat in the Second political and physical geography in the conflict’s dynamics. In - eth an indispensable component of Karabakh War, it can be argued of the breakaway region differs no-territorial conflicts, a periph- its “character.” Shusha, a key town that Nagorno-Karabakh’s struggle from that of the other conflict cases eral location (a border region or in Nagorno-Karabakh, best illus- for secession has now been trans- in the post-Soviet space and be- an island) is generally said to have trates Nagorno-Karabakh’s national formed from a unilateral attempt yond. The fact of being an enclave strong centrifugal effects; whereas importance for Azerbaijan. Once to a permanent failure. should have hindered the region’s the contrary (an enclave in a heart- the regional center for traditional secessionist aspirations: it certainly land) is expected to foster cen- carpet production, Shusha was also There may be many reasons— strengthened the Baku central gov- tripetal tendencies and cause se- home to many Azerbaijani com- whether they be actor- or pro- ernment’s resistance all along. At cessionist efforts to be strongly posers and singers who made the cess-centered—for why, against all the same time, Nagorno-Karabakh’s resisted. Nagorno-Karabakh is an town famous as the musical capital odds, the Azerbaijani side never specific geographic position helped ethno-territorial enclave within of Azerbaijan. During the Soviet accepted the attempted secession to expand the conflict beyond its the Azerbaijani heartland that is era, Shusha was even declared an of the breakaway region, despite boundaries: the Armenian side’s separated from Armenia by the high inspiration for Azerbaijani culture. its complete defeat in the First military strategically occupied mountains of the Lesser Caucasus, Karabakh War. To develop a deeper the adjacent Azerbaijani regions, which make access from Armenia It is thus no surprise that Aliyev understanding of Baku’s invariable thereby creating an extensive “se- even more difficult. made the liberation of Shusha a stance, we must first (and fore- curity belt” around Nagorno- central goal during the Second most) consider structural factors, Karabakh to offset the enclave’s hus, the breakaway re- Karabakh War, because, as he put such as geographic and historical precarious isolation and facilitate Tgion clearly exemplifies the it, “Shusha has a special place in the preconditions, the ethnic compo- Armenian control by shortening the aforementioned second situation hearts of the Azerbaijani people. sition of the state, and the coun- length of the front line. Armenia that, all other things being equal, [...] Without Shusha, our business try’s dominant legal system. From also sought to create an overland should have inhibited secession would be unfinished. Of course, today’s perspective, these struc- connection to Nagorno-Karabakh, because it made it much harder for this issue was [also] always on the tural factors appear to be relevant thus expanding the original Azerbaijan to agree to any agenda during the [peace] talks.”

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History by Stalin to being an autonomous “historical lands are not limited to Ethnic Armenians represented republic within Georgia. Nagorno-Karabakh and sur- more than three-quarters of the rounding areas. [...] Today’s population, but the region also husha is also a good example What is more, over the decades, Armenia is, in fact, the historical had a substantial number of ethnic of a situation in which geog- S Azerbaijan was mostly concerned land of Azerbaijan.” That is why Azerbaijanis. However, the Azerbai- raphy and history reinforce each about losing still more land to the Azerbaijani government re- jani and Armenian settlement areas other. As the old capital of the its neighbor—in addition to the peatedly made its policy plain that were not compact, displaying an Karabakh khanate (1748-1822), areas that Moscow had ceded to it would never allow a “second ethnic heterogeneity in the conflict Shusha is also an important Armenia in the twentieth century. Armenian state” to be established on area: they were spread throughout component of Azerbaijan’s (polit- In Azerbaijani public opinion, Azerbaijani soil. It is no sur- the region—a situation that gener- ical) history. For example, the suc- Nagorno-Karabakh’s secession prise that Aliyev famously an- ally seems best suited to a system of cessful 33-day-long defense of the would be thus perceived as nounced, already back in 2009, that autonomy with minority protection. Shusha fortress against the all-pow- Azerbaijan losing part of its “Nagorno-Karabakh will not be an erful army of the Iranian Aga territory to Armenia again. independent state, not today, not Then, during the First Karabakh Mohammed Khan Qajar in 1775 Most prominently, a compar- in ten years or one hundred years. War, ethnic cleansing transformed is a lieu de mémoire for a pop- ison was made with the his- Azerbaijan’s position is unequiv- Nagorno-Karabakh into a homo- ular national-historical story of torical province of Zangezur, ocal. Despite all the pressure, we geneous, ethnically pure Armenian Azerbaijani heroism. which had been transferred to will defend this position to the end.” region. Just as in seven occupied Armenia after the establish- surrounding territories, all ethnic Historically, another factor in- ment of Soviet rule in the South Azerbaijanis either fled Nagorno- hibiting secession is the lack of Caucasus in the early 1920s. That Ethnic Composition Karabakh or were expelled. At the Armenian statehood in Nagorno- is because Azerbaijan sees in the onset of the conflict, in Azerbaijan Karabakh. Although the Armenian conflict two complementary pro- ith only 1.5 percent proper only a tiny part of the pop- side refers to its bloody fights for cesses: first, the violent attempt W(150,000 people) of ulation living in an equally tiny sovereignty in the disputed area, at secession of a breakaway mi- Azerbaijan’s total population (10 part of the country was of ethnic Nagorno-Karabakh cannot in- nority that seeks to expand be- million) documented as residing Armenian origin. voke an earlier era of political in- yond even its administrative bor- in Nagorno-Karabakh (as of last dependence under Armenian au- ders; second, the irredentist policy count), there is a huge asymmetry However, unlike the Israeli- thority, which is always helpful for of Armenia, which supports this in the quantitative relationship Palestinian conflict for example, legitimizing secession. The region’s attempted secession militarily between the majority and the the ethno-cultural differences in lack of any Armenian sovereign in order to further expand its minority group in the country. Nagorno-Karabakh have not caused tradition contrasts with Abkhazia, borders at the expense of it to become an international proxy for example, another long-term Azerbaijani territories. Another relevant factor inhib- conflict between two religious post-Soviet conflict in the region: a iting the attempted secession is groups—despite efforts by Armenia principality from the fifteenth to the n this respect, it had been connected to the ethnic composi- and its diaspora to portray them- nineteenth century with its own tra- Ia dominant historical nar- tion and structure of settlements selves as an endangered Christian dition of statehood, Abkhazia was a rative in Azerbaijan in the past in the secessionist area. Prior to outpost in a predominantly Muslim Soviet Socialist Republic from 1921 years and decades that, as Aliyev the war, the situation in Nagorno- region. Although Christianity to 1931 before it was downgraded said back in 2014, for example, its Karabakh proved contradictory. is a source of the West’s general

Vol. 4 | No. 3 | Spring 2021 34 35 Vol. 4 | No. 3 | Spring 2021 BAKU DIALOGUES BAKU DIALOGUES sympathy for Armenia, its direct ef- states (albeit also found in fed- states within the boundaries that it In addition, Azerbaijan’s eco- fects are limited. For example, the erations), which was also Baku’s had as constituent republic of the nomic potential, which is far supe- United States was the only Western preferred solution in the interwar Soviet Union. Azerbaijan there- rior to that of Armenia, along with country to impose sanctions against period. It is no surprise that back fore always saw the conflict first its financial resources, also presents Azerbaijan in 1992—a sign of in 1998, the international peace and foremost as an act of aggres- opportunities for relatively poor one-sided solidarity helped by the broker’s common-state plan— sion by Armenia because it illegally Nagorno-Karabakh. The case of Armenian diaspora’s intensive which foresaw a joint state for occupied its sovereign territories South Tyrol in Italy can serve as lobbying. Azerbaijan and Nagorno-Karabakh during the First Karabakh War. an example: a once mostly poor —failed because Azerbaijan That is why the UN Security province populated by moun- would not accept Nagorno- Council also condemned the tain farmers, South Tyrol is now Dominant Legal Order Karabakh as its equal. Armenian occupation in the early one of Italy’s wealthiest prov- 1990s in four separate resolutions. inces. South Tyrol benefited not long with the aforemen- In addition to Azerbaijan’s only from Italian government Ationed non-political fac- domestic system, it is also the in- grants, but also from Italy’s mem- tors, Azerbaijan’s tradition of a ternational system that makes Significant Advantages bership in the EU, which granted centralized state made Nagorno- Nagorno-Karabakh’s attempted significant regional funds to the Karabakh’s attempted secession secession highly problematic. In sober calculation reveals that autonomous province. In the same even more difficult to accept. Also, this respect, Nagorno-Karabakh’s Aan internal settlement within vein, if Nagorno-Karabakh were to regarding either a federative or a legal status in the Soviet Union Azerbaijan can present significant become prosperous in comparison confederative scheme—namely, plays a central role. The Soviet advantages for Nagorno-Karabakh. to Armenia—like South Tyrol (Italy) granting maximal sovereignty leadership first issued a binding One aspect is its geographic link to did in comparison with North and to Nagorno-Karabakh short of a decision declaring Nagorno- Azerbaijan: this would facilitate the East Tyrol (Austria), it could de- state independence—the following Karabakh an autonomous region development of the territory’s eco- velop its own economic interests structural constraint immediately (oblast) of Azerbaijan in July 1921. nomic and transportation connec- and self-confidence. This, however, strikes the eye: Baku continues to tions, which in turn would positively would require creating incentives, as a unitary state regard this ruling impact upon the surrounding regions. for instance in the form of spe- with a presidential A sober calculation re- as confirmation Also, twentieth-century history re- cial offers, such as starting a system of govern- veals that an inter- of the Azerbai- veals another important and positive “Develop Karabakh” initiative ment, it would be nal settlement within jani nation-state’s moment in the collective memory of and financial transfers. The re- the two communities: the period of gional road network, municipal very hard for Azer- Azerbaijan can present rightful bound- baijan to consider aries (uti possidetis peaceful co-existence when they lived infrastructure, and energy supply even a loose union significant advantages for juris—principle together and got along with each other urgently need to be upgraded. with Nagorno- Nagorno-Karabakh. of the inviolability day in and day out. Building on these Creating competitive structures, Karabakh. of borders). Ac- and similar examples could gradually renovating and modernizing cordingly, when transform the historically antago- homes, and building new housing While looking at other conflict Azerbaijan became independent— nistic distortions and enemy images are also needed. settlement cases, autonomy ar- like all other former Soviet repub- and make it possible to create a new, rangements are rather a typical lics—it was under international law shared identity. But it can be done. BD characteristic of centralist unitary recognized by the community of

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meters wide within the EU itself, in- complex systems,” sometimes also Hydrocarbon Energy cluding the Danube delta. From that called complexity science.) Herein definition, it would follow that the I describe the complex-scientific Complexes Silk Road Region is largely em- evolution of energy geoeconomics bedded in Central Eurasia. in Central Eurasia with a focus on the Caspian Sea region, and its Central Eurasian Keystone The name “Central Eurasia” was geopolitical extensions, since the sometimes used in the 1990s as a early 1990s. This article is also a Triangles shorthand for the 15 former So- non-technical condensation of spe- viet republics together (Russia in- cialized and scientific work on the cluded), but this usage has faded topic in which I have been engaged Robert M. Cutler away. The collapse of the Soviet for a couple of decades. Let me Union did not assure the even- start by explaining what I mean by tual geoeconomic consolidation geoeconomics. he editorial statement of website provided a lengthy but of Central Eurasia, but the condi- Baku Dialogues posits a useful geographic definition of tions for that consolidation have The term “geoeconomics” fo- certain geographic defini- “Central Eurasia.” This definition now been established. This has oc- cuses attention on how interna- tionT of what is called the “Silk Road included “Turkic, Mongolian, Ira- curred thanks to the confluence of tional structures constrain national Region,” namely “the geographic nian, Caucasian, Tibetan, and other international financial and indus- choices over energy-resource de- space looking west past Anatolia peoples in a broad area that geo- trial interest in the region’s energy velopment and export (and im- to the warm seas beyond; north graphically extends from the Black resources, the political will of the port), but without determining across the Caspian towards the Sea region, the Crimea, and the United States (the only remaining those choices uniquely. It draws Great Plain and the Great Steppe; Caucasus in the west, through the superpower), and the freedom and attention to how those choices east to the peaks of the Altai and Middle Volga region, Central Asia rapidity of networked information feed back into the structuration the arid sands of the Taklamakan; and Afghanistan, and on to Siberia, exchanges made possible by the of regional international systems and south towards the Hindu Kush Mongolia, and Tibet in the east.” internet. and how these systems constellate and the Indus valley, looping down To clarify the term “Black Sea re- themselves so as to configure and around in the direction of the gion,” which appears in that defini- reconfigure “system-level” interna- Persian Gulf and across the Fertile tion, I adopt the European Union’s The Geoeconomic tional structures. Edward Luttwak Crescent.” characterization of that region as Approach introduced the term in its modern stretching from Romania and Bul- sense, without specific reference When I served on the Executive garia, through northern Turkey and he fact that the Silk Road to energy. The approach that is Board of the Central Eurasian on to Georgia, but including only a Tregion is embedded in proper to the analysis of Central Studies Society 20 years ago, its thin coastal strip some 20-60 kilo- Central Eurasia illustrates one of the Eurasian energy development elements of the complex-scientific is less neo-Clausewitzian than approach—embeddedness in par- his, which it modifies in an ordi- Robert M. Cutler is Senior Research Fellow and Director of the Energy Security Program at the NATO Association of Canada and Fellow at the Canadian Global ticular—that informs the present nary-language direction. In partic- Affairs Institute. He was for many years a senior researcher at the Institute for European, essay. (I use “complex-scientific” ular, it is animated by an insight of Russian and Eurasian Studies at Carleton University. to mean “concerning the science of the Swiss-American scholar Arnold

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Wolfers, made in the early stages geographical determinants of inter- The complex-scientific analysis complex-scientific epistemology of the Cold War (that then got national political action, but with of the evolution of geoeconomic that observations may be inter- lost in the abstractions of North a more global perspective and at- energy networks draws special at- preted differently according to scale American international relations tention to non-state actors. None of tention to energy pipeline projects of analysis (e.g., Turco-Caucasia vs. theory), about levels of analysis be- these approaches focuses specifically and the networks Central Eurasia). tween “system” and “state-actor.” on international energy questions or that they evolve. When the theo- That insight is the common-sense their particular characteristics. In the nineteenth The complex-scientificries that are used acknowledgment that foreign policy century, the con- analysis of the evolution for explaining ob- strategies are conditioned by territo- Another approach, the “resource struction of rail- of geoeconomic energy servations change riality, shaped by geographical loca- scarcity” approach, identifies three roads in European (with the scope of tion, and informed by geographical types of energy scarcity: demand-in- states served na- networks draws special analysis), then the understandings about the world. duced, supply-induced, and “struc- tional authorities attention to energy pipe- interpretations (of tural” (which is actually supply-in- as a means for line projects and the net- the observation he better to define geoeco- duced but is triggered by deliberate establishing and works that they evolve. language) change Tnomics, it may first be con- actions of an external actor such as embedding cen- as well. trasted with the geopolitics ap- a state, a company, or a cartel). This tral administrative proach. The latter concerns how a approach draws useful attention to power in the countryside. Today, My earlier work occasionally state’s geographical situation and “resource nationalism”—that is to the construction of energy pipe- presents slightly different chronol- natural environ- say, a government’s lines creates axes for the interna- ogies and even different names ment influence its direct participation tional projection of influence by for different “hydrocarbon en- practice of foreign Foreign policy strategies in natural-resource great powers. These pipelines sig- ergy complexes” (a term that I policy. The intel- are conditioned by terri- exploitation on the nify and embody cooperative stra- define below). Here, those have lectual heritage of territory of its state, tegic ententes, sometimes verging been revised so as to take into “geopolitics,” as- toriality, shaped by geo- often through a on de facto political alliances account new phenomena on the sociated with such graphical location, and national oil and/ among the various states. ground that have more recently names as Alfred informed by geographical or gas company emerged, eliciting new inter- Thayer Mahan, understandings about the (sometimes called pretations and slightly different Karl Haushofer, world. a “champion”). The Basic Concepts chronologies. The discussion Halford Mac- resource-scarcity in this essay relies on four basic kinder, and Nich- approach is a useful ome interpretations presented complex-scientific concepts, in olas Spykman, is over a century adjunct to the geopolitical perspective, Shere are new, but they have addition to nestedness. It is con- old. It has been challenged by yet even together the two of them are emerged from newer phenomena venient to introduce them briefly “critical geopolitics,” which seeks insufficient. They do, however, point manifesting on the ground in the here, including a brief repetition to unpack the discourses by which the way towards the geoeconomic region. Even if they have evolved of embeddedness, the fifth basic elite and publics construct spaces approach, which underlines inter on the basis of older interpreta- concept. The other four are: com- for political action. This latter ap- alia a state’s dependence on foreign tions, these latter are not neces- plex system, emergent coherence, proach has led to a “neoclassical sources of energy while taking ac- sarily invalidated, because they hydrocarbon energy complex, geopolitics” approach that seeks to count of the given country’s domestic arose from examination at dif- and energy triangle. Each will be re-emphasize physical and energy policy. ferent scales of analysis. It is part of examined briefly in turn.

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complex system is a system They are intermediated by autopoi- constraints. There then followed fact that development, production, Ahaving multiple interacting esis. Autopoietic dynamics explain a phase where unsustainable pat- and pipeline transmission of en- components, of which the overall the extension of hydrocarbon en- terns of structuration of regional ergy resources is a complex social behavior cannot be inferred ergy pipeline networks out from subsystems fell away and those still system. Such a system contributes simply from the behavior of the the Caspian Sea basin to Europe incipiently coherent settled-down to configuring geopolitically the components. The canonical and China. and persisted. Finally, these now- territories where the energy is pro- non-complex system is an automo- emerged and autopoietic regional duced, transited, and consumed. Its bile factory: from studying inputs A potential pipeline project is subsystems began to establish evolution is governed by the effects and how they are transformed, one a complex system that interacts deeper-running reciprocal rela- of internal dynamics of social and can predict what is produced. The with its physical and human en- tions. This last development has re- economic growth in combination canonical complex system is the bi- vironment. After it emerges as an inforced their coherence as well as with external geopolitical con- ological cell; human societies, hu- idea, it alters its form as necessary their constrained but self-directed straints. man-created political systems, and through the working of the (evo- autonomy, with respect to their own individual human beings are also lutionary) principle of variation. evolution as regional subsystems of This geoeconomic HEC approach complex systems. In the perspective Such altered forms then either the general international system. considers pipeline networks (oil employed here, a complex system survive (e.g., the evolution of the and gas transmission systems) to be is characterized by three phrases of Baku-Supsa oil pipeline into the also use the term hydrocarbon complex adaptive systems, executed emergent coherence. Emergence is Baku-Tbilisi-Ceyhan pipeline or Ienergy complex (HEC). An by human agency, that transform the first phase and coherence is the fail to survive (e.g., the evolution HEC designates a regional geo- their human and physical economic, last phase. They are intermediated of the Nabucco project into the graphical construct—typically political, financial, and ideological by “autopoiesis” (meaning self- Nabucco West variant, which sub- transnational or international— environments. Pipeline networks creation or self-production), which sequently died). The surviving that is structurally unified by -en and their associated social systems refers to the capacity of a complex pipeline projects are those that ergy flows that are, in turn, - typi thus participate in configuring and system to establish autonomously have cohered, through the (evolu- cally institutionalized by oil and reconfiguring the geopolitics of ter- self-generated goals and to pursue tionary) principle of selection, in gas pipelines. These may now in- ritories where hydrocarbon energy them via evolutionary adaptation a manner best adapted to their en- clude translittoral pipelines, such is produced, transmitted, and con- to its environment. vironment. Not only can complex as Blue Stream that sumed. They can systems, including pipeline proj- goes from Russia to alter inherited bal- he next term is emergent co- ects, evolve; they can also combine Turkey under the Pipeline networks and ance-of-power geo- Therence (formally an “EAC and recombine into new complex Black Sea, and, if their associated social political patterns by cycle” for emergence-autopoie- systems. they are significant systems participate in unifying elements sis-coherence), understood as a enough, transoce- configuring and recon- of adjacent geoeco- framework for analyzing and ex- It is worth remarking that the anic vectors such figuring the geopolitics nomic subregions plaining the extension of oil and gas general post-Cold War interna- as in the case of of territories where hy- in new ways. And pipeline networks from the Caspian tional system evolved in the same liquefied natural they can transform Sea basin westward to Europe and way as this. First there was a phase gas (LNG). The drocarbon energy is pro- international re- eastward to China. In an EAC cycle, of the bubbling-up of possibilities complex-scientific duced, transmitted, and gions and promote ‘emergence’ and ‘coherence’ have of new patterns of international re- nature of an HEC consumed. interregional re- their ordinary-language meaning. lations, relatively free from bipolar emerges from the structuring from

Vol. 4 | No. 3 | Spring 2021 42 43 Vol. 4 | No. 3 | Spring 2021 BAKU DIALOGUES BAKU DIALOGUES the bottom up. This was most ev- Asia is nested within a broader yet constituted as a set of triangles. and embody cooperative ententes, ident in the circum-Caspian lit- well-defined (transborder) mac- Examples of this will also be given sometimes verging on de facto po- toral regions in the 1990s and early ro-region of Greater Central Asia, later the present essay. litical alliances, among different 2000s. which is in turn located within the states. Oil and gas pipelines and demographic, cultural, geographic, inally, the analytical tool of their networks thus transform in- Recent geoeconomic trends—in and historical unity called Central Fenergy triangles implements ternational regions and promote retrospect somehow ineluctable but Eurasia. Likewise, what we will the insights of network sociolo- interregional restructuring from not predetermined—argue strongly call Greater Turco-Caucasia nests gists from the 1990s. These scholars the bottom up. that the Greater Central Asia re- Turco-Caucasia within itself and showed that the dynamics of triads gion, and its HEC in particular, is also itself nested within Central differ qualitatively from any iter- Different periodizations of HEC has expanded into an East-Central Eurasia as its western component. ation of dyadic relations. The Ba- evolution are possible, especially Eurasian HEC, while the Greater In addition, each chronological ku-Tbilisi-Ceyhan oil pipeline was depending upon the geographic Turco-Caucasian HEC has ex- phase of emergent coherence (i.e., the first trilateral project imple- scale and level of analysis. Here I panded into a West-Central emergence, autopoiesis, and coher- mented in the history of the world will present a straightforward and Eurasian HEC. The present evo- ence) may comprise its own nested hydrocarbon industry, for example, relatively unelaborated one, fo- lution of the East-Central and subphases of emergence, autopoi- and it cannot be reduced to an ag- cused on the emergent coherence West-Central Eurasian HECs—par- esis, and coherence; also, it may gregation of bilateral Azerbaijan- of the Central Eurasian HEC; but ticularly their emergent intercon- be nested in a superphase of me- Georgia, Azerbaijan-Turkey, and it is necessary to start on a smaller nections—was not pre-determined. ta-emergence, meta-autopoiesis, or Georgia-Turkey relations. scale and build up to that. Earlier I This evolution takes place thanks meta-coherence. Examples of how mentioned “Turco-Caucasia,” and to human agency, constrained by this is so are given towards the con- it is now time to define it. the international and geophysical clusion of this essay, after the main On the Two Shores of the environment. This agency has pre- analysis, on which it is based, has Caspian Sea he term “Turco-Caucasia” vented certain other tendencies been first set out. Tsignifies a certain region be- of energy-geoeconomic evolution yond the South Caucasus through over this same period of time. The The concept of nestedness re- o recall: the complex-sci- which the implementation of oil observed energy-geoeconomic evo- sponds to the need for a way to Tentific geoeconomic HEC and gas exploitation and trans- lution thus shows an aesthetically transcend the mere aggregation of approach considers pipelines and mission projects extends. While a pleasing tendency toward unifica- bilateralisms that was characteristic their networks as complex systems Central Asian HEC may be defined tion. Its analysis as a phenomenon of so much international relations executed by human agency that simply as the five post-Soviet re- is empirically justified. theory during the life of the Cold transform the human and physical publics together located there, the War international system. Such economic, political, financial, and Turco-Caucasian HEC is a bit more he term nestedness has al- multilateral arrangements have ideological environments in which complex. The latter would include Tready been mentioned but now become the norm throughout they are embedded. Energy pipe- all three South Caucasus states plus not explained. It signifies that every European and Eurasian geoeco- line projects unify elements of ad- mountainous and lowland terri- region is “nested” within different nomics, and the method of triangles jacent geoeconomic subregions in tory in the North Caucasus up to scales of analysis and also, in turn, may be extended to higher orders new ways, altering the antecedent the port of Novorossiysk, but not may nest other regions within itself. of multilateral relations. Quadrilat- balance of power and its corre- including most of the territory To take another example, Central eral relations, for example, may be sponding geopolitics. They signify over which the Caspian Pipeline

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Consortium (CPC) eventually laid conceived as an energy-geoeco- frame, was an important driving developments motivating the its pipeline in southern Russia from nomic entity—i.e., as the Tur- force in the geoeconomic en- gradual merging of the two HECs— Tengiz to Novorossiysk. co-Caucasian HEC—it emerged largement of Turco-Caucasia into located on opposite shores of the only following the provisional res- Greater Turco-Caucasia. Caspian Sea—that one sees begin- The Turco-Caucasian HEC also olution of ethnic conflicts that had ning today to be under way, was includes a half-dozen Turkish erupted in Georgia and Azerbaijan he Central Asian HEC not just the unsuccessful attempt provinces in the northeast of the in the late 1980s. The negotiations Tcomprised simply the five to implement the TCGP at that country around the territory of over both the Baku-Chirag-Gu- Central Asian states. The Greater time, but also the successful imple- the Baku-Tbilisi-Erzurum natural nashli oil field and the Shah Deniz Central Asian HEC includes, in ad- mentation of the Caspian Pipeline gas pipeline (now also called the natural gas deposit (and their incip- dition, much of the eastern North Corporation (CPC) pipeline for oil South Caucasus Pipeline, SCP). ient exploitation) are the main ac- Caucasus that are not part of the from Kazakhstan’s Tengiz deposit Greater Central Asia and Greater tual developments that motivated Greater Turco-Caucasian HEC, to cross southern Russia to its Black Turco-Caucasia are geographical the emergent coherence of the plus southern Siberia, western Sea port of Novorossiysk (and the enlargements of those two con- Turco-Caucasian HEC from 1992 Mongolia, Xinjiang, a small part subsidiary port of Tuapse). cepts, traced by events. Culturally, through 2003. of northern Afghanistan, much historically, and demographically, it of northern Pakistan, and part of The CPC pipeline was a main is possible to suggest that, as a geo- The Turco-Caucasian HEC northeastern Iran. The concept has artery of the geoeconomic enlarge- political rather than a geoeconomic evolved autopoietically into the historical, cultural, demographic, ment of Central Asia into Greater concept, Turco-Caucasia may also Greater Turco-Caucasian HEC and geophysical bases, as well as Central Asia. The geoeconomic include that part of the Anatolian from 2004 through 2015. “Greater being applicable to contemporary regions of Turco-Caucasia and peninsula east of the BTC pipe- Turco-Caucasia” signifies the evo- energy-geoeconomic developments. Central Asia were thus not con- line, northern Iraq including the lution of geoeconomic Turco-Cau- nected by international energy Kirkuk-Ceyhan pipeline, and a part casia into a region of still greater Only around the middle of the flows until sometime after the fall of northern Iran populated in the scale, including the eastern part of 2000s, with the geoeconomic en- of the Soviet Union. Attempts at majority by ethnic Azerbaijanis. the Anatolian peninsula. Culturally largement of Central Asia into the time, largely unsuccessful, to However, the facts of the HECs and demographically, it would en- Greater Central Asia (and of develop further the Karachaganak evolution on the ground do not large also to include larger swathes Turco-Caucasia into Greater gas deposit, which depends upon warrant the inclusion of Iraqi or of the Azerbaijani-populated re- Turco-Caucasia), did the two re- the Russian processing plant in Iranian territories in the geoeco- gion in northwest Iran; however, gions on opposite sides of the Omsk, also played a role in the nomic concept of Turco-Caucasia. as an energy-geoeconomic HEC Caspian Sea begin to move to- geoeconomic enlargement of construct, Greater Turco-Caucasia wards geoeconomic merging. Oil the Central Asian HEC into the It is also possible to set dates on excludes that region. The construc- shipments from Kazakhstan and Greater Central Asian HEC. Ka- the evolution of Turco-Caucasia. tion and entry into service of the Turkmenistan across the Caspian zakhstan’s supergiant offshore The region itself, as a geopolit- BTC oil pipeline—which origi- Sea to Baku and Makhachkala ac- strike at Kashagan raised the pos- ical unity, fell out of its Soviet-era nates in Azerbaijan’s offshore zone count for this tendency, as does sibility (still being developed) configuration already by 1989; its in the Caspian Sea, goes through the reanimation of the Trans-Cas- for gas exports to be taken under emergent coherence as a geopolit- Georgia and terminates at Turkey’s pian Gas Pipeline (TCGP) project the Caspian Sea through the ical region was achieved by the end East Mediterranean coast—occur- under the aegis of the European South Caucasus to Europe. The of the twentieth century. However, ring during roughly the same time Union at that time. The clearest Kazakhstan-Caspian Transportation

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System (KCTS) was first sketched West-Central and East- characterized by the addition, to purpose of analysis as four tri- on the drawing-boards at that time. that basic Central Asian triangle, of angles, each one constructed by Central Eurasia a different strategic player: a “fourth consecutively omitting one the The KCTS still envisages vertex,” as it were. In each suc- quadrilateral’s vertices. bringing Kashagan oil onshore o summarize the narrative ceeding phase, the previously intro- to enter a (still to be constructed) Tso far. On the western duced actors did not disappear, but hese present observations pipeline inside Kazakhstan from Caspian shore, the Turco- a former non-actor achieved prom- Tare simplified sketches of Atyrau to Kuryk, and then shipped Caucasian HEC emerged from 1992 inence and drove events. Thus from much more complex and compli- through an undersea pipeline to to 2003, developed autopoietically 1995 to 2000, this was the United cated developments. They are not, Azerbaijan, whence Kashagan oil into the Greater Turco-Caucasian States, mainly through involve- however, reductionist, and they do could enter the BTC pipeline for HEC from 2004 to 2015, and is co- ment in Kazakhstan; from 2001 not falsify any actual history. There export to the world market. At the hering as the East-Central Eurasian to 2006, it was the EU (including are actually three broad schools time, it was also conceived that HEC as from 2016 until 2027. Like- several of its member-states and of complex-systems studies. One this oil could reach Odessa under wise on the eastern Caspian shore, their “national champions”), also emphasizes “complex adaptive sys- the Black Sea from Georgia, then the Central Asian HEC emerged in Kazakhstan but in some Russian tems” and studies how interactions flow east-to-west through the from 1992 to 2003, developed au- regions as well; and from 2005 to give rise to patterns of behavior. A Odessa-Brody pipeline (also called topoietically into the Greater Cen- 2010, it was China, which became second, more typical of the nat- the Sarmatia pipeline) to a point tral Asian HEC from 2004 to 2015, deeply involved in all members of ural sciences, seeks to understand near the Ukrainian-Polish border. and is cohering as the West-Central the original energy triangle. the different ways in which - com It was planned to construction a fur- Eurasian HEC as from 2016 to 2027. plex systems may be normatively ther pipeline from there into Poland, It may or may not be a coincidence By the end of this three-phase described. The third is a cybernet- arriving at Plock with an eventual ex- that each of these geoeconomic en- cycle, only one of these fourth ver- ics-based and system theory-ori- tension to Gdansk, from where the oil largements, into the East-Central tices survived as an ongoing energy ented approach that looks at the could be shipped to world markets. and West-Central Eurasian HECs, partner, namely China. Competi- process of the structural formation entail the adjoinment of a fourth tion increased between China and of complex systems through pattern Also in the middle of the 2000s, vertex to its respective foundational Russia for Turkmenistan’s natural formation and evolution. The last when each HEC (on either side triangle. Let me explain. gas. Russia’s project for a refurbished is the approach adopted here. So of the Caspian Sea) was reaching Caspian Coastal Pipeline (CCP, here we are engaged in the descrip- its autopoietic stage, it was in- Taking the energy-triangle pos- sometimes termed ‘pre-Caspian’ in tion of patterns that have not only tended that an extension of the tulate as the point of departure, it English, following the Russian pri- emerged but also cohered through Nabucco gas pipeline project becomes clear that the triangular kaspiiskii) went unrealized while the formation and evolution of in- (namely, the TCGP) should enter basis—let us call it the keystone China successfully constructed the ternational energy-geoeconomic Central Asia. This pointed toward triangle—for the Greater Central Turkmenistan-China gas pipeline, structures. the eventual knitting-together of the Asian HEC comprises Kazakhstan, which also crosses Uzbekistan and Greater Central Asian and Greater Russia, and Turkmenistan. The Kazakhstan. The East-Central Eur- Now, with respect to the Turco-Caucasia HECs—and their enlargement of the Central Asian asian HEC then emerged on the West-Central Eurasian HEC, we respective enlargement and trans- HEC into the Greater Central basis of the earlier triangle plus can say it emerged from the trian- formation—into the West-Central Asian HEC required that each China. This new quadrilateral, gular basis of the Turco-Caucasian and East-Central Eurasian HECs. of its chronological phases be in turn, may be regarded for the HEC and then later the Greater

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Turco-Caucasian HEC. This basis success of this endeavor is today on so the European Union appears early 2000s until the mid-2010s the comprised Azerbaijan, Russia, the ground for everyone to see— as the enduring fourth vertex Central Asia HEC evolved into the and Turkey. Fourth vertices ap- notwithstanding the formal closure that has transformed the Greater Greater Central Asian HEC—and peared over time here also. Instead by the EU in 2016 of the underlying Turco-Caucasian HEC (with its the Turco-Caucasian HEC into the of one every six years, however, institutional support mechanism Azerbaijan-Russia-Turkey keystone Greater Turco-Caucasian HEC— there has been one every 12 years. launched in 1995 under the mon- triangle) into the West-Central then why are there no analogous The United States was the domi- iker “Interstate Oil and Gas Trans- Eurasian HEC. developments in South Asia? nant energy player from outside portation to Europe” and better During the 2000s and early 2010s, the region during the 1990s and known as INOGATE. hat about other Cen- this question was in fact not yet the early 2000s. It was the U.S. that Wtral Eurasian HECs? If decided. The projects of the Iran- made it possible for BP to strike the Following the logic of the succes- the Greater Turco-Caucasian Pakistan-India pipeline, a puta- “Contract of the Century” with sive enlargements from the Central HEC grows into the West Central tive underwater Iran-Oman-India Azerbaijan. Not just American Asian to the East-Central Eurasian Eurasian HEC, if the Greater pipeline, and the Turkmeni- companies but also American di- HEC, China might be next on the Central Asian HEC grows into stan-Afghanistan-Pakistan-India plomacy were intimately involved, scene through the 2020s. However, the East Central Eurasian HEC, (TAPI) pipeline together raised in the late 1990s, in the negotiations there are not yet any signs of this; and further if these enlargements the possibility of the emergence around the first incarnation of the nor, in fact, are there likely to be any permit these complexes to merge of a South Asian or Greater South TCGP. However, the United States such signs. Indeed, China has been and grow into one another, then Asian HEC. began to lose interest in the re- and is continuing to turn its atten- how should the evolution over gion’s energy geoeconomics in the tion to South Asia, in particular time of this phenomenon be con- The TAPI pipeline project mid-2000s, and that relative lack of Pakistan and most recently Iran, ceived and periodized? To answer would have played a role in con- interest has endured up until the the northwestern section of which this question, it is necessary first necting a putative Greater South present day. was originally considered above to realize that although the West Asian HEC with the Greater as a part of cultural-demographic Central Eur- Central Asian t was the European Union Greater Turco-Caucasia, but which asian and East HEC; and also the Ithat next entered the scene, was excluded from energy-geoeco- Central Eurasian There can be no better cat- Iranian projects first with the inter-ministerial con- nomic Greater Turco-Caucasia. HECs may to- alyst for achieving the last- with the Greater ference and the resulting Baku gether define—in ing stability and prosperi- Turco-Caucasian Initiative in 2004, which was the The Southern Gas Corridor and its broad out- ty of Central Eurasia than HEC. In the event, first meeting ever in which the continuing offshore developments lines—the Central however, the ener- EU and the South Caucasus and in Azerbaijan guarantee the EU’s Eurasian HEC, the final realization of the gy-geoeconomic Central Asian countries discussed continuing presence in the Greater nevertheless this is fully-fledged Trans-Caspi- consolidation of energy cooperation. The initiative Turco-Caucasian HEC. Indeed, not the limit of the an Gas Pipeline. neither South Asia was followed by the 2006 Astana just as China become the enduring analysis. nor Greater South Roadmap. The EU’s interest con- fourth vertex that transformed Asia occurred. Had tinued with the Nabucco project, the Greater Central Asian HEC If the energy geoeconomics of it occurred, it could have theoreti- which turned into the Southern (with its Kazakhstan-Russia-Turk- the 1990s and early 2000s pro- cally further enlarged into a South- Gas Corridor with an Italian rather menistan keystone triangle) into duced the HECs of Central Asia Central Eurasian HEC. Geo- than an Austrian terminus. The the East-Central Eurasian HEC, and Turco-Caucasia, and from the physical limitations such as the

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Himalaya mountain range, as well reach all the way to Sakhalin, and the mid- to late-1980s. By contrast, Challenges to the stability of any as social-demographic limitations even to the Kamchatka gas pro- Central Asia was the last region of international system typically begin such as produce political unrest duction center, while including as the Soviet Union where the union to appear during its third super- the transborder Baluchistan re- well the Yakutia and Irkutsk gas republics declared their indepen- phase, which for the current system gion, are among the factors that production centers and the whole dence. Kazakhstan was indeed the would begin in 2028. The failure to prevented such a development. Power of Siberia pipeline linking to very last, four days even after the govern the said challenges results There were, however, also economic China. The latter would include the Russian Federation did so. in a breakdown into a transitional and financial constraints, not to Yamal development and other west period to a new in- mention political and geopolitical Siberian and Arctic production The phases of the ternational system. barriers, that could not be overcome. centers, with their pipelines linking evolution of the Challenges to the stabil- The final super- to the EU. However, these two en- broader-scale Cen- ity of any international phase—one of s there a North-Central ergy-geoeconomic formations are tral Eurasian HECs system typically begin to meta-coherence— IEurasian HEC? Not really. still in their emergent phase. Even were assigned the appear during its third would fall into the If there were a North-Central if they would appear to be passing dates 1992-1997, superphase, which for the period 2028-2045. Eurasian HEC, it would include from emergence to autopoiesis, 1998-2003, and current system would be- The argument in mainly Russian territory. But the their boundaries are still somewhat 2004-2009, for favor of this pat- Russian gas transmission system is amorphous. the reasons given gin in 2028. tern is especially still not nationally unified with a above. Recalling persuasive in view comprehensive export pipeline net- that not only energy-geoeconomic of the fact that a number of fore- work, as for example is Turkmen- Keystone Triangle HECs but also chronological EAC sight scenarios (including one of istan’s, which can export gas from cycles can be nested within one my own, elaborated from the same any corner of the country in any di- ther work established the another, it is natural to conceive complex-scientific principles as set rection. Russian President Vladimir Ofirst three phases of evo- that that EAC cycle on the Central out here for studying HECs) pre- Putin had once envisioned both the lution of what I now call Greater Eurasian scale, running from dict the downfall and collapse of EU and China being connected up Turco-Caucasia (the geopolitical 1992 through 2009, may be a su- the current “post-Cold War” inter- to West Siberian sources of natural construct, as opposed to its HEC) perphase of a meta-EAC cycle. If national system in the mid-2040s. gas, with his own hand on the valve as 1989-1994, 1995-2000, and 2001- so, then it would be followed by Complex-systems studies predict to determine which direction it 2006; whereas the first three phases a superphase of meta-autopoi- that the trigger will come in the might flow; however, that did not of the evolution of Greater Central esis (embedding another EAC early 2030s, and that after the mid- come to pass. Asia (the geopolitical construct, as cycle with the three phases: 2010- 2040s there will follow a dozen opposed to its HEC) were 1995- 2015, 2016-2021, and 2022-2027). years of another “international A putative North-Central 2000, 2001-2006, and 2007-2012. The projects entering into service transition” (a period coincidentally Eurasian HEC is in fact divided Recall that this five-year offset during these years would define similar in length to the dozen years between what one might call—if is due to the fact that the post- the axes of development for the following the end of the Cold War). events continue along the paths Soviet transition effectively began whole of energy production—from already tentatively sketched—a in the South Caucasus roughly five Central Europe to Central Asia— It is interesting to note that we Greater East-Central Eurasian years earlier than in Central Asia. over the entire half-century fol- are near the midpoint between HEC and a Greater West-Central The civil war in Georgia and the lowing the collapse of the Soviet the origin of the present interna- Eurasian HEC. The former would First Karabakh War all date from Union. tional system (the year 2001) and

Vol. 4 | No. 3 | Spring 2021 52 53 Vol. 4 | No. 3 | Spring 2021 BAKU DIALOGUES BAKU DIALOGUES its breakdown. of Europe, and the ports, securing revenues totally cated, later on, to entertain the But how it breaks The knitting-togetherother crossing from independent from those gained possibility that the Central Eur- down is path-de- of the East-Central and Georgia under from Russia and China. Just as the asian HEC enlarges into a Greater pendent over West-Central Eurasian the Black Sea and Baku-Tbilisi-Ceyhan oil ex- Central Eurasian HEC. This could time. The present making landfall port pipeline was a demonstra- possibly include North-Central system’s configu- HECs into a genuine in Romania (the tion project enabling the South Eurasian parts of Russia not part of ration in the late overall Central Eurasian White Stream Caucasus Pipeline and the Southern the East-Central and West-Central 2020s and 2030s HEC is the pivot upon pipeline project) Gas Corridor, so the TCGP would Eurasia HECs; and, even more im- would therefore which the energy geoeco- for markets in be a demonstration project sig- portantly, this opens the possibility condition the par- nomics of those future de- Central and Eastern naling that other trans-Caspian for integration with South-Central ticular character- velopments will turn. Europe. energy projects might go forward, Eurasian regions, notably India, istics of how that while also giving a decisive boost as a necessary balance against the breakdown comes Such a TCGP to transport and other projects out- Chinese and now Russian ener- to pass—i.e., the will assure the side the energy sector. gy-geoeconomic domination of Pa- “initial state” for the next interna- robust formation of the Central kistan as well as against the ever-in- tional transition, which will pro- Eurasian keystone triangle, com- s the two components creasing Chinese presence in Iran. duce the point of departure for posed of Azerbaijan-Kazakhstan- Aof a prospective Central the evolution of the next interna- Turkmenistan, thus unifying Eurasian HEC grew together and The unification—or not—of the tional system, as from the mid- to the East-Central Eurasian ener- increasingly intertwined from West- and East-Central Eurasian late-2050s. gy-geoeconomic keystone triangle, 1992 to 2009, it has become ap- HECs will condition how this third Azerbaijan-Russia-Turkey, with its propriate to refer to the expanded superphase (meta-coherence, from he knitting-together of the Kazakhstan-Russia-Turkmenistan c Greater Turco-Caucasian HEC as 2028 to 2045) will begin to emerge, TEast-Central and West- ounterpart in West-Central Eurasia. the West-Central Eurasian HEC, thus whether Central Eurasia and Central Eurasian HECs into a gen- and to the expanded Greater eventually Greater Central Eurasia uine overall Central Eurasian HEC Despite the European Green Deal, Central Asian HEC as the East- will emerge and cohere either as is the pivot upon which the energy the TCGP remains an important Central Eurasian an HEC or even geoeconomics of those future de- project for Europe, for numerous HEC. In further From the standpoint of as a coherent geo- velopments will turn. For the sta- reasons that have been explained evolution, the political unit. The bility of the countries in the region, elsewhere. From the standpoint former has enlarged energy geoeconomics, TCGP would thus not to mention for the well-being of of energy geoeconomics, upon already to extend to upon which so much of be a potential cat- the populations there and their eco- which so much of general geopo- southern Europe, general geopolitical evo- alyst for the benefi- nomic prosperity, there can be no litical evolution today depends, for example via lution today depends, the cial evolution of the better catalyst than the final realiza- the implementation of Turkmen the Southern Gas implementation of Turk- structure of the in- tion of the fully-fledged Trans-Cas- gas exports to the EU in sizeable Corridor to Italy, ternational system pian Gas Pipeline (TCGP) with quantities would cement Central and the latter to men gas exports to the up to the half-c its two large-volume strings: one Asia’s ties with Europe. No other China’s coastal areas EU in sizeable quantities entury, and even feeding a further expanded South project can do this. Kazakhstan and eastern Siberia. would cement Central decades beyond: a Caucasus Pipeline into the Southern and Uzbekistan would later join It therefore Asia’s ties with Europe. factor for stability Gas Corridor for markets in the south Turkmenistan in westward gas ex- becomes indi- while the rest of the

Vol. 4 | No. 3 | Spring 2021 54 55 Vol. 4 | No. 3 | Spring 2021 BAKU DIALOGUES BAKU DIALOGUES world is in the throes of yet another only cost-effective source for system-change. significant quantities that would be able to decrease its depen - he foundational basis—the dence on Russia. Leaving aside Tkeystone triangle—of the the manifold benefits and pros- East-Central Eurasian HEC is the perity that would accrue from Kazakhstan-Russia-Turkmenistan implementing the TCGP and triangle, with China adjoined to its follow-on projects—both in form a quadrilateral (treatable as and outside the energy sector— four triangles). That having been it is obvious from sheer geog- said, Russia-Turkmenistan energy raphy and geoeconomics that relations are nearly nonexistent Azerbaijan is the key link of this now, so any triangle that would keystone-triangle bridge repre- include those two vertices to- sented by the incipient Azerbaijan- gether would be of trivial signifi- Kazakhstan-Turkmenistan forma- cance. Of the three tion—so, in other triangles formed . The TCGP would thus words, between by Turkmeni- Eastern-Central stan with any pair be a potential catalyst for and Western- of vertices from the beneficial evolution Central Eurasia— its foundational of the structure of the and not just for en- basis, only the international system up ergy HECs alone. China-Kazakhstan to the half-century, and For Kazakhstan, -Turkmenistan even decades beyond: a Turkmenistan, one has any real and even Uzbeki- significance— factor for stability while stan to have a for now. As for the rest of the world is in western egress to the West-Central the throes of yet another European markets Eurasian HEC, system-change. will only enhance with its Azerbai- stability in the jan-Russia-Turkey Caspian Sea re- keystone triangle, the EU is the gion by providing more balance additional vertex now forming a for their multi-vectorial foreign quadrilateral. policies. Such increased stability would be to everyone’s benefit in The EU has already come the turbulent decades to come, up to terms with its continuing through the collapse of the cur- need for natural gas. The rent international system in the Caspian Sea region is the 2040s, and beyond. BD

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Europe and is a platform for in- The present corridor is com- The Strategic Benefits of the creased supplies to these markets prised of four different com- and also can be extended to reach mercial projects: the upstream additional markets in Europe. With development of the Shah Southern Gas Corridor the completion of the first stage Deniz II gas field in of the Southern Gas Corridor, Azerbaijan; the expansion of the Azerbaijan and SOCAR, together South Caucasus gas pipeline; Vitaliy Baylarbayov with their partners, are examining the establishment of the Trans- strategies for the next phase of the Anatolian Pipeline (TANAP) corridor’s development. through Turkey; and the es- t the end of 2020, the supplied its first gas to the Turkish tablishment of the Trans- Southern Gas Corridor market and went on to change the he Southern Corridor is Adriatic Pipeline (TAP) from became fully operational. dynamics of that country’s gas a strategic mega-project, the Turkish border to Greece, ThisA marked the completion of a market, whereby Azerbaijan is now T transiting seven countries and six Albania, and Italy via the journey that began a decade ago one of its top gas suppliers. On regulatory systems. The project Adriatic Sea. In tandem with the when the government of Azerbaijan December 31st, 2020, inaugural links 11 different investors and, in FID on the Southern Gas Corridor, and the State Oil Company of the commercial gas supplies arrived from its first stage, will supply 12 dif- Azerbaijan and its investment Azerbaijan Republic (SOCAR) the Caspian into Europe, signaling ferent gas buyers. SOCAR and BP partners have extended Produc- took a strategic decision to launch the commencement of the Southern have been involved in all aspects tion Sharing Agreements (PSAs) a major natural gas export project. Gas Corridor’s full operations. of the $33 billion project. The con- on the Shah Deniz field to the sortium and SOCAR concluded year 2048. The Southern Gas Corridor is one For Azerbaijan, the Southern Gas 25-year contracts with European of the largest and the most expen- Corridor provides a major source of gas buyers, which serve as a check This essay will next examine sive gas supply projects in the world revenue unlinked to the global oil on potential changes in market Azerbaijan’s political and com- built to date. In December 2013, market; the project also strengthens conditions. Despite the commercial goals in establishing the SOCAR and its partners signed a Baku’s links with its neighbors and plexity and scope Southern Gas Final Investment Decision (FID) Europe. For SOCAR—as operator of the project, Corridor. It will to establish a gas pipeline corridor of components of the project and the Southern then consider the from Azerbaijan through Georgia, investor in all its segments—the The Southern Corridor is Gas Corridor has project’s impact Turkey, Greece, and Albania be- project’s success represents a major been completed a strategic mega-project, on European en- fore ending in Italy. A branch pipe- step in the company’s transition on schedule and transiting seven coun- ergy security, line is now under construction to from a national to an international below budget. Ini- tries and six regulatory the strategic im- Bulgaria, which is expected to energy company. The Southern tial project costs portance of the be completed in the second half Gas Corridor provides new gas systems. were estimated project, and the of 2021. In July 2018, the project supplies to Turkey, Georgia, and at $44.6 billion, hurdles that were while in the end the project was overcome. It will conclude with a Vitaliy Baylarbayov is Deputy Vice-President for Investments and Marketing of completed with an investment of discussion of lessons learned for SOCAR, the state oil company of Azerbaijan. An earlier version of this essay had been $33 billion—a savings of more international energy export and posted on the Baku Dialogues website in late 2020, which the present one supersedes. than 26 percent. policy.

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Azerbaijan’s and SOCAR’s investment and develop its energy meters of natural gas and more than in decline. Moreover, with some resources—extreme challenges in 240 million tons of condensate. European states attempting to phase goals light of the prevailing situation. out coal consumption and nu- Moreover, Azerbaijan’s landlocked In addition to providing a steady clear energy, there will be growing he main goals of contem- status meant that it needed coop- revenue stream, the Southern Gas demand for natural gas in many Tporary Azerbaijan and eration from neighbors to get its Corridor project is designed to European markets. SOCAR—in terms of oil and nat- hydrocarbon resources to world strengthen the country’s ties with ural gas production and export markets. It was, in its neighbors and Europe. More The economics of the Southern projects—have al- short, almost im- broadly, Baku hopes that the project Gas Corridor project were posi- ways been to pro- possible to imagine will generate a stronger Western in- tively affected by the fact that Shah vide resources to Despite the complexity and scope of the proj- that the young state terest in preserving peace and se- Deniz is also a condensate field; fuel the country’s could carry out curity in the South Caucasus, due thus, production of the gas is ac- development and ect, the Southern Gas major new pro- to Azerbaijan’s new role as a major companied by condensate pro- strengthen its inde- Corridor has been com- duction and export energy supplier. duction for export as well, which pendence and se- pleted on schedule and projects. Yet a little is linked to the global price of oil. curity. Azerbaijan below budget. more than a de- As noted above, SOCAR is in The gas supply contracts concluded reestablished its cade following this the midst of an important transi- for the first stage of the Southern independence in tragic period, the tion from a national oil company Gas Corridor are exceptionally l 1991, amid the collapse of the Baku-Tbilisi-Ceyhan (BTC) oil into an interna- ong-term—up to Soviet Union, and is geograph- pipeline and the South Caucasus tional oil com- 25 years—as are the ically located at the geopolitical gas pipeline had both become op- pany. SOCAR is In addition to provid- transit agreements. crossroads of three major powers: erational. Revenues from these the operator of the ing a steady revenue Two important Turkey, Russia, and Iran. energy export projects allowed Southern Caucasus stream, the Southern Gas considerations Azerbaijan to develop good infra- Pipeline and is also Corridor project is de- follow from this: Early in its independence pe- structure and public services as well an investor in all the signed to strengthen the first, Southern Gas riod, neighboring Armenia invaded as build housing for the refugees. components of the country’s ties with its Corridor supplies Azerbaijan and occupied close to Southern Gas Cor- are not subject to 20 percent of the latter’s sover- n 2010, the government of ridor, including the neighbors and Europe. market vacillations eign territory. Armenia expelled IAzerbaijan and SOCAR de- European portion— and price volatility; all ethnic Azerbaijanis from both cided to launch the Southern Gas TAP. Thus, the Southern Gas second, consumers are able to rely Armenia and the occupied territo- Corridor in order to take further ad- Corridor constitutes a new investment on stable gas supplies at an antici- ries, turning more than one million vantage of the country’s more than model with the European Union. pated price. Azerbaijanis into refugees or dis- 2.6 trillion cubic meters of proved placed persons. The new state also gas reserves. Additional Azerbaijani n terms of its commercial goals, Prior to launching this gas ex- inherited a collapsed economy and gas reserves are currently estimated ISOCAR, BP, and other Shah port project, Azerbaijan needed to healthcare and education systems. at 3.45 trillion cubic meters. The Deniz partners assessed that while design it in such a way as to ensure Shah Deniz field is a large, world- natural gas demand in Europe may alignment with the interests of In the midst of this turmoil, class gas resource in Azerbaijan, stagnate, imports will grow because multiple public stakeholders (i.e. Azerbaijan sought to attract foreign containing over 1 trillion cubic domestic production in Europe is Turkey, Georgia, Albania, Greece,

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Italy, the EU, and United States) European Energy Security strategy that extended over mul- For instance, on July 12th, 2020, and companies (chief among tiple terms of both American ad- Armenia launched an attack on them BP). This was not an easy he volumes of the Southern ministrations and EU commissions. Azerbaijani military units stationed feat, since divergent goals were TGas Corridor are quite near the border between the two in play: the companies wanted to modest relative to Europe’s overall The Southern Gas Corridor states in the Tovuz region—a part bring supplies to the most profit- gas consumption. However, the has also catalyzed the building of of the country through which its able markets in Europe in the most project provides for significant interconnector natural gas pipe- major energy and transport corridor cost-efficient manner whereas supply diversification for specific lines in Southeast runs westward, in some political actors wanted the markets, which constitutes its Europe. Further the direction of gas supplies to reach Europe’s unique energy security and geopo- interconnecting The project provides for Europe. At the time most vulnerable markets (located litical contribution. The contracted gas markets across significant supply di- of these attacks, in Eastern and Central Europe) gas to Europe in its first stage is 10 Europe has been an versification for specific Elshad Nasirov, in order to improve the region’s billion cubic meters (BCM) an- American and EU markets, which consti- Vice-President of security of supply. In designing nually, in addition to 6 BCM to policy goal for a tutes its unique energy SOCAR for Mar- the Southern Gas Corridor, Turkey. It should be noted, in this long time; how- security and geopolitical keting and Invest- Azerbaijan therefore had to iden- context, that the capacity of TANAP ever, it was only ments, stated that tify a route that met both commer- and TAP can be relatively easily this private sector contribution. “it is not by chance cial and policy goals. doubled to 32 and 20 BCM, respec- initiative that was that Armenia tively. Moreover, these can be fur- able to establish such an inter- launched a military operation zerbaijan’s gas export ther expanded to deliver additional connection in practice. The Ioni- against Azerbaijan three months Astrategy reflects several volumes. By 2022, the gas supplied an-Adriatic Pipeline (IAP) is an ad- before the start of Azerbaijani gas principles. First, Azerbaijan by the Southern Gas Corridor will ditional interconnector with likely supplies to Europe.” works with all countries. Thus, provide, in terms of total national prospects for development. Azerbaijan exports gas in multiple gas consumption, 13 percent of de- Yerevan chose the timing and directions and is prepared to transit mand in Italy, 20 percent in Greece, location of the attacks in an at- it from multiple sources without and 33 percent in Bulgaria. Clear Strategic Value tempt to create the impression that discrimination. Second, the in- Armenia has the capacity to disrupt vesting companies in the Southern The high-level support extended he geopolitical impor- this strategic energy and transit Gas Corridor are from multiple to the Southern Gas Corridor by Ttance of the Southern Gas corridor. During the fighting, countries and even different con- both Washington and Brussels over Corridor was clearly illustrated in Armenia attempted to capture the tinents. A prevailing principle the past decade contributed to the the weeks before the project’s tech- Qaraqaya Heights in Azerbaijan, is that energy is never used as project’s success. The United States nical operational commencement which are perched above the en- a coercive political tool. Third, and the EU sought to improve Eu- in November 2020. Due to the ergy and transit corridor. Following Azerbaijan is not competing with rope’s energy supply security and clear strategic value of the project, these attacks, senior Armenian of- other suppliers in the European reduce national security vulnera- Azerbaijan’s adversaries—together ficials haughtily pointed out that market. It does not strive to supplant bilities by establishing a new source with those that oppose the im- Armenia’s goal in the fighting was another supplier but rather to make and a new route of gas supplies into provement of European energy se- to make it clear to the EU that more gas supplies available to the Europe from the Caspian region. curity—sought to undermine the somehow “Armenia is the guar- European continent. Doing so required a long-term Southern Gas Corridor project. antor” of Europe’s energy secu-

Vol. 4 | No. 3 | Spring 2021 62 63 Vol. 4 | No. 3 | Spring 2021 BAKU DIALOGUES BAKU DIALOGUES rity, announcing energy security and costs more in Europe on average consortium was able to conclude that Yerevan had As a result of the war, geopolitical needs than most pipeline-supplied op- 25-year gas supply contracts that plans to coordi- Azerbaijan removed the that could not be tions. Many consumers in Europe will allow it to sell all the gas ca- nate with the EU’s Armenian threat to the fulfilled by LNG. have found the price of LNG to be pacity planned in the first stage of Directorate Still others asked prohibitive. the project’s production. Southern Gas Corridor General for Energy whether, given sig- in light of the July and restored its strategic nificant growth in Second, relying on LNG supplies Fourth, geographic factors also 2020 attacks. deterrence. renewable energy exposes consumers to extreme vol- restrict LNG supplies. LNG cannot consumption and atility in prices. The potential for solve the gas needs of many land- As subsequent events made clear, public support for such direction- extreme LNG price spikes was il- locked states in Europe presently the July 2020 fighting represented ality, there would be significant lustrated in January-February 2021, dealing with security of supply an initial phase of the full-scale future demand for natural gas in when a cold spell in Asia rocketed challenges—mostly located in Second Karabakh War that broke Europe. demand for LNG cargoes, leading Central and Eastern Europe. More- out in autumn 2020. As a result of subsequently to soaring gas prices over, countries whose maritime ac- the war, Azerbaijan successfully lib- Thus, before seeking invest- in Europe and the UK as well as cess is located east of the Bosporus, erated its territories that had been ment, SOCAR and its partners increasing the level of difficulty to such as Bulgaria and Ukraine, under Armenian occupation for had judged that while renewable access supplies. During this same cannot directly receive LNG sup- close to three decades. In addition, capacity and demand was growing time period, pipeline-supplied nat- plies, since LNG vessels are prohib- Azerbaijan removed the significantly in Europe, the EU had ural gas continued to be delivered ited from transiting this waterway. Armenian threat to the Southern not fully found adequate substitutes to Europe stably and at a much To this may be added the fact that Gas Corridor and restored its for its diminishing nuclear and coal lower price. This is an important increased instability in recent years strategic deterrence. generation capacity. In addition, case study in comparing the secu- in regions and countries that border SOCAR and its partners were able rity of supply and security of price major trade waterways—most no- to draw on the scientific and public benefits of pipeline gas versus LNG tably the Persian/Arab Gulf—has Hurdles Overcome policy consensus that had deter- for Europe. increased public aversion to current mined that natural gas is the most trade policies in parts of the West. ot only has the Southern compatible baseload fuel with the Third, as additional regions of Also, unexpected external shocks, NGas Corridor had to concurrent generation of renewables. Europe—particularly the Bal- such as the COVID-19 pandemic, tend with military threats to the Thus, a conclusion was drawn that kans and other parts of Southeast raise further questions about the project’s security, but it has also had demand for renewables went hand Europe—develop economically reliability of LNG deliveries. to address questions about its long- in hand with demand for pipe- enough to adopt more environmen- term commercial viability in light line-supplied natural gas. tally friendly fuel mixes, demand n additional hurdle to of significant gas market changes. for natural gas in these regions is Aactualizing the Southern Gas During its development stage, some emand for pipeline natural anticipated to grow. However, most Corridor project came in the form questioned whether mega-natural Dgas will be preserved for at of these new consumers will find of the potential for EU regulatory gas supply pipeline projects were least several more decades, despite LNG access prohibitive, either be- changes proposed after it had - al still relevant in a world awash in the rising available supplies of LNG cause of geographic or price con- ready been initiated and foreign liquified natural gas (LNG); others for several reasons. First, pipeline straints. Indeed, despite increasing investments made. This hurdle has raised the issue of whether they met natural gas is cheaper: LNG still LNG options, the Shah Deniz been overcome by agreement.

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Initially, it was widely assumed that II of the Southern Gas Corridor. of production in new fields. These the new gas resources originating the political risk of the project was SOCAR now aims to reach addi- include Shafag Asiman (the giant in Azerbaijan. highest in Georgia and Turkey, and tional markets and transit natural structure where the first explora- that the European portion would be gas from additional locations as tion well is being drilled by BP), In addition, the November 10th, built smoothly. In reality, the Geor- well as to develop Azerbaijan’s un- Babek (400 BCM of gas), Absheron 2020, the agreement that ended the gian and Turkish portions were built tapped gas resources. In this next (350 BCM of gas), and Umid (at Second Karabakh War contains a without a glitch: on time and below phase, the Southern Gas Corridor least 200 BCM of gas)—all of which provision stating that infrastructure budget. It was, in would be able to also contain extensive condensate links between the two states will fact, the segment in transport gas from reserves. Azerbaijan is engaged in be restored. Accordingly, a direct Europe (TAP) that In this next phase, the new sources, such the development plans for these re- pipeline between Nakhchivan and ended up presenting Southern Gas Corridor as those located sources and seeks to add between the main part of the country can be the biggest chal- would be able to trans- in the Eastern 15 and 20 BCM annually by 2030. envisioned. lenge: project costs Mediterranean, were greatly reduced port gas from new sourc- Central Asia, and, SOCAR is also engaged in de- in the easternmost es, such as those located at some point, veloping new infrastructure to parts of the Southern in the Eastern Mediterra- Iran.For instance, extend the reach of current gas Lessons for International Gas Corridor lo- nean, Central Asia, and, the signing on production. One significant new Energy Projects cated in Azerbaijan, at some point, Iran. January 21st, piece of infrastructure will be the Georgia, and Turkey 2021, of a Memo- pipeline connecting Nakhchivan— he decade of work that whilst costs in the randum of Under- Azerbaijan’s exclave—to Turkey’s Twent into the Southern Gas TAP segment dropped only mar- standing between Azerbaijan and existing pipeline network, which is Corridor—from conception to ex- ginally. Moreover, the Southern Gas Turkmenistan on the joint develop- already supplied by Southern Gas ecution—provides several lessons. Corridor elements in Azerbaijan, ment of the newly named Dostluq Corridor volumes from the main First, major energy production and Georgia, and Turkey were completed oil and gas field in the Caspian Sea part of Azerbaijan supply projects re- ahead of schedule whilst TAP ended increases the likelihood of the fu- via the existing quire fulfillment of up being delivered later than initially ture export of Central Asian hydro- pipeline corridor. One significant newboth commercial expected. Investors considering the carbons westward via the Southern Despite being piece of infrastructure and policy goals. establishment of new supply projects Gas Corridor and the BTC oil small and inex- Policy goals alone into Europe very clearly noticed these pipeline. This agreement reflects a pensive, this new will be the pipeline con- are not enough challenges, which represents an infor- mutual desire of the two states for piece of infrastruc- necting Nakhchivan— to incentivize the mative case study. increased cooperation. ture will have a Azerbaijan’s exclave—to establishment of significant impact Turkey’s existing pipeline production and in- In Azerbaijan, SOCAR plans to on regional gas network. frastructure costing Looking Ahead produce additional gas volumes flows, increasing billions of dollars. through the initiation of new the security of supply to On the other hand, commercial ow that the Southern Gas phases of production in existing Nakhchivan and creating greater ventures on their own—without NCorridor is up and run- fields (e.g. Shah Deniz III, deep gas interconnection within Turkey significant public interests and ning, SOCAR has turned its atten- in the Azeri-Chirag-Gunashli field itself, thereby allowing addi- political support—probably tion to the development of Phase project) as well as the inauguration tional regions of Turkey to access cannot make it across seven

Vol. 4 | No. 3 | Spring 2021 66 67 Vol. 4 | No. 3 | Spring 2021 BAKU DIALOGUES BAKU DIALOGUES states with two dozen investors of the Southern Gas Corridor. In providing baseload reductions by in- and gas buyers. contrast, many policymakers and generation (i.e. a With this new policy signal creasing their re- non-governmental organizations stable energy supply emanating from Brussels, spective consump- Second, states still fulfill an - im would like to reduce the use of nat- base that allows tion of natural gas. portant role in proving for energy ural gas, which they lump together proper electricity many EU member states security. Having strong political with other fossil fuels. Environ- grid function). are likely to adopt the The July 2020 support from the government of mental NGOs in the EU today tend Major gas import quickest path to emissions tragic attacks by Azerbaijan, the main partners along to treat natural gas similar to the projects such as reductions by increasing Armenia in close the route (such as Turkey), and the Union’s policy toward coal and oil, the Southern Gas their respective consump- proximity to the United States and the European despite the lower environmental Corridor require tion of natural gas. Southern Gas Cor- Union were all essential to the suc- and climate impact of natural gas. years of planning ridor are a reminder cess of the Southern Gas Corridor. and major invest- of the importance of It should be noted, of course, that ment commitments. This means that the continued protection of critical Third, receiving gas supplies the current phase of Caspian gas the EU needs to clearly signal years energy infrastructure. Because these requires years, if not decades, of export will not be affected by any ahead if it wants to receive new gas pipelines have strategic importance, planning and ac- anti-gas sentiments supplies in order to secure a smooth they can become easy targets. Now tivity and the EU in the EU, since transition to a greener economy. that the project is up and running, will need to give Having strong political long-term supply it needs to be constantly protected: a signal to the contracts have In December 2020, the European Azerbaijan will continue to engage in market if it wants support from the govern- been concluded. Commission decided that each EU further improving its critical energy to receive new fu- ment of Azerbaijan, the However, further member state could chose the com- infrastructure-protection capabilities. ture gas supplies. main partners along the exports and poten- position of its own fuel mix and thus The European route (such as Turkey), tial the expansion the way it plans to achieve emissions Of course, the best protection is Union is presently and the United States and of the Southern reductions. Accordingly, this is in- peace. As part of SOCAR’s next stage engaged in a policy the European Union were Gas Corridor pipe- terpreted to mean that EU member of project development, the gov- formation process line network could states can include natural gas and ernment of Azerbaijan has initiated to determine the all essential to the suc- be affected by pre- nuclear energy in their future fuel plans to renew energy supplies to role of natural gas cess of the Southern Gas vailing attitudes to- mixes. This decision may lead to an Azerbaijan’s newly-liberated terri- in its fuel mix in Corridor. ward the consump- increase in demand for natural gas in tories. These supplies will be made the decades prior tion of natural gas. Europe. In this context it is useful to available to the entire population to transitioning to the primary con- underline that America’s experience of the formerly occupied territo- sumption of renewable energy. The he EU is thus in a policy co- indicates that the cheapest and fastest ries, as is the case with all citizens of EU faces a policy dilemma on the Tnundrum: its institutions and way to achieve climate-altering emis- Azerbaijan. Hopefully, the victory role of natural gas in its future fuel popular sentiment are, by and large, sions reduction is through switching that returned the liberated territories mix. On the one hand, EU institu- averse to supporting new gas proj- from coal to natural gas in power to Azerbaijan will also produce a new tions seek to produce comprehen- ects in Europe; at the same time, production. With this new policy phase of peace in the South Caucasus sive policies to ensure the security renewable energy supplies at this signal emanating from Brussels, in which energy infrastructure will of their gas supplies, such as the stage cannot deliver Europe’s en- many EU member states are likely to play an important role in advancing EU’s support for the establishment ergy needs—especially without gas adopt the quickest path to emissions regional cooperation. BD

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2020, in light of technical delays in the World Bank supplied a $400m The Southern Gas Corridor the pipeline’s inauguration and the loan, and both the European Bank big changes in energy markets de- for Reconstruction and Develop- scribed above: “the TAP pipeline is ment (EBRD) and the European and the New Geopolitics of 90 percent completed and will be Investment Bank (EIB), owned by inaugurated soon. Unlike oil pipe- EU member states, also provided Climate Change lines, whose flexible delivery to the large funding. In October 2017, the end-consumer can EBRD approved a be sorted out once €1.5bn financing Morena Skalamera they are built— The EU, backed by package for the as oil travels via the United States, has TAP project. This tanker, rail, etc.— long championed the included €500m t has been argued that the U.S. Deniz II field and at least $15bn gas pipelines are Southern Gas Corridor of its own cru- shale revolution, the Trump for the delivery system) to supply more rigid invest- as a way for Europe to cial money—the Administration’s energy pol- natural gas from the Caspian Sea to ment endeavors. EBRD’s big- icies,I and the global shift towards Europe and, by so doing, reduce re- reduce its dependence on [...] You don’t agree gest-ever single low-carbon energy sources and reliance on Russian imports. This is a on a gas pipeline Russian gas. loan—and a fur- newables have contributed to shape priority that has taken on urgency unless you have ther €1bn syndi- a new energy order—one that chal- in the wake of Russia’s 2014 an- secured a buyer on the other end.” cated loan to one of the Southern lenges the market power tradition- nexation of Crimea and the sharp While natural gas supplies from Gas Corridor pipelines, the TAP. ally enjoyed by petro-states. No- deterioration in relations between Azerbaijan’s Shah Deniz field are Similarly, the EU’s EIB in February where are these developments more Moscow and Brussels that ensued. already contracted, the project 2018 approved a €1.5bn loan for relevant than in Azerbaijan, as the Currently, the SGC is made up of has seen numerus twists and turns building the TAP, one of the largest country’s expensive investments in two pipelines to deliver gas from since it was signed with great fan- ever for Europe. the Southern Gas Corridor come Azerbaijan’s Shah Deniz II field to fare at the end of 2013. The SGC is under increasing pressure. Unless Turkey and Europe—one called an expensive endeavor and the in- These loans came under in- Azerbaijani gas can be decarbon- TANAP that is already operational stitutions that lined up to finance creased scrutiny when in October ized at a competitive cost, it may and runs the length of Turkey, and it are a testament to the degree of 2017 the board of the Extractive risk becoming redundant within another known as TAP stretching strategic importance it carries for Industries Transparency Initiative a couple of decades as Europe from Turkey’s border with Greece the EU. The project has, indeed, (EITI) instructed the Azerbaijani embraces a greener future. across Albania to Italy, which been designated as one of the EU’s government to revise some laws started pumping gas in late 2020. “priority projects.” regarding civil society within four Geopolitics and Geo-economics months or face suspension, on the The Southern Gas Corridor (SGC) This is how a leading ADA he EU, backed by the United grounds that Baku had not made is a $45bn mega-project ($25bn University policy expert described TStates, has long championed satisfactory progress on require- for the development of the Shah the situation to me in October the Southern Gas Corridor as a ments related to civil society en- way for Europe to reduce its depen- gagement. In response, Azerbaijan Morena Skalamera is University Lecturer in Russian and International Studies at the dence on Russian gas. BP is a major withdrew from the international Institute for History of Leiden University. shareholder in the project, to which transparency watchdog, presenting

Vol. 4 | No. 3 | Spring 2021 70 71 Vol. 4 | No. 3 | Spring 2021 BAKU DIALOGUES BAKU DIALOGUES a dilemma to international finan- also been placed under the mi- the AIIB position with respect to need the resources, Baku needs cial institutions (IFIs) such as the croscope and discussed through questions about Azerbaijan’s re- their technology and the revenues. World Bank and the EBRD, which the prism of scholarly debates—as cord on corruption and democracy Moreover, SOCAR has been en- were at the time appraising loans exemplified by a 2018 Journal of subsequent to the latter’s entry as a abled to become a real player in the to Azerbaijan’s energy sector condi- Democracy article authored by Al- funder. More widely, such “pipeline international industry. And TAP, tional on its compliance with EITI exander Cooley, John Heathershaw, politics” in the SGC has been scru- with plans to deliver 10bn cubic norms. The withdrawal at first cast and J.C. Sharman entitled “The tinized for its divergence from the meters to Europe a year, will pro- doubt on prospects that Western Rise of Kleptocracy: Laundering normal ways in which economics vide modest yet important diver- IFIs would lend for Azerbaijan’s Cash, Whitewashing Reputations.” tended to trump politics in the Eu- sification in Europe’s natural gas contribution to the SGC project; ropean gas trade. As energy expert sources as well as slightly reduce but given the importance of the t the same time, Western Akhmed Gumbatov has argued in a the EU’s reliance on Russian sup- SGC, the U.S. and some European Astakeholders’ demands for recent Baku Dialogues essay, for the plies. Europe’s strategic interests countries lobbied against outright limited legal changes in light of EU and the U.S., the SGC is clearly a explain SGC’s built-in scalability suspension of the agreed financing, the October 2016 EITI ultimatum project of geostrategic importance. (i.e., the underlying desirability to with officials at the EBRD—the were not well received by senior increase its size) and investors’ in- only international financial insti- figures in the Azerbaijani - gov terest in the project despite the some- tution with a specific mandate to ernment, who pushed back hard SGC Benefits what high risks and costs associated promote democracy—insisting that against the perceived interference with it. it had ensured that TANAP met the in Azerbaijan’s internal affairs and, he EU insists that the SGC usual standards. subsequently, went on to mobilize Tis important for its efforts to As British sociologist Anthony less ‘demanding’ financiers. Two diversify supply routes and develop Giddens argues in his 2009 book According to an August 2018 months later, the China-led Asian an open, competitive gas market. The Politics of Climate Change, all story that appeared in the Financial Infrastructure Development Bank While not involving zero-emission risk assessment is contextual and Times, the EIB’s financing also went (AIIB) approved a loan of $600 or renewable energy, it will help to depends, in the final analysis, upon on without any human rights safe- million, the largest at that point replace coal and lignite, still widely values, which inevitably shape guards, spurring criticism over how in its history, for the construction used in the Balkans, with cleaner our perception of the saliency of Western officials and IFIs chose to of the TANAP gas pipeline from gas. In this sense, TANAP and TAP given threats: the constant variable minimize the inconvenient truth Azerbaijan to Turkey. As Elshad not only help increase total gas shaping decisionmaking given that that their energy policies (and re- Nassirov, Vice-President for Invest- volumes available to Europe, but no course of action is ever risk-free. lated funding) are directed toward ments and Marketing at SOCAR, they are also going to help diver- In that sense, the idea to open a actors whose human rights prac- the state oil company, told me: sify the gas supplies of central and new corridor to the European con- tices are understood to diverge “Chinese money was quicker.” southeastern EU member states tinent to import gas not only from from EU norms. Former British (and Western Balkans candidates Azerbaijan but the wider Caspian prime minister Tony Blair’s ap- Given that IFI finance is so crit- and aspirants), which strongly rely region and the Middle East, in- pointment for offering, through ical for the SGC, which had con- on Russia-dominated supplies of cluding Turkmenistan and Iraq, has his consulting firm, political and tinued to face a funding gap (es- natural gas. Compared with the dominated the EU’s energy policy strategic advice to the BP-led Shah pecially after 2014, when world oil Middle East, Azerbaijan is a safe discourse. Initially, the 3,500km Deniz consortium on the export prices collapsed), it appears that place to do business—due to the SGC network would transport gas of Azerbaijani gas to Europe has Western banks moved closer to fact that, while foreign companies from the giant, BP-led Shah Deniz

Vol. 4 | No. 3 | Spring 2021 72 73 Vol. 4 | No. 3 | Spring 2021 BAKU DIALOGUES BAKU DIALOGUES field in offshore Azerbaijan, but, In 2016, Šefčovič was quoted in far, only Azerbaijan which is why ideally, would in future draw sup- the Financial Times as saying, has gas reserved for Earlier in 2021, Azer- SOCAR’s Nassirov plies from other Caspian and Cen- “it’s a project which is built in Europe. Iran’s gas is baijan and Turkmeni- has said that “it is tral Asian countries and even the a super-strategic area, very rich off the table due to stan signed a landmark in the interests of Middle East, changing the energy in hydrocarbons, very close to the effects of Amer- everybody to find map of the whole region. Despite Turkmenistan, Iran, northern Iraq. ican sanctions. agreement to jointly de- these additional the strong momentum, it has be- […] The guys who are developing Direct European velop a long-disputed low-cost volumes, come increasingly challenging to Israeli, Egyptian, or Cyprus gas access to Turkmen Caspian gas field, a move which would make make the case that expanding the fields are also looking at this pipe gas is not likely to that could, in princi- the pipeline’s ex- SGC makes commercial and polit- as a [...] potential [delivery] route.” become a reality ple, pave the way for the pansion both com- ical sense for four crucial reasons. TAP and connected pipelines in the near future mercially viable The sections below will examine could, indeed, become a route for for a variety of rea- transit of Turkmenistan’s and politically in- each in turn. other new suppliers. For instance, sons, not the least massive gas reserves to teresting.” The re- Turkey’s 2020 big discovery of of which involve Europe. sult of the current natural gas in the Black Sea has China’s increas- lack of additional Security of Supply prompted analysts to argue that the ingly competitive gas molecules to fill size of the provisional find would offers to take the gas in the other di- the SGC’s planned expansion may uropean Union officials have be significant if it proved to be com- rection, the unproven feasibility of be that Russia’s Gazprom—which has Elong argued that TAP could mercially viable. an undersea Caspian route, Russian been in intense competition with these turn out to be a “first step” to- and Iranian opposition to the whole EU-backed projects to supply more wards the construction of a Trans- ue to the geopolitical quan- project, and a combination of low gas to the EU’s lucrative markets—is Caspian Pipeline that would bring Ddaries involved in East-Med market prices and high transit costs coming to be viewed as a candidate gas from Turkmenistan (and some gas and the uncertainty over the involved. Earlier in 2021, Azer- that could still make the expansion day from Iran) to Azerbaijan — profitability of Turkey’s discovery, baijan and Turkmenistan signed a feasible, if not very profitable. “The and thus help to diversify Europe’s though, in the short-term the SGC landmark agreement to jointly de- more gas in the pipeline, the more energy imports. The pipeline is is only likely to increase in volume velop a long-disputed Caspian gas profitable it becomes,” Nassirov told designed to be flexible enough to if and when low-cost supplies from field, a move that could, in - prin me in an interview. “It is not accurate be scaled up if new sources of gas Iran and Turkmenistan come on- ciple, pave the way for the transit of to say that Azerbaijan plays games to emerge. stream. But low-cost Iranian or Turkmenistan’s massive gas re- keep competitors at bay. More gas only Turkmen gas is far from being serves to Europe. In practice, how- adds to economic profitability.” For example, Maroš Šefčovič, a available. Therefore, one major risk ever, most observers stress that former European commissioner for linked to the project’s expansion an undersea gas pipeline across energy, has often hailed the project is resource availability—in other the Caspian Sea to take gas from The Role of Russia as “a new source, new supplier, new words, the ability to demonstrate a Turkmenistan would still be “difficult” route, and really new molecules of steady, balanced, long-term flow of due to the above-mentioned factors. he EU, supported by the U.S., gas” and argued that the EU would gas. It appears that the SGC team Thas long insisted that the SGC like to see the corridor expanded to is yet to take steps that would se- Expanding the SGC project is, of has advantages over Russia-backed take in gas from other states, such as cure the gas necessary to fill any course, less commercially attrac- pipelines, as it will bring gas from Turkmenistan, Iran, and Iraq. expansion of the pipelines. Thus tive in a lower price environment, a new source. But the politics

Vol. 4 | No. 3 | Spring 2021 74 75 Vol. 4 | No. 3 | Spring 2021 BAKU DIALOGUES BAKU DIALOGUES surrounding the SGC are turning transparent pipeline operation, the Ukraine crisis, EU member Turkey’s and Russia’s involve- Russian gas, ironically, into a po- non-discrimination in setting fees, states imported about 170bn cubic ment in the Nagorno-Karabakh tential justification for the -eco third-party access, and separation meters of Russian gas by pipeline in conflict, Iran’s proximity, and the nomics of expansion. of supply and transmission. At the 2018, about 37 percent of their total presence of major strategic oil and moment, Gazprom does not appear consumption, according to BP’s gas pipelines all make this a region When BP first committed to to be signaling that it is seriously 2019 Statistical Review of World a place where a local flare-up could bringing new gas volumes to considering this route; at the same Energy. Russia’s role aside, SGC’s quickly turn into an international Europe, it pledged to do so through time, the company has repeatedly expansion may still face other prob- headache. Potential funders of the a secure corridor and at a compet- floated the idea of TAP as an alter- lems. Another question mark is the project’s expansion will evaluate if itive price. But the SGC has yet native export route for Russian gas. geostrategic risk related to transit. and how it is possible to overcome to secure the gas needed to justify the very large potential transit risks the scalability of the funded pipe- Nassirov says that SOCAR does linked to the project. lines, which could, in principle, not view Russian gas as a rival and Transit Risk and Security swiftly be increased in capacity has pledged there will be no polit- of Demand n addition to the supply, to supply gas from other fields as ical obstacles to Gazprom’s partic- Itransit, and technical risks of well. While taking gas from Russia ipation in feeding an expansion of nvolving seven countries and any major pipeline project, risks would run counter to EU energy the SGC, “should the EU not ob- I11 companies, the marathon such as security of demand (which objectives to diver- ject it.” As such, project has been described by BP may be variable due to changing sify gas supply away according to Azad as the global oil and gas industry’s environmental and social priori- from Russia, the While taking gas from Garibov, an ana- “most significant and ambitious un- ties) must be considered early in the European Russia would run count- lyst specializing dertaking yet.” Political and cross- development stage of such a large- Commission may er to EU energy objectives in Caspian affairs border uncertainties are among scale undertaking of expansion. As some of the key risks during the de- struggle to find a to diversify gas supply at the Jamestown mentioned, gas demand may be legal basis to chal- Foundation, velopment phase of a major pipeline. subject to abrupt shifts. The TAP is lenge such a prop- away from Russia, the Russian gas in Consensus amongst governments a good, albeit modest, answer to the osition. Under EU European Commission the SGC seems to can at times be difficult to reach due growing gas need in Europe in the law, pipeline oper- may struggle to find a be an alternative to differing priorities among the next couple of decades. However, ators are obliged to legal basis to challenge that could make various countries involved. according to the IEA’s 2019 World grant third-party such a proposition. expansion com- Energy Outlook, by 2040 demand access or specifi- mercially viable As the SGC runs only a few ki- for gas is expected to sharply de- cally seek exemp- without provoking lometers from Nagorno-Karabakh cline in the European Union de- tions from this. While an exemp- backlash from Moscow. Russian gas and South Ossetia, the uncertain spite the depletion of indigenous tion was granted for the first phase is typically low-cost, which makes economic rationale of expanding sources. This casts more doubt of Shah Deniz development to it very competitive. This explains the SGC—especially as gas demand about the project’s expansion. take on Azerbaijani gas only, TAP why the economic case for Russian in the destination markets is not and TANAP will likely both need gas supplies has typically been re- expected to grow—is compounded Two game-changing events have to apply the key principles behind ceived more favorably than the cur- by the geopolitical risk of relying recently altered global politics in the EU’s energy laws in case any rent state of geopolitical standoff on a number of volatile transit fundamental ways and reordered expansion occurs. These include might otherwise suggest: despite countries, not least Turkey. the world, as it were, from the

Vol. 4 | No. 3 | Spring 2021 76 77 Vol. 4 | No. 3 | Spring 2021 BAKU DIALOGUES BAKU DIALOGUES perspective of hydrocarbon pro- but rather with the energy tran- transit hub for natural gas—a pro- gas are not required, as the EU ex- ducers. First, the shale revolution sition—a secular shift that places cess concurrent with the terminal pects additional gas to be available has fundamentally eroded hy- a strong emphasis on promoting decline of the Azeri-Chirag-Deep- from the construction of liquefied drocarbon industry profitability. energy efficiency and the develop- water Guneshli, the enormous natural gas terminals, and through Second, the renewables’ revolution ment of renewable energy. It is this field offshore in the Caspian Sea, the Nord Stream II project from will continue to depress growth in trend that explains a lower appetite whose development since 1994 had Russia. In the long run, as gas com- demand for fossil fuels. The com- for big hydrocarbon investments spurred Baku’s previous oil boom. petition over Europe’s oil and gas bined result has put the profitability among the world’s oil majors. market tightens, existing trading of the entire global hydrocarbon Yet the world market for gas, relationships will fall away. In that industry under pressure. As U.S. In December 2019, the EU un- too, has shrunk by more than 10 sense—and not unlike Russia and energy expert Meghan O’Sullivan veiled its Green Deal, aimed at cre- percent in the past decade and is other fossil fuels supplying coun- noted in a Spring 2020 Bloomberg ating the world’s first carbon neu- liable to decline further as climate tries—Azerbaijan finds itself in a column, history has shown that a tral continent by 2050. The Green policies accelerate the switch to re- buyer’s market that it cannot con- big change in energy markets often Deal envisions a power sector based newables. Furthermore, in an era trol. All this explains the gradual precipitates a big largely on renew- of shale gas-induced abundance, pivot to the east—in investments, change in geopol- able sources, the global competition over the EU’s and perhaps, in the future, also in itics. For instance, the world now also faces rapid phasing out gas market is fierce: with LNG im- the energy trade. the shift from coal one of the largest shifts of coal, decarbon- ports increasing, and Russia deter- to oil catapulted ization of gas, and mined to dominate the European in the global oil and gas The Role of China Middle Eastern industry, which could a focus on energy market, there is no shortage of countries to stra- efficiency. Over the supply. In addition, the outlook for tegic significance. impact directly on SGC next few decades, SGC’s enlargement could worsen s political scientist Farid And the recent expansion plans. mounting pressure as renewables become cheaper and AGuliyev argues in a 2019 essay technology-driven to take action on more accessible over time. published in Energy Policy, existing boom in shale oil elevated the the threat of climate change may be scholarship appears to have over- United States to net oil exporter the single most important factor in hat said, as long as at least looked the deep shifts in the Trump status, changing its outlook on the deciding the fate of SGC expansion. Tsome fossil fuel power plants Administration’s energy policy importance of oil in global affairs. are needed to back up variable gen- and the long-term consequences eration from wind and solar—and for the global energy system. Similarly, the world now also A Bridge Fuel? during the indeterminate period that America’s shale revolution—which faces one of the largest shifts in the will see homes and businesses switch keeps oil prices low due to a global global oil and gas industry, which as is sometimes referred to as to electricity for heating—there will oversupply—and the implemen- could impact directly on SGC ex- Ga “bridge fuel,” in the sense still be demand for imported gas in tation of the EU’s climate agenda pansion plans. For one, the collapse that it can be a lower-carbon op- the European Union (especially as has made long-term projects for in oil prices induced by the shale tion to help the transition from a the domestic sources held by member the import of fossil fuels such as revolution complicated things for coal-burning past to a renewable states are rapidly depleting). the SGC largely redundant. So the SGC. But the larger long-term energy future. This explains why far, Joe Biden’s policies do not ap- disruption has had not so much to Azerbaijan has tried to reinvent Some EU countries may still argue pear to run contrary, in a funda- do with a cyclical fall in oil prices, itself as a leading producer and that additional supplies of Caspian mental way, to those of the previous

Vol. 4 | No. 3 | Spring 2021 78 79 Vol. 4 | No. 3 | Spring 2021 BAKU DIALOGUES BAKU DIALOGUES administration in this regard. n the past five years, the U.S. fault line between consumer be- Guliyev goes on to observe that Ihas turned into a major ex- west and east and is Azerbaijan has become havior, mirrored in the absence of investments by porter of oil and natural gas, which gaining in impor- increasingly alluring to in consumers’ will- Western oil companies—and given has had far-reaching implications tance as an energy China, along with more ingness to pay for the lack of U.S. and EU leadership in for the global energy order. As transit route and clean energy, thus developing new energy projects— Guliyev contends, this new energy as a hub between established players such creating new op- Caspian energy producers, with order also means a lower demand European and as the EU, Iran, and portunities and the exception of those in Azer- within the West for Caspian fossil Asian markets. As Turkey as well as Russia jeopardizing tra- baijan, are looking to China and fuels. For the resource-rich coun- such, Azerbaijan and the United States. ditional business other Asian countries for export tries of the Caspian basin, these has become in- models. markets. trends have fed a strong Chinese creasingly alluring presence and a more permanent to China, along with more estab- These developments are likely to Azerbaijan is an interesting case tie-up to Beijing. Yet, as seen from lished players such as the EU, Iran, make expansions of Caspian oil and in this context: the government the perspective of the recipient and Turkey as well as Russia and gas pipeline projects targeting the in Baku has borrowed billions of countries, Beijing’s strong push to the United States. EU market prohibitively expensive, dollars from Western lenders to assert influence is by no means an revealing an interaction between build a network of gas pipelines unmitigated blessing. On the one hina’s hydrocarbon invest- domestic politics and international (e.g., TANAP and TAP) to ship hand, some of the Caspian coun- Cments and “greening” efforts bargaining that, in the field of inter- its gas to southern Europe—an tries have become more vulnerable within the Silk Road region must national trade, has been discussed endeavor that also perpetuates to kleptocratic state capture; on the be viewed in light of its long-term under the rubric of U.S. political the country’s dependence on rev- other hand, there has been much effort to meet its energy needs, scientist Robert Putnam’s two-level enues from conventional fossil debate whether China’s regionalism curb pollution, and set itself at games. fuels. The country still remains in Central Asia—and in particular the forefront of clean technology the only exception in the re- BRI—reflects debt trap diplomacy investment at home and abroad. gional panorama in terms of its that has left many host countries While Western IFIs investments Two-level Games and commitments to westbound ex- mired in debt. in Azerbaijan persist, a related Stranded Assets port markets for its fossil fuels. domestic political development However, more recently, Chinese A 2018 article by Mehdi P. Amineh is worth noting here. As Meghan he $40bn, 3,500km SGC lenders and the AIIB have loomed and Melanie van Driel entitled O’Sullivan notes in her 2017 book Tconduit is one of the big- large in the list of financiers from China’s Statist Energy Relations Windfall: How the New energy gest infrastructure projects in the which Baku has borrowed bil- epitomizes the position of those Abundance Upends Global Politics global oil and gas industry. Today, lions: so even though Azerbaijan who argue that China’s growing and Strengthens America’s Power, however, the geopolitical calculus is not actively looking to China economic interest in the oil-rich na- domestic efforts by the United States around this large gas corridor has (as yet) for pipeline export mar- tions of Caspian basin should come to style itself as a “global energy su- changed—not only do the U.S. and kets, it had taken on Chinese debt as no surprise, as Beijing’s domestic perpower” have boosted global sup- Russia compete in global hydro- during the boom in commodities power-wealth structure relies on plies of hydrocarbons. At the same carbon markets but Azerbaijan, prices, while its finances are par- uninterrupted foreign (energy) time, global demand has withered too, has become a potential com- ticularly vulnerable to plunging supplies. Within the larger region, due to Western policies favoring petitor for the U.S. and Russia in commodity markets today. Azerbaijan sits on a geopolitical decarbonization and a change in the lucrative EU gas market. It

Vol. 4 | No. 3 | Spring 2021 80 81 Vol. 4 | No. 3 | Spring 2021 BAKU DIALOGUES BAKU DIALOGUES remains to be seen whether consider how the world will change Vreeland, indeed, show that re- rule out a more prominent role America’s new energy prowess in response to this very phenomenon. gional hegemons do not hesitate for Beijing in the country’s hydro- and the EU’s climate agenda will to use their power in multilateral carbon investments, given that affect the eagerness of Western lobally, the U.S. is the largest organizations to advance unilat- China’s ruling class continues to IFIs to finance the long-discussed Gcombined shareholder of eralist foreign policy objectives. recognize a connection between expansion of the SGC. leading multilateral development Similarly, in their recent analysis of the domestic economy and the banks (MDBs), including the World China and Japan’s role in Asia, po- economies of resource-rich countries. A more likely scenario is that Bank, the Asian Development litical scientists Saori N. Katada and these large infrastructure invest- Bank (ADB), and the EBRD. It Jessica Liao argue that powerful ments become stranded as the EU bears watching whether in the up- states often use tools of economic The Pandemic’s Disruptive transitions away from fossil fuels coming tranches of infrastructure statecraft to establish regional lead- Effects in an increasingly financing there ership. In a 2015 article published well-supplied gas will be any observ- in International Studies Quarterly dopting carbon friendly pol- market where low- Vast swaths of Caspian able decrease in entitled “Oil and International Aicies may not suit countries er-costs suppliers oil and gas reserves Western develop- Cooperation,” scholars Michael that depend on oil and gas for gov- such as Russian may never be extracted ment monies allo- Ross and Erik Voeten indicate that ernment revenues but suffer less piped gas, Qatari because doing so would cated to the SGC. the more states depend on oil ex- pressure to change their behavior LNG, Yamal LNG, intensify global warming If so, this would ports, the more unilateralist they from the investment community. and American support an argu- become. Besides reflecting new Azerbaijan is one such country. LNG ferociously as foreign policymakers, ment about how dominant ideas on sustainability Global secular trends in “greening” compete for market fossil fuel companies, and the waning interest within the West’s policy discourse, are, however, now concurrent with share. Here we leading thinkers come in financing the re- any abrupt decrease in Western an ongoing crisis that may have come to the term under increasing pressure gion’s hydrocarbon investment in SGC hydrocarbons lasting market and geopolitical “stranded assets.” to consider how the world projects is reflec- would also reflect the material do- implications for hydrocarbon producers: namely, the coronavirus The International will change in response to tive of changes in mestic priorities of relevant ac- Energy Agency America’s domestic tors able to call the shots within pandemic. According to Russian defines stranded this very phenomenon. energy policy as Western MDBs, such as the United economist Tatiana Mitrova, it is assets as “those well as transitions States (a situation reminiscent of highly likely that the effects of investments which have already to low-carbon energy sources and the Chinese “greening” tied to do- COVID-19 will amplify and accel- been made but which, at some time renewables in Western Europe, both mestic priorities of combating “air erate trends for decarbonization, prior to the end of their economic of which are reshaping the global en- pollution.”) especially in Europe, Azerbaijan’s life, are no longer able to earn an ergy order. This, in turn, would draw main export market. economic return.” Vast swaths of attention to the domestic sources With oil prices falling (coupled Caspian oil and gas reserves may of multilateral trade cooperation with energy-transition related Some analysts go on to add that never be extracted because doing through the logic of two-level games. difficulties), Baku is rethinking the instability of the oil market so would intensify global warming how it will fund a possible expan- could hasten a structural shift to- as foreign policymakers, fossil fuel In a 2013 article published in sion of the SGC project. Should ward renewable energy by making companies, and leading thinkers World Politics, political scien- Azerbaijan and China’s interests traditional fossil fuel companies come under increasing pressure to tists Daniel Mao Lim and James align in the future, one should not less attractive to investors. While

Vol. 4 | No. 3 | Spring 2021 82 83 Vol. 4 | No. 3 | Spring 2021 BAKU DIALOGUES BAKU DIALOGUES renewable energy projects typically state coffers, all of which may now Deniz Gas Field will evolve in light “exorbitantly expensive.” Then of generate lower returns than oil force a geopolitical reset. of the seismic changes currently course it got built. The first phase and gas exploration, they also offer underway in the global geopolitics of the SGC excluded third-party long-term price stability that would Given that fossil fuels are still of energy, and whether any links access and went on to take gas only become more attractive in the cur- very much seen as the basis of can be drawn between the inter- from the Shah Deniz field in off- rent market. As Mitrova notes, China-powered growth, one national economic statecraft of shore Azerbaijan. Any expansion there are already increasingly vocal should not rule out an enlargement Western IFIs and the domestic pri- is likely to guarantee third-party calls from governments and inter- in the scope of BRI-driven engage- orities of important stakeholders access in accordance with EU reg- national organizations to adopt a ment in Azerbaijan. Such cooper- within their ranks. ulations. Time will tell if Russia low-carbon approach to restarting ation could have far-reaching so- will try to join the SGC and, by so the economy. cial and political consequences for In the past, Russia has questioned doing, use TANAP and TAP pipe- Azerbaijan, as new transnational the feasibility of the SGC. In 2015, lines built on the back of billions zerbaijan is a prime example clientelist relationships may con- Vladimir Chizhov, Russia’s am- of, inter alia, EU public monies Aof a shift in energy power tinue to disproportionally benefit bassador to the EU, described the to undermine the European from producers to buyers, and the local political elites. project as “extremely challenging Union’s Southern Gas Corridor country is especially vulnerable to from a technical point of view” and diversification plan.BD such external shocks—a situation cemented by the oil boom of the Reordering 2000s that made it even more dependent on oil and gas. The com- udging by the decreasing cost bined effect of the secular decline Jof renewables and their in- in global oil prices and the coro- creased appeal for investors, we navirus pandemic (which halved may conclude that the current gas prices and reduced oil prices disruption in hydrocarbon mar- by a third) seriously damaged kets will reorder some power rela- Azerbaijan (at least in the short- tionships. In a 2019 edition of the term), as oil and gas revenues make Caucasus Analytical Digest, up 45 percent of the country’s scholars Farid Guliyev and Marco economy. Siddi argue that, guided by com- bakudialogues.ada.edu.az mercial interests, Western oil com- Structural reforms undertaken panies have already shown no in- since the drop in oil prices in 2014 terest in investing in new Caspian may help to mitigate the impact, energy developments, and the but for the state budget, the slow- idea of building a seabed Trans- down in fossil fuels exports meant Caspian Pipeline to connect a sharp hit and a may force a re- Central Asia to Azerbaijan remains think of the country’s established stuck on paper. It is worth watching economic model. The Second how prominent EBRD investments Karabakh War also put a strain on in the hydrocarbons of the Shah

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geopolitical interest. Furthermore, the Great influence and power are Oil Pipelines in the Silk Road Caucasus-Caspian Sea-Central Asia available to whomever has partial region (CCCA) today—this corre- or total control over any of the pro- sponds more or less to what the edi- cesses involved in delivering energy Region tors of Baku Dialogues have called the to the consumer: source possession, “Silk Road region”—is merging ever exploitation, production, transport, Coordination and Collaboration closer with Eurasian and Middle East storage, distribution, and price-set- politics. The politicization of energy ting capabilities. These subjects con- Amidst Competition and and transport—with pipeline poli- stitute energy security: the capability tics often dealing with opposing eco- to guarantee resources at predictable Confrontation nomic and partisan interests—as well affordable prices. as sanctions against Russia and Iran, also raises the importance of sanc- The more actors—whether public Rodrigo Labardini tions-free routes. Compounding these or private—that participate in any issues is the fact that several countries project, the more complicated it is to in the region are landlocked, depen- attain results. Numerous technical or centuries, numerous proj- “choke-points,” each with three alter- dent on transit states, and vulnerable questions, economic considerations, ects have wanted to connect native routes. First, the “Eastern Gap” at to the latter’s maneuvers. legal misunderstandings, and polit- the Caspian Sea to its main the Caspian Sea: Russia, Iran, and the ical waves have to be tackled with marketsF in the East (China) and the Caspian Sea. The Caspian Sea region unswerving commitment in spite of West (Europe). All vie to link en- also includes Azerbaijan, of course, Energy geopolitics governmental changes. ergy sources (oil and gas) and goods since it is the only state (together with (commodities and manufactured Russia and Iran) located on its western nergy is essential to life: it’s a n classical geopolitics, geog- products) with consumers. Con- bank, with routing options via the Enecessity for mankind, for all Iraphy and surroundings impact temporary pipelines and transport Caucasus to reach the Black Sea and communities, and for every country. upon foreign policy. In other words, corridors are presented as cost-effi- Anatolia on to Europe. Second, the Whomever controls any of the pro- geography matters. Yet, in a critical cient, faster, and profitable, and thus “Western Gap” at the Black Sea: Russia cesses to produce energy and reach perspective, image construction sound economical alternatives to (again), the Black Sea, and Anatolia. markets has im- and language shape traditional hauling via tankers. portant social and in- geopolitical interac- The South Caucasus’ unique geo- ternational leverage. Energy resources possess tion. Political actors Reviewing the political map, con- graphical location between East and Energy resources a unique natural double may use any narra- tinental pathways between East and West as well as between Russia and Iran possess a unique nat- characteristic used as a tive strategically to West must traverse two regional place it at a strategic crossroads of key ural double charac- foreign policy tool: they shape domestic and teristic used as a for- international policy eign policy tool: they are both commercial and discourse and, in Rodrigo Labardini is Mexico’s ambassador to Azerbaijan. Previous postings include are both commercial strategic goods, which turn, to promote ambassador to Nicaragua, Director General for International Labor Policy of the Ministry of Labor, Director General for Human Rights and Democracy of the Foreign and strategic goods, explains their political their own interests. Ministry, and Deputy Legal Adviser of the Foreign Ministry. All comments are solely which explains their nature. They are also influ- those of the author. ORCID: 0000-0002-2547-0549; [email protected]. political nature. enced by domestic,

Vol. 4 | No. 3 | Spring 2021 86 87 Vol. 4 | No. 3 | Spring 2021 BAKU DIALOGUES BAKU DIALOGUES international, and regional dynamics and as it keeps developing, more countries followed varied paths in Brzezinski wrote in The Grand involving political and economic countries will join—probably even search of increased revenue, en- Chessboard (1997). This makes developments. Russia. ergy security, and economic inde- the Silk Road region a center of a pendence. These involved coop- global energy focus. Yet, it is worth- The desire to reach markets can onetheless, tensions may eration and coordination amidst while remembering that in 1991, foster international relations in Noccur due to copious is- competition and confrontation, during the demise of the USSR, the energy flows. Countries and trans- sues—mainly political and eco- with crisscrossing projects avoiding Caspian Sea countries—excluding nationals jointly build regional in- nomic—in all processes involved collision. Azerbaijan, Kazakhstan, Russia—represented 0.68 percent frastructure and garner specialized in delivering energy to markets, fu- Turkmenistan, and Uzbekistan— and 2.11 percent of the world’s oil knowhow and assistance from in- eling conflict. Recent Eurasian - ex all former Soviet republics en- and gas proven reserves, respec- ternational finance institutions. Oil amples include the Russia-Ukraine dowed with rich hydrocarbon tively. In 2019—again excluding and gas originating from the CCCA gas crises of 2006, 2009, and 2014; resources—inherited a share of Russia—they represented 2.22 region are becoming a growing re- the 2009 Turkmen-Russia gas dis- that former country’s pipeline net- percent and 13.20 percent of the ality in European pute; the Belar- work. They each tried to increase world’s proven oil and gas reserves, households. Exam- us-Russia 2007 oil and gas production, establish respectively. ples to transport It all comes down to a and 2020 energy transport routes to world markets, Caspian oil to safe route to access ener- disputes over gas and build petrochemical industrial The Caspian region faced Europe include the and oil; and the complexes. These constituted the challenges to extract and transport Caspian Pipeline gy resources and diversi- 2017 and 2020 basis for opportunities in both the energy resources, as well as financing Consortium (CPC), fy supplier countries and Belarus-Lithu- Eastern and Western Gaps to reach challenges. Caspian hydrocarbon the Baku-Novoros- routes. ania transport the Black and Mediterranean Seas fields are located far from export mar- siysk (BNP), the Ba- disagreements. via the Caucasus and Anatolia, kets and initially had to rely on old, ku-Tbilisi-Erzurum while side-stepping sensitivities to Soviet-era pipelines. But the Caspian (BTE), and the Baku-Tbilisi-Ceyhan Eurasia is surrounded by turbu- the north and the south. countries used their geography as a (BTC) pipelines. Intricacies become lence, with energy projects com- bargaining chip for export routes. For evident when we consider that the peting with one another. Challenges example, in 1994, Azerbaijan signed Southern Gas Corridor (SGC) was abound. It all comes down to a safe Pipelines and Reserves the Contract of the Century with initially developed by six countries route to access energy resources eleven multinationals from eight coun- (Azerbaijan, Georgia, Turkey, and diversify supplier countries oday, the world is much more tries to deliver oil to Europe; in 1997, Greece, Albania, and Italy), yet it and routes. Countries, producers, Taware of the Caspian Sea’s Kazakhstan agreed to build the China may further develop to the East— transporters, price-setters, and con- energetic relevance. It has even financed Kazakhstan-China Oil Pipe- with Turkmenistan via a Trans- sumers are involved in a cooperative been called the New Persian Gulf, line (KCOP): the first pipeline to Caspian Pipeline (TCP)—and delivery game whilst competing with for it may contain 16 percent of the directly send Caspian oil to China. further into Europe—with the each other to reach the markets. world’s oil and its natural gas and Nonetheless, the legal status of the Balkans and Southeast Europe via the oil reserves. And we should keep Caspian Sea was still pending; this Ionian-Adriatic Pipeline (IAP) and An energy strategy arises in mind that its reserves, together was addressed with the 2018 Conven- the Interconnector Greece-Bulgaria from geopolitics, foreign policy with those of Central Asia, “dwarf tion on the Legal Status of the Caspian (IGB) pipelines. SGC became fully priorities, and market character- those of Kuwait, the Gulf of Mexico, Sea, with maritime border guidelines operational on December 31st, 2020, istics. Caspian and Central Asia or the North Sea,” as Zbigniew and some cooperation parameters set

Vol. 4 | No. 3 | Spring 2021 88 89 Vol. 4 | No. 3 | Spring 2021 BAKU DIALOGUES BAKU DIALOGUES up for the countries Sea and its re- and partnership with foreign en- independence of the Central Asian in question to use Today, the world is source-rich states ergy companies, mainly originating states can be rendered nearly mean- and share aquatic much more aware of the (Azerbaijan, in the United States, the European ingless if Azerbaijan becomes fully and subsea (hydro- Caspian Sea’s energetic Kazakhstan, and Union (and the UK), and China. subordinated to Moscow’s control.” carbon) resources. Turkmenistan) Azerbaijan pursued a balanced for- Yet it seems that relevance. It has even were surrounded eign policy whilst vying to achieve After regaining its indepen- this document been called the New by neighbors that economic independence in 1991, requires trans- Persian Gulf, for it may were commer- dence by opening Azerbaijan expe- Caspian pipelines contain 16 percent of the cial rivals and up to foreign di- Before the demise of the rienced a severe to be approved by world’s oil and its natural possessed major rect investment in Soviet Union there was economic reces- all Caspian Sea gas and oil reserves. regional access oil endeavors to no major geopolitical sion characterized states and, as it hap- routes, notwith- fund development by negative growth pens, both Russia standing what and promote re- game in the Silk Road for five years, -in and Iran apparently still oppose American analyst Robert Manning gional stability and region. Afterwards, each cluding a 50 per- these on environmental grounds. termed a “a plethora of alternative growth. Kazakh- country took a different cent decline in oil oil and gas pipelines.” This author stan implemented path to diversify and production from ydrocarbon reserves are un- lists several options whose point major economic development whilst 20 million tons Hevenly distributed in the of origin is the Caspian basin: to reforms to attract seeking to reduce their to 10 million tons Caspian Sea, with all five littoral Russia; to Europe via Russia and foreign investors. over a 25-year pe- states’ economies largely depen- the Black Sea; to the Black Sea via Turkmenistan respective dependence on riod (1970-1995) dent on oil and gas. Kazakhstan has Georgia; to Europe via Turkey; to kept a strong Russia. due to outdated the most substantial proven oil re- the Persian Gulf via Iran; to Pakistan control over its technology, poor serves, Azerbaijan was a pioneer in and India via Turkmenistan and economy, particularly in the en- planning, lack of investment in offshore oil production, Turkmen- Afghanistan; and to the Yellow Sea via ergy sector. Uzbekistan aimed at new drilling and rehabilitation of istan is a leader in proven natural Uzbekistan, Kazakhstan, and China. stabilization in the quest to avoid existing wells, and the conflict with gas reserves, while the Russian and economic and institutional shocks. Armenia over Nagorno-Karabakh. Iranian share is insignificant. Whereas Before the demise of the Soviet for Azerbaijan, Kazakhstan, and Turk- Union there was no major geopolit- As a newly independent menistan, the Caspian Sea is the main ical game in the Silk Road region. Caspian Basin Countries country with a long oil tradition, source of energy reserves, Russia Afterwards, each country took a Azerbaijan used all available and Iran have other, more plentiful different path to diversify and - de zerbaijan’s regional hydro- routes to transport its Caspian energy resources at their disposal. velopment whilst seeking to reduce Acarbon relevance was de- hydrocarbons. Crossing the Cas- their respective dependence on scribed by Zbigniew Brzezinski pian Sea either to send or receive In addition to drilling and lo- Russia. After seven monopolistic thusly: “Azerbaijan, with its vast hydrocarbons was complicated, gistics issues, for the longest time decades, the countries of the Silk energy resources, is also geopolit- since it required a legal defini- another problem for Caspian Road region started receiving se- ically critical. It is the cork in the tion of this body of water, its Sea resources to reach the world rious interests for exploring, devel- bottle containing the riches of the maritime borders, and an agree- markets was the fact of landlock- oping, and producing their oil and Caspian Sea basin and Cen- ment on the exploitation of its edness. Furthermore, the Caspian gas resources through investment tral Asia,” he continued. “The subsea resources. Azerbaijan was

Vol. 4 | No. 3 | Spring 2021 90 91 Vol. 4 | No. 3 | Spring 2021 BAKU DIALOGUES BAKU DIALOGUES pragmatic: to reach European which then gave rise to the idea that bring Kazakhstan, Turkmeni- of Caspian hydrocarbons (vis- markets, it developed routes geopolitical rivalry was restricting stan, and Iran together to jointly à-vis Azerbaijan, Kazakhstan, and through Russia, Georgia, and Russian and Iranian exploration, build oil pipelines to overcome Turkmenistan), offering projects to Turkey. With the latter two, Baku development, and export routes. Russia’s regional influence. A transport oil and gas from various stressed that a security alliance Additionally, American sanctions Kazakhstan-Iran protocol envis- Caspian fields. was most beneficial. were applied on Iran, amidst frosty aged Iran financing the reconstruc- Azerbaijan-Iran relations on action of Kazakhstan’s Aktau port, One of the first projects to give A successful oil and gas strategy count of Iran’s support for Armenia linking it to the Tengiz oil field fur- Russia an opportunity to compete led to extraordinary international during the First Karabakh War. ther north to see Kazakhstani oil in Caspian oil transport was the investment and economic growth flow via Iran’s Caspian port in Ban- Tengiz-Novorossiysk pipeline with the signing of the aforemen- azakhstan implemented a dar-e Anzali to oil refineries located (CPC) connecting Kazakhstani tioned Contract of the Century Kmulti-vector foreign policy, in other parts of that country. It fields with Russia’s Black Sea, con- and the Shah Deniz field agree- walking a thin line between, on also developed the Turkmenistan- tributing to the development of ment, agreed two years later (in the one hand, its two major neigh- Afghanistan-Pakistan-India Pipe- Novorossiysk. Ultimately, this 1996). Azerbaijan received $60 bors, Russia and China, and, on the line (TAPI)—still under construc- strengthened the importance of the billion in foreign investment in its other hand, the Western countries, tion as of March 2021. Black Sea while boosting Russia’s oil and gas sector between 1994- whilst pivoting towards China with economy and Turkey’s control of 2010, or $77.8 billion between the construction of the KCOP as ussian production in the oil-flow through the Bosporus and 2000 and 2017. The country’s oil well as the Central Asia-China gas RCaspian Sea basin tradition- the Dardanelles. and gas revenues were expected to pipeline. Energy is the country’s ally came from onshore fields in reach $200 billion by 2024. main source of income (85 percent the North Caucasus, particularly ost of Turkmenistan’s gas of its total 2007 annual revenue and Krasnodar, Stavropol, and Chechnya. Mreserves are located in the n the 1990s, Iran was facing 67.1 percent of total exports). This region supplied Russia with Amy Darya basin in the southeast, Iproblems in the world’s oil 65,000 bbl/d (in 2013 numbers). the Murgab basin in the south, export markets, and prospective Three main pipelines carry Aside from oil revenues, developing and the South Caspian basin in Caspian oil and gas producers were Kazakhstani crude and oil prod- the northern Caspian gives Russia the western part of the country. a threat. After an international ucts: the Uzen-Atyrau-Samara an opportunity to advance new The economy is highly dependent consortium backed by Western (UAS) and Caspian Pipeline Con- technologies to employ in the Arctic. on natural gas (86.8 percent of ex- capital looked to Azerbaijan’s hy- sortium (CPC) pipelines to Russia, ports), trailed by petroleum oils drocarbons, Iran tried to obtain a as well as the KCOP pipeline to After the downfall of the Soviet and crude oil. The fuel industry share by advocating Azerbaijan’s China, in addition to rail (to Russia Union, Russia lost its previously accounts over 81 percent of do- position on dividing the Caspian and China) and tanker shipments vast Soviet Caspian Sea resources. mestic industrial output. Thus, its into national sectors. (across the Caspian Sea to Russia, It tried to preserve its geo-stra- economy is highly vulnerable to Azerbaijan (linking to BTC), tegic, political, economic, and gas and oil prices’ fluctuations with However, unable to do so by de- and Iran). An underwater trans- environmental interests, while restricted exports markets. mand of the United States, Iran Caspian pipeline seems to be the facing technical difficulties in oil then strenuously argued in favor of best option for increasing produc- extraction from the Caspian Sea. Turkmenistan has given great a condominium concept (in this, tion and diversifying export routes. Hence, Russia became involved in importance to diversifying its Tehran was supported by Moscow), Geographical proximity may a struggle for the transportation export routes in order to reduce

Vol. 4 | No. 3 | Spring 2021 92 93 Vol. 4 | No. 3 | Spring 2021 BAKU DIALOGUES BAKU DIALOGUES vulnerability, prevent political in- Smaller pipelines, together with KCP reshaped Iraq-Turkey re- a distraught oil industry. It had two stability, and overcome the perils Russian pipelines available to lations, as the former needed large markets in view: Europe and of landlockedness. It opened up Caspian production, provide an- markets and export routes to the China; the former was more attain- the Cheleken oil and gas drilling other 25 percent. This is supple- Mediterranean and the latter able in the immediate near future as project to foreign investment, with mented by smaller but significant needed reliable sources of supply the latter required longer distances most of its exports in 2011 going routes involving railways, swaps with and currency. With KCP, Iraq be- to traverse and would require more through Azerbaijan to the world Iran, and other transport options. came Turkey’s largest oil supplier complex political arrangements. markets. Most of its gas exports go while providing Iraq an imperative The crux was to reduce dependence to China; most of its oil exports are Of noteworthy interest is the alternate export route. on Russia while avoiding situa- exported over the Caspian Sea to temporal framework of regional tions where international sanctions world markets. pipelines. KCP was built in 1970— KCP was developed during the could apply. An initial compromise some three to four decades earlier Iraqi-Turkish economic rapproche- allowed pumping oil to Georgia than the other Caspian/Caucasus ment of the 1960s. Iraq’s support for (BSP) and to Russia (BNP). Turkey Caspian Oil Pipelines pipelines, namely BNP (1998), Turkey in the 1974 Cyprus Crisis, claimed to be a part of the energy BSP (1999), CPC (2003), and BTC Turkey’s diplomatic support for corridor and found strong support he Caucasus/Caspian Sea (2006). This reflects the evolving the Arabs in the 1967 Six-Day War in Washington from policymakers Tregion has significant transit state of the world. The oil em- and the 1973 Yom Kippur War, wanting to limit Russia’s control infrastructure, hosting major bargoes of 1956 (Saudi Arabia and both countries’ common in- over exports of Caspian oil. Out trans-Caucasian oil pipelines: the vs. France and the UK) and 1967 terest in dealing with their respec- of seven general routes, only one Caspian Pipeline Consortium (“Arab oil” vs. America, the UK, and tive Kurdish populations allowed destination remained (i.e., Europe) (CPC), the Baku-Novorossiysk Germany) may not have been suc- Baghdad and Ankara to overcome with three possible routes: Russia/ Pipeline (BNP), the Baku-Supsa cessful as foreign policy tools, but historical mistrust and build the Black Sea, Georgia/Black Sea, and Pipeline (BSP), the Baku- they evidenced the importance of KCP. It was built independently Georgia/Turkey. Tbilisi-Ceyhan pipeline (BTC) diversification (both for producers of major oil companies and, at and, inasmuch as it reaches and consumers), while striving to one point, was the largest pipeline The advantage of BNP was its the same destination point and satisfy domestic industrial needs system in the Middle East. lesser cost ($1 billion), which was thus becomes a competitor, the and acquiring foreign currency. achieved by reversing a Soviet-era Kirkuk-Ceyhan Pipeline (KCP). KCP enhanced Iraq’s export pipeline that had previously deliv- To the United States and the EU, CP is a clear example: it of- routes whilst providing Turkey di- ered Russian crude from Grozny the region matters as a transit route Kfers diversification to Iraq, rect imports from Iraq as well as to Baku refineries and extending for energy goods from the Caspian direct oil imports and currency for foreign currency for transit fees for it to the offshore oil terminal at Sea as well as for energy source Turkey, and reduces Russian influ- oil transshipped from Ceyhan. Sangachal. Its disadvantages in- diversification. ence for both. The other pipelines cluded preserving Russia’s mo- (BNP, BSP, CPC, and BTC) arose ext up is the Baku-Novo- nopoly over Azerbaijani oil and Caspian oil moves through pipe- when pipelines to (Northern) Nrossiysk Pipeline (BNP). recurring wintertime problems lines, ports, ships, and railways. Europe had been developed Post-independence Azerbaijan had with fog and wind that made Two pipelines—CPC and BTC— and had crafted European de- to overcome several serious tanker loading difficult. Later, a dominate the network, with over pendency from Russian fuel, challenges, including possible civil Chechnya bypass was constructed. 50 percent of available capacity. impelling diversification. war, a dire economic situation, and BNP passes close to Russia’s

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Makhachkala port, allowing access War. In July 2015, Russian troops Iran proposed alternatives, sug- Together with CPC, BTC provided for oil from the eastern Caspian. gained control over a section of gesting oil swaps as most profitable. more than half of available transport BSP in occupied South Ossetia. options for Caspian oil. Azerbaijan undertook a politically Nonetheless, SOCAR stated that Nevertheless, BTC opened in sound decision for its oil to reach Azerbaijan can deliver to Supsa via mid-2006. It runs parallel to BSP Since 2010 BTC has run with European markets notwithstanding alternative routes. as far as Georgia before turning spare capacity, wherefore SOCAR the negative effect on its rev- south through Turkey to Ceyhan proposed reversing part of BNP to enue stream. To wit: by exporting e now come to the on the Mediterranean coast. BTC export Russian oil through BTC. through BNP, Azerbaijan agreed to WBaku-Tbilisi-Ceyhan pipe- is capable of transporting around This would also allow Russian oil blend its higher quality semi-light line (BTC). After the renewal of its 50 million tpa of crude oil. Ca- to bypass the Turkish straits. sweet crude with Russian crude independence, Azerbaijan wanted pacity can be increased to 60-65 and market it as the medium sour to export its oil to Western markets. million tpa by employing drag re- riven by American and crude Urals blend, which is sold at The immediate routes were BNP ducing chemicals and to 80 million DEU energy interests, 10 percent less than the usual price. and BSP. Both had the inconve- tpa by adding pumping capacity. It Azerbaijan managed to establish BNP has had geopolitical/flow is- nience of traversing the Bosporus has also carried Kazakhstani and transit routes for energy resources; sues due to quota disagreements, and Dardanelles bottlenecks. The Turkmenistani oil. first through Russia’s Black Sea technical matters, earthquakes, onset of the Second Chechen War (Novorossiysk), later bypassing and military issues. in 1999 helped to justify the final While BNP Russia to Georgia’s choice of BTC, at which point, and BSP were Black Sea (Supsa), he Baku-Supsa Pipeline Russia’s Lukoil withdrew from the important for While BNP and BSP were and finally by- T(BSP) was built in 1998 by consortium. Moscow maintained Azerbaijani oil rev- important for Azerbaijani passing the Black refurbishing a partially constructed that Azerbaijani oil reserves were enues, BTC was the oil revenues, BTC was the Sea and the pipeline in Azerbaijan connected to too limited to justify as costly a defining project for defining project for Azer- Bosporus by engi- a disused pipeline from northwest project as BTC. Azerbaijan and baijan and the region. BTC neering a pipeline Tbilisi to Batumi. This was further the region. BTC project whose ter- refurbished as far as Supsa, located Iran also opposed BTC. Tehran helped unlock the helped unlock the Caspi- minal is located in on Georgia’s Black Sea coast, where was wary about it. It claimed BTC Caspian’s eco- an’s economic potential, the Mediterranean an offshore loading facility was was unreasonably expensive ($3.6 nomic potential, bringing investment and (Ceyhan). constructed. billion). Together with Russia, Iran bringing invest- revenues as well as parallel alleged that a trans-Caspian oil and ment and revenues economic development. Thus, Azerbaijan BSP was closed in mid-2006 gas pipeline (connecting Tengiz as well as parallel became less de- because of corrosion and a land- oil and Turkmen gas with Baku) economic devel- pendent on Russia slide. After a major explosion might have undesirable ecological opment. The pipeline also and Iran after BTC. This pipe- and fire closed BTC in August consequences due to the region’s strengthened competition by ex- line is both a power resource 2008, BSP was used to re-route seismic situation. Tehran argued panding the transport capacity of and the interaction medium for Azerbaijani oil deliv- the Caspian had considerably less Caspian hydrocarbons. This pipe- regional and international ac- eries, which were also oil reserves than was the case, line practically put an end to Russia’s tors, including governments and temporarily closed for safety rea- especially in the Azerbaijani sector. monopoly on the transport of NGOs, due to the wide array of sons due to the Russo-Georgian As tensions over BTC heated up, Caspian energy resources. connections made possible.

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e turn now to the Kazakhstan have shares, to Iranian and Russian opposition. well as storage capacities). They are WCaspian Pipeline Consor- Moscow had to allow the par- Here it can be noted that the orig- principally directed to major de- tium (CPC). After gaining its -in ticipation of Western compa- inal TCOP provided for 150 kbd mand centers in Germany, France, dependence, Kazakhstan arranged nies such as Chevron, Shell, of Kazakh oil across the Caspian and markets along the way. Pipe- a swap arrangement with Iran. ExxonMobil, Eni, and British Gas. in the first stage. In 2016 this was lines both complement each other Iran would deliver to the Persian As the largest privately-operated almost fully accounted for with 120 and are at competition with each Gulf an amount equivalent to Ka- pipeline route, CPC is the only oil kbd sent to Azerbaijan by tanker. other, as well as with other modes zakhstani oil delivered to northern pipeline within Russia not con- of transportation, in filling these Iran. An agreement with Turkey trolled by state-owned Transneft, needs. There are long-haul versus was signed in March 1993 to build Russia’s oil pipeline monopoly. Laying Eurasian Pipelines short-haul pipelines. From their a pipeline from Baku connecting to layout, several distinctive purposes KCP, tracing a route south of the he Trans-Caspian Oil o build oil pipelines from may be contemplated for building Iranian border. It would have carried TTransport System (TCOTS) TCaspian Sea sources to oil pipelines. Azerbaijani and Kazakhstani oil. is a proposed oil transport infra- European markets—or, for that structure project designed to carry matter, between any source and irst, to directly reach European As part of its active policy in oil through the Caspian Sea from its markets—over time states ev- Fmarkets from the sources. Di- pipeline development strategy, Kazakhstan to Azerbaijan and on idenced economic and political rected to markets in Germany Russia has shown a desire to dis- to the Mediterranean or Black motivations, preferring easier and and France, and traversing Italy tance itself from any clashing or Seas. The cost is estimated at $4 more economical routes, subject and Central Europe directly from what three Russian energy ex- billion. The plan is to build a 739 to political considerations. This is sources in Asia/Eastern Europe. perts called in a 2016 article in the km pipeline from Eskene to Kuryk confirmed by analyzing the time- Druzhba and Norpipe are prime International Journal of Energy in Kazakhstan (the Kazakhstan- line of when and where major in- examples. Druzhba is the world’s Economics and Caspian Trans- ternational pipelines were built in longest pipeline, originating in Policy a “domi- portation System) Eurasia, as well as accounting for Almetyevsk in central Russia, where nating attitude of As the largest private- and a 700-kilo- the intended purpose for their con- it collects oil from western Siberia, the transit coun- ly-operated pipeline route, meter undersea struction. the Urals, and the Caspian Sea, tries” in its ex- CPC is the only oil pipe- Trans-Caspian Oil before moving on into Ukraine, port routes. With line within Russia not Pipeline (TCOP) An examination of any map Hungary, Poland, Slovakia, and meager compen- from Kuryk to depicting the major interna- Germany. Norpipe is a Norwegian sation, Russia es- controlled by state-owned Sangachal, al- tional pipelines originating in the pipeline running from the offshore tablished with Transneft, Russia’s oil pipe- ternatively using Caspian basin that link to Ekofisk Complex, which collects Kazakhstan the line monopoly. tanker shut- European markets provide at least both oil and gas from neighboring Caspian Pipeline tles from Kuryk the following standout observa- fields as well as its own, and trans- Consortium to to Sangachal with a tions. Pipelines serve dissimilar ports this to Teesside in the UK and transport Caspian oil from the 500 kbd capacity in the initial stage, regions with varying consuming Emden in Germany. Tengiz field located near the rising to 1,200 kbd. patterns, derived from different Caspian Sea to Novorossiysk and refineries, consumption patterns Druzhba and Norpipe directly to international markets via the So far, the project seems to be of large consumers, and even sea- reach their intended markets from Bosporus. Although Russia and stuck in neutral gear, in part due sonal consumption patterns (as sources in central Russia and

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Siberia, and the North Sea. In the Gulf of Finland. Second, BPS-2, Czech Republic), is one such ex- pipeline (IKL), which runs from these systems, the regions sur- which was designed to bypass ample. Another is the South Europe Germany to the Czech Republic, rounding the main markets serve Belarus after the 2007 oil trans- Pipeline (SPSE), which originates and the Adria-Wien Pipeline, as transit routes and benefit in a port dispute with Russia. Third, west of Marseilles and supplies oil which runs from Italy to Vienna, twofold manner: by receiving oil the Odessa-Brody pipeline (OBP), to refineries in France, Switzerland, exemplify this point. Both carry oil from sources and from transit fees which travels from Ukraine’s port and Germany. A third is what is from main lines to consumption revenue. In time, these pipelines city of Odessa to Brody, a town near now known as the Adria oil pipe- centers not as large as the main line evidenced a mutual dependence the border with Poland—a planned line and originally called the Yugo- destination point. between sources and markets. extension could see it expand to slav or JANAF pipeline, which runs In 2018, almost one third of the Plock on the Vistula and Gdansk from a terminal on the Dalmatian ifth, a geopolitical vision. Oil European Union’s oil imports came on the Baltic Sea. Fourth to eighth, coast into the Croatian hinterland, Fpipelines—as any other large from Russia. In 2016, the export of the aforementioned CPC, BSP, Serbia, Hungary, Slovakia, and regional infrastructure project— crude oil and petroleum products BNP, BTC, and KCP pipelines. the Czech Republic, with branch are rife with geopolitical battles. amounted to nearly 70 percent of Caspian Sea hydrocarbon countries lines to Slovenia and Bosnia and To conclude any project requires total Russian petroleum liquids (Azerbaijan and Kazakhstan) re- Herzegovina. vast amounts of financial re- production, mostly to European used old pipelines (BNP) or built sources (from countries, interna- countries, with revenues from oil new pipelines to reach the Black Furthermore, while it is good to tional financial institutions, and and natural gas—including ex- Sea (CPC, BSP) or the Mediterra- have access to the seas, there are companies), cooperation between ports—making up 36 percent of nean (BTC). The maritime points differences associated with each builders to overcome complex tech- Russia’s federal budget revenues. each of these pipelines reach are particular sea. nical issues, and a veritable oil logistics hubs. Thus, while an constant and un- econd, to reach the world’s option may be to Geopolitics had a more swerving political Soil markets via oceans. Ob- hird, to reach consumption reach the Black significant role in the commitment to ac- viously, the oil market is not only Tcenters from the oceans. Mir- Sea, it is better to construction and main- complish the final European but global in nature. roring pipelines from the sources reach the Medi- tenance of some pipelines result. Such coop- Oil that does not directly reach its to the oceans, these pipelines con- terranean because than others. eration and un- intended market via pipelines is nect to the consumption regions from there it can derstanding must destined to reach these via mari- from a coast—receiving oil from reach world mar- continue after the time transport. This evidences the the world’s sources. Evidently, oil kets faster while avoiding dense project becomes operational, or it liquid nature of oil and the relative coming into European consump- traffic in the Bosporus and may become unused. Nonetheless, ease for its handling. tion centers is not necessarily orig- Dardanelles bottlenecks. geopolitics had a more significant inating from Eurasian production role in the construction and main- A number of pipelines exem- centers. Fourth and relatedly, in- tenance of some pipelines than plify this. Here we can list eight. terconnector pipelines. With others. First, the Baltic Pipeline System The Trans-Alpine Pipeline (TAL), ocean-to-consumption pipelines (BPS) collects oil from Russia’s which originates in Italy’s northern in place, smaller but necessary ef- Three examples can be given. The Timan-Pechora region, west Adriatic port of Trieste and trans- forts must be taken to haul oil to aforementioned Druzhba pipeline Siberia, and the Urals-Volga regions ports oil to refineries in Central additional consumption centers. (the term means “friendship” in to Primorsk at the eastern part of Europe (Germany, Austria, and the The Ingolstadt-Kralupy-Litvinov Russian), used to be known in some

Vol. 4 | No. 3 | Spring 2021 100 101 Vol. 4 | No. 3 | Spring 2021 BAKU DIALOGUES BAKU DIALOGUES circles as the COMECON pipeline were not agreed, in July 2004 the which case the projects may stall and One set of pipelines were due to the fact that it originated Ukrainian government accepted never come to fruition. On the other developed to reach the oceans and in Soviet plans to provide eastern Russia’s proposal to reverse the hand, once operational, a pipeline another set to reach the consumer Russian oil to energy-hungry pipeline flow. This made OBP may survive its original political im- markets from the coasts. By doing so, western regions of the Soviet Union transfer Russian oil from South petus, as in Druzhba, which after the these pipelines provide the shortest (western Russia, Ukraine, Belarus) Druzhba southwards to the Black Soviet Union’s demise continued to possible route to reach maritime re- as well as to its “fraternal socialist Sea and on to Mediterranean des- function as an important source of gions and through them world mar- allies” in the former Soviet bloc like tinations. Hence, Russia preempted revenue (somewhat) independent kets. The major source for these pipe- Czechoslovakia, Poland, Hungary, Caspian Sea oil flowing into Europe of ideology—in spite of important lines is Russia, but they also include and East Germany. It is the largest and prevented competition for its technical problems, including oil Caspian Sea states (Kazakhstan and principal artery for the transport oil in the EU market. contamination. On the other hand, Azerbaijan) as well as Iraq. of Russian (and Kazakh) oil across due to political or economic reasons Europe and remains one of Russia’s Lastly, the Baltic Pipeline System or instability, a pipeline may become Another distinct feature is the greatest geopolitical instruments Two pipeline (BPS-2). While BPS unsound or discover new interests. timeline for the Mediterranean for Russia. was built between 1997 and 2001 on BNP is a case in point. and Caucasus pipelines. Northern the basis of solid commercial prin- pipelines linking their points of Another is the aforementioned ciples, BPS-2 had clear geopolitical origin with Northern Europe were Baku-Novorossiysk Pipeline views in its planning, development, Geography Matters built first: Nord-West Oelleitung (BNP). The transport of Azerbai- and construction. The project (NWO)—the first long-range crude jani oil became a controversial surged after the January 2007 oil wo different regions emerged oil pipeline in Europe—in the late issue in the late 1990s, as Moscow transit dispute between Belarus and Tbetween Asia and the Atlantic 1950s and Druzhba a few years had been insisting on delivering it Russia. Even with a negative prof- coast: Northern and Mediterranean later. These were followed later to Novorossiysk, while a consor- itability report, Russia developed Europe. The vast majority of the by ocean-to-consumption centers tium of largely Western companies, BPS-2 to bypass the Belarus transit oil pipelines discussed in this essay pipelines (AWP and ADRIA), as led by BP, was reluctant to opt for route with the aim of protecting link production centers in Eastern new European consumption cen- this cheaper option but wary of an- Russia and its partners from what Europe or Eurasia to consumption ters developed. The southern pipe- tagonizing Russia. As noted above, the aforementioned Russian energy centers in Northern Europe, both in lines—BNP (1998), BSP (1999), with BNP, Azerbaijan had to accept experts called “dominant attitudes direct source-to-consumption pipe- CPC (2003), and BTC (2006)— to mix its high-quality oil with Rus- of the energy transit countries,” in- lines and in ocean-to-consumption- were built in less than one decade, sian lower grade and sell it as an cluding decisions to raise tariffs or center pipelines. Major oil sources yet some three to five decades after Urals blend for less money siphon off hydrocarbons. for Northern Europe are Russia and the northern pipelines—save for the North Sea. By building—in the KCP, which was built in 1970. A third is the Odessa-Brody pipe- ixth, once in operation, pipelines Soviet era—one pipeline (namely line (OBP), also discussed earlier in Sbecome more business-oriented Druzhba) with two branches to his points to geopolitical the essay. It was initially intended to and may disregard ideologies. Intents former Soviet republics and allies in Tdevelopments as well. After haul oil from Kazakhstan to Odessa for regional pipelines may vary sub- the Soviet bloc, Russia became domi- the demise of the Soviet Union, and to link up with the South stantially during any of its pre-op- nant in the north. Decades later came the newly independent countries Druzhba pipeline. However, as erational phases—including design, the development of pipelines in the in Central Asia and the South sufficient capacities of oil supplies financing, and construction—in Mediterranean region. Caucasus had to develop large

Vol. 4 | No. 3 | Spring 2021 102 103 Vol. 4 | No. 3 | Spring 2021 BAKU DIALOGUES BAKU DIALOGUES regional infra- name indicates, to be said that, especially in the EU confrontation, amidst crisscrossing structure projects Union, the newly in- does not supply space, negotiations over Russian projects that avoid collision. in order to over- dependent countries in crude oil). One can oil are generally more about supply come their respec- Central Asia and the surmise that this and pricing. Political factors, if they Of the examined major interna- tive landlocked- is due to the large exist, are not primary. However, tional oil pipelines, none directly ness. This required South Caucasus had to distance involved it is important to note that the re- deliver oil directly from their point very important develop large regional and the high as- sulting dependency is mutual. Just of origin to Europe, except for and prolonged ne- infrastructure projects in sociated costs, as Europe depends on Russian en- Druzhba. Pipelines go first to the gotiations between order to overcome their possibly impelling ergy, Russia depends on European oceans, then transport by ship to governments and respective landlockedness. commercial in- oil revenue. Europe before being taken by de- companies—not terests to build a livery pipelines to their ultimate only to address pipeline thereto. n large cross-border infrastruc- markets. Pipelines between Europe complex technical issues but par- As the region grows economically, Iture projects, including pipe- and Asia were developed during ticularly to cement agreement this would represent an option for lines, economic and commercial the 1958-1990 period, while the amidst coordination and coop- development. issues are of para- Caspian Sea and eration between competing and mount importance, South Caucasus confronting interests of govern- having to satisfy In the EU space, negoti- pipelines were ments, with regional crisscrossing Final Thoughts technical matters ations over Russian oil built in less than a interests in possible collision. The in long-maturing are generally more about decade at the turn South Caucasus pipelines could nergy is a life necessity and political processes. supply and pricing. Polit- of the millennium only be developed after the demise Eone-third of the world’s pri- To become a re- ical factors, if they exist, (1997-2006)— of the Soviet Union: once the re- mary energy comes from fossil ality, and to con- again, except for source-rich newly independent fuels. Controlling any part of the tinue to operate, are not primary. KCP, which be- states could act by themselves to processes requires one to identify they cede to po- came operational channel international revenues the source, exploit and produce litical concerns as foreign policy in the 1970s. They were and could to their respective countries di- it, transport it, distribute it, store tools. Some pipelines, like BPS-2, only be developed after the demise rectly. In the Silk Road region, it, and set its price. This obviously have been specifically built for po- of the Soviet Union. only Russia, Iran, and Georgia are provides great influence and power, litical reasons, despite not satisfying sea-abutters, wherefore these fur- which explains why a plethora of commercial issues. On the other n the Caspian Sea-South ther gained geopolitical relevance countries seek to participate in as hand, ideological and geopolitical ICaucasus region, during the to reach the world markets—with many of these as they possibly can. motivations may be overcome once Soviet era all pipelines were con- only the latter not subjected to a pipeline becomes operational— trolled by Moscow and went to Western (Russia) or international Much has been said about the including surviving a new era, Russia. Somewhat opening up the (Iran) sanctions. European continent’s dependence such as Druzhba—but they seldom market, in 1997 BNP still preserved on Russian energy. Russia cer- operate seamlessly. Nonetheless, Russia’s monopoly whilst providing Interestingly, there is no major tainly has influence in Europe on once operational, pipelines develop Azerbaijan with much needed in- international oil pipeline from account of its oil—and in fact has a life of their own, wielding new ternational revenue. As expert and Asia to Southeastern Europe (the used it as political pressure, as with sources of cooperation and cooper- former U.S. Department of Energy Southern Gas Corridor, as its Belarus and Ukraine. But it needs ation dealing with competition and official Leonard Coburn put it, the

Vol. 4 | No. 3 | Spring 2021 104 105 Vol. 4 | No. 3 | Spring 2021 BAKU DIALOGUES BAKU DIALOGUES first fissure occurred in 1998 with to inhibit Russia’s oil monopoly in BSP and the opening up of rail the Caspian Sea in a span of less routes from Baku to Batumi and than a decade. Supsa. The second took place when CPC opened in 2001, carrying By breaking the oil source mo- Kazakhstani oil to the Black Sea nopoly for Europe, the Caspian via Russia. The third came about Sea-South Caucasus region has in 2006, with BTC finally breaking opened alternatives for European Russia’s monopoly and bypassing energy sourcing. When (or if) sanc- the Bosporus-Dardanelles bottle- tions against Iran are lifted, this may neck. Furthermore, Kazakhstan become even more so. Whereas and Azerbaijan are developing Europe was importing 35 percent trans-Caspian oil shipping from of its oil from Russia in 2011, by Aktau to BTC, that in 2016 was 80 the first half of 2020 the figure had percent fulfilled—and committed dropped to 26.4 percent. Thus, it has to building a trans-Caspian pipe- oiled the hinge to open the door in line. These routes provide the Silk Eurasia as one economic and political Road region with competitive and continent through the construction diverse routes that undermine Rus- of regional oil pipeline infrastructure. sia’s position. Thus, Azerbaijan—to- It seems unlikely that the genie will gether with Kazakhstan—managed be put back inside the bottle. BD

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With the rapid growth of its the energy field in the Gulf amid Beijing’s Long Way to the economy and consequent height- the decreasing influence of the West ened energy demands, China is and declining crude oil demand. Gulf Region viewed as a potential investor by the oil rich GCC states, each of which For the Gulf states (the Arab needs to diversify its economy. On- ones, in particular), the interest Oil, Security, Geopolitics going Western sanctions directed of Chinese oil companies in the against Iran also make China an region offers new and potentially attractive proposition for Tehran. highly lucrative business opportu- Fuad Shahbazov Although the Chinese interest in, nities. Moreover, considering the and policy towards, the region is huge capacity of the Chinese energy nergy cooperation has has received increasing atten- increasingly complex, this new axis market, regional hydrocarbon pow- been a key aspect of tion from the region’s more estab- between the Gulf region (especially erhouses like Saudi Arabia and Iraq growing bilateral cooper- lished strategic players: foremost the Arab half) and China has not are keen to expand their respective ationE between China and the Arab the United States, but also the UK received much attention from the ties with Beijing. Simultaneously, states of the Gulf region for the past as well as the EU and some of its think tank and academic commu- Chinese interest in the region is several years. Since 1996, China member states. Indeed, the region’s nities—at least in the West. not limited only to crude oil and has become a net importer of crude apparent geopolitical challenges— natural gas imports; Beijing also oil and, as the second-largest en- such as the American withdrawal t has become commonplace but views this area as a new platform ergy consumer in the world after from the Middle East, the escala- Ino less important nowadays to for the expansion of its ambitious the United States, is now the third- tion of sectarian wars in the region, stress that China’s rising influence Belt and Road Initiative (BRI), largest importer of oil after the the outbreak and development of across the world represents the which consists of a series of infra- United States and Japan. Therefore, the Syrian conflict followed by the most salient development of con- structure networks along with trade it should not come as a surprise that spread of Islamic radicalism and temporary international politics. Its and economic investment projects China is eying a deep and strategic similar threats—have encouraged ballooning economy is forcing the that span, roughly speaking, all the partnership with the states of a re- the Arab states in the Gulf (as well country to search for stable sources various land and maritime routes of gion that sits on top of the world’s as Iran) to look more to the East for of energy in its immediate neigh- the ancient Silk Road. largest proven crude oil and natural new reliable partners. This has pro- borhood and beyond. This can gas reserves. vided China with an opportunity be seen as a determining factor in The Gulf states are of particular to obtain a foothold in the region, China’s deepening cooperation interest to China due to their in- The deepening political and which sits adjacent to the Silk Road with resource rich GCC states, as creasingly important capital re- economic cooperation between region and is therefore of signifi- per Beijing’s pragmatic approach. sources. As a matter of record, new, China and the member states of the cant and lasting interest to readers Although China viewed events in closer relations between the GCC Gulf Cooperation Council (GCC) of Baku Dialogues. the Gulf region during the Cold states and China have come at the War era through its revolutionary expense of older strategic ties, such ideology, its relations with the re- as the Beijing-Tehran partnership— Fuad Shahbazov is Senior Research Analyst at the Baku-based Center for gion’s states are now driven largely although the recent announcement Strategic Communications and a former Visiting Scholar at the Daniel by energy and trade concerns. of a new economic and security Morgan School of National Security in Washington, DC. China is rapidly taking control of relationship may serve to correct

Vol. 4 | No. 3 | Spring 2021 108 109 Vol. 4 | No. 3 | Spring 2021 BAKU DIALOGUES BAKU DIALOGUES this trend. How- fact that has con- lthough the current trade infrastructure in eastern Siberia ever that may be, New, closer relations be- tributed to the Awar between the West and and the Russian far east is already it appears that tween the GCC states and considerable rise China is expected to slow the latter’s leading to some shortages in oil and China’s mainte- China have come at the ex- in China’s energy economic growth, the increasing natural gas export to China. In this nance of good consumption is volume of Chinese goods trans- regard, the wealthy Gulf Arab states, economic, polit- pense of older strategic ties, the manufacturing ported overseas will expand oil with their modern infrastructure ical, and even se- such as the Beijing-Tehran and construc- imports. For that purpose, China and economic potential, appear to curity relations partnership—although the tion boom re- is actively seeking new, alternative, be more attractive destinations for with Tehran is recent announcement of a sulting from eco- and reliable energy sources. In that Chinese investments. likely to avoid the new economic and securi- nomic expansion sense, with its vast oil and natural provision of open, ty relationship may serve and the building gas reserves, the Gulf region is the unconditional of entirely new perfect option for oil-thirsty China. China’s Changing Role in support of Iran’s to correct this trend. cities across the Energy and economic cooperation the Middle East positions in the country. As a have been core elements in devel- Middle East or in its particular result, China has seen a rap- oping relations between China and he objective of this section sort of rivalry with the West. idly increasing demand for re- the GCC states, with the region Tis to scrutinize the pivot of fined petroleum, gasoline, liqui- reportedly being home to six of China towards the Middle East This essay will mainly analyze fied natural gas (LNG), and China’s foremost oil importing region. China is a relatively new China’s relations with the GCC related products. companies. player in the Middle East in gen- states, Beijing’s particular interest eral, and in the Persian Gulf in in their energy resources, and the To fulfill its energy require- Although traditionally Russia particular. Unlike major Western role of the Belt and Road Initiative ments, China has gone from being and Central Asian states have been powers like the United States and in advancing relations between the a net exporter of oil to one of the China’s primary energy donors, as some EU member states that have aforementioned countries. It will world’s largest importing coun- it were, the lack of economic pros- maintained a leading role in this re- also examine how the balance of tries, thus challenging the United perity that the oil industry is cur- gion for decades, Chinese influence power between traditional Western States’ position in the global en- rently experiencing is hitting hard. and involvement in the Gulf was, actors and China is changing in the ergy market. China’s main priority Russia, for instance, is experiencing until recently, relatively minor. Gulf region. Lastly, the essay will in growing its oil imports is to deep troubles amidst decreasing discuss China’s rising influence in fill its strategic oil reserves: once oil prices and ongoing Western Until the 1980s, China supported the Arab half of the Gulf region and this is satisfied, it is likely that sanctions. Russia’s energy-rich ter- various local resistance movements its strategic implications for the West. oil imports will decrease slightly. ritories in the west and far eastern against the local Gulf monarchies, Compared to its domestic oil re- parts of its territory have been in viewing the region through a so- serves, China’s natural gas supply operation since the early 1970s cialist revolutionary prism. From Energy Trends in China is more limited, with national re- and are now substantially depleted. the 1990s onwards, Chinese coop- serves being largely undeveloped. Therefore, they require serious and eration with the region’s states grad- hina’s spectacular economic This factor has pushed China to costly technological renovation in ually increased, though its presence Cdevelopment is clearly the increase the volume of imported order to resume output equal to and influence in the Gulf remained most important causal factor in natural gas, mainly from the Gulf the previous level. Also, the lack of insignificant compared to the its rising energy demand. Another region. necessary transport and refinery West. Nevertheless, the changing

Vol. 4 | No. 3 | Spring 2021 110 111 Vol. 4 | No. 3 | Spring 2021 BAKU DIALOGUES BAKU DIALOGUES geopolitical situation has swiftly hina’s most significant -in coronavirus pandemic that locked n the case of Iran, Tehran is shifted the balance of power in the Cterest in the Gulf region is down China for weeks. Iwilling to keep the Chinese oil Gulf region over the last several oil, in addition to natural gas. As market open for export to compen- years. While all attention is now fo- the largest oil importer and con- Most of China’s oil imports from sate its missing trade partners in cused on the endless U.S.-Iran dis- sumer globally, China imported the Middle East originate from light of U.S. economic and political pute and the ongoing bloody con- nearly 6.2 million barrels of crude the Gulf region, particularly Saudi pressure. The robust, Western-led flict in Yemen (and Syria, of course, oil per day in 2014, more than half Arabia, Iraq, and Iran, while Qatar sanctions regime threated to cut off and Libya, and so on), China is of which was from the Middle East. is a significant exporter of liquified access to the international banking rapidly and quietly consolidating Being a customs-free market with a petroleum gas and LNG. China system for any company that does a presence in this vitally important population of 280 million, the GCC imports about 55 percent of its oil business in Iran, which succeeded region. region has considerable amounts of from the Gulf. China can be seen in suffocating the Iranian economy petrodollars. Its sovereign wealth as an “energy panda” that needs by scaring away badly needed for- The general failure of the Western funds have swollen to a cumula- secured energy resources to satisfy eign trade and investment. powers to ensure peace and sta- tive $2.3 trillion, accounting for its appetite. Since bility in the Arabian Peninsula around 36 percent of the world’s the beginning Chinese oil com- and the Gulf region over the past total, according to a 2019 study by of the 2000s, the Riyadh is considered a rel- panies would be century, which has been overshad- the China Institute of International country’s growing atively stable source of oil the only losers owed by the legacy of colonialism Studies, the official think tank of dependence on because of its close align- in such circum- and harsh “human rights” rhetoric, the country’s foreign ministry. crude oil quickly stances, notwith- has allowed Beijing to play a larger became a source ment with Washington standing the lower regional role. As a result, the trade Hence, it should not come as a of concern for and the security guaran- price of Iranian volume between GCC countries surprise that Chinese state-owned Beijing. Therefore, tees provided, while Iran oil. In July 2019, a and China has risen substantially, companies have been operating in China has always is convenient because of new first was regis- making the latter a significant eco- the Middle East since the 1980s, needed to ensure a its relative proximity to tered in this regard nomic partner. Three main reasons dealing mainly with the construc- reliable oil supply, when the Trump China. may explain Beijing’s successful in- tion of necessary energy infra- which requires Administration tegration into the economies of the structure and oil exploration is- stable trading part- imposed economic Gulf. First, no political obligations sues. According to available data, ners. Considering the substantial penalties on a Chinese company imposed by China on regional in 2013 alone, China imported hydrocarbon resources of the re- (called Zhuhai Zhenrong) for “vio- countries. Second, non-interference more than 3 million barrels per gion’s states, China focused heavily lating U.S. sanctions” by importing in their domestic affairs. And day (b/d), compared with U.S. on Iran, Iraq, and Saudi Arabia as crude oil from Iran, while the third, the decisions of the regional imports of 2 million b/d from the major suppliers of oil. For Beijing, major China National Petroleum states themselves to downgrade the Middle East. As of 2020, China’s Riyadh is considered a relatively Company (CNPC) pulled out of Western influence in the Gulf by crude oil imports from top sup- stable source of oil because of its the country in October 2019. Nev- reaching out to Beijing, the result of plier Saudi Arabia rose 26 percent close alignment with Washington ertheless, China’s decision not to which has gone a long way to create compared to 2019. Overall, China’s and the security guarantees pro- entirely cut partnership ties with a balance of power. These should be imports of crude oil jumped by 9.9 vided, while Iran is convenient Iran despite U.S. pressure demon- kept in mind as a backdrop to the percent compared to the first half because of its relative proximity strates Beijing’s desire to act as an sections that follow. of 2019, despite the devastating to China. equal global power. Meanwhile,

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Iran’s efforts to strengthen ties with When assessing the GCC-China unlikely allow Iran to implement help the kingdom develop renew- China are likely motivated by its partnership in the fields of energy destructive policies in the Gulf that able energy resources and decrease desire to use China as a counterbal- and economics, it becomes clear would undermine Beijing’s reputa- its dependence on oil exports. Also, ance, which has the technology and that Beijing’s extensive relations tion in the region. to obtain necessary leverage, Saudi appetite for oil that Iran needs. with Iran are based on the idea of Arabia increased investments in securing freedom of navigation in Thus, keeping good relations with China and thus reduced the role On the other hand, at a time the Gulf region, which is of partic- Iran masks a series of more proof its arch-rival Iran. This ongoing when the U.S. was overwhelmed ular importance to boost influence. found shifts in energy imports from dispute between the Gulf states is with an economic recession and The new cooperation agreement the region. According to reports, undoubtedly in Beijing’s interest. worsening COVID-19 cases, envisages some critical infrastruc- bilateral trade between China and In 2020, Saudi owned Aramco China and Iran decided to take the ture projects like the construction the GCC states has seen significant and Saudi Basic Industries Corp. next step for closer partnership of high-speed railways, highways, growth this century, with the GCC (SABIC) were both in negotiations by signing a new comprehensive telecommunication networks, representing a large proportion of to invest about $35 billion in proj- strategic partnership in the im- and developing free-trade zone in Chinese trade in the Arab world. ects in China, with production ca- mediate aftermath of the Chinese the cities of Maku (in Iran’s West Trade value had increased from pacities reaching 7.5 million tons in president’s visit to Tehran, where Azerbaijan province) and Abadan just under $10 billion in 2000 to chemicals, which accounts for 45 Xi Jinping met Iran’s Supreme (located near the border with Iraq nearly $115 billion in 2016. Those percent of total overseas produc- Leader Ali Khamenei. According just north of the Gulf coast). numbers have grown further in the tion capacity of Saudi producers to the document, the pact is set to interim. overseas. go further than economic cooper- Unlike the U.S., China has ad- ation and include unprecedented opted an apolitical and develop- audi Arabia has become Collectively, the GCC ranks as collaboration in transport and ment-oriented approach, refuting SChina’s most important China’s sixth-largest export des- logistics in Iran’s southern ports to take sides in political disputes trading partner in the Middle East, tination and fifth-largest import and islands as well in the Gulf region. and the UAE ranks second. Saudi destination. Any possible conflict as the country’s By deepening its Arabia’s Crown Prince Mohammad in the Strait of Hormuz involving defense and secu- Unlike the U.S., China economic part- bin Salman (MbS) paid an official Iran and a U.S.-led coalition would rity sectors. While has adopted an apolitical nership with Iran, visit to China at the beginning of inevitably have negative conse- some argue that Beijing aims to 2019 amid his big Asia tour. Sur- quences for China and other Asian the new strategic and development-orient- help it reach a con- prisingly, the visit by MbS to China consumers. China’s need for oil will deal would ened approach, refuting to sensus with other came right after the Iranian dele- grow even more in the next sev- able isolated and take sides in political dis- Gulf states. There- gation’s visit to Beijing, which was eral years due to the insufficient suffocated Iran to putes in the Gulf region. fore, the Gulf mon- led by Parliament Speaker Ali Lar- domestic reserves, and, according counter the U.S. archies are not par- ijani and Foreign Minister Javad to reliable estimates, China is pro- influence in the ticularly irritated Zarif. The Saudi crown prince’s jected to import 8 million BPD Middle East, the opposite seems with the China-Iran partnership visit to China was a particularly by 2020 and 11.4 million BPD by to be happening: this partnership since their bilateral cooperation exciting event, for a number of 2030. From the perspective of the is likely to increase Iran’s reliance neither imposes any political obli- reasons. MbS wants China to be GCC countries—particularly Saudi on China—both economically gation nor poses a critical threat to closely engaged with his ambitious Arabia and the UAE—a willingness and politically. regional security. Also, China will Vision-2030 plan, as Beijing can to partner closely with China can

Vol. 4 | No. 3 | Spring 2021 114 115 Vol. 4 | No. 3 | Spring 2021 BAKU DIALOGUES BAKU DIALOGUES be attributed to the perception of again, it is unlikely that it will make The Belt and Road Initiative countries is somewhat complemen- the U.S. as a “disruptive element” in such a controversial decision. tary. However, the BRI project is at the region, its decreasing demand and the Gulf Region least partially about directing en- in oil import due to vast national Although Beijing reportedly has ergy resources to China and facil- oil reserves (reportedly, 293 bil- more than one billion barrels of his section aims to assess the itating the flow of energy through lion barrels), and an overall disap- strategic reserves to cover around Timportance of the energy regional states. With regard to this pointment with Washington’s anti- 640 days of imports, the ques- partnership between China and the policy, nearly all Gulf states are Iranian rhetoric, with no real action tion for many oil-thirsty Asian Gulf region, as well as its impact on aware of the necessity of securing taken or measures imposed against countries, especially for China, the implementation of the Belt and reliable and long-term export mar- the country. is whether there is a possibility Road Initiative in this region. Al- kets, and the growing energy appe- of further devastating strikes and though officially, the GCC is not a tite of China seems like a perfect oreover, Washington’s provocations that could trigger core part of BRI, the Gulf is one of solution. Mrestrained position over more considerable turmoil in the main regions where the project frequent drone and missile at- the region. This question is of is being implemented, as it is con- lthough the Middle East pos- tacks on Saudi Arabian oil fields strategic importance for China sidered one of the world’s most in- Asesses massive hydrocarbon and other infrastructure (this given its ambitions, plans, and fluential financial hubs. The project resources, interconnectivity be- particularly refers to the Trump investments regarding the Gulf itself provides a suitable outlet for tween regional states is weak due Administration, and the ju- states implemented under the Chinese state-owned companies— to current (and longstanding) geo- ry’s still out on a possible Biden BRI umbrella. Meanwhile, former mostly those dealing in hydrocar- political and economic turmoil. In Administration reaction) en- U.S. Joint Chief of Staff General bons—to increase their investments turn, the BRI framework also al- couraged countries such as Saudi Joseph Dunford underlined that overseas. In contrast, for regional lows the regional states to develop Arabia, UAE, Oman, and Kuwait an increased number of U.S. mil- states, their objectives in fields like stronger relations with each other to seek a new, powerful ally such itary personnel in the Middle East economic diversification, crude oil/ and other future-proof economies as China. According to the data, and the provision of U.S.-made natural gas export market diversifi- along the various routes of the Belt China’s imports from Saudi Arabia weapons exported to Saudi Arabia cation, and regional security align and Road Initiative. New energy in July 2020 were at a two-year would not fully guarantee the se- perfectly with the BRI concept. roads, rail networks, maritime high of 1.8 million barrels a day, curity of the kingdom’s oil fields. hubs, and pipelines routes pro- up from 663,000 for the same Undoubtedly, Dunford’s position The BRI project means better posed within the BRI framework month in 2019. Nevertheless, fre- and opinion revealed deeper con- connectivity and could help knit the quent missile attacks on Saudi cerns among overseas consumers the building of Gulf region into Arabia would likely push China to of Saudi oil—a fact that could fur- new ports, pipe- The BRI project means a unique network diversify its oil import partners to ther affect global oil prices in the lines, highways, better connectivity and stretching from avoid possible supply disruption. event of new attacks. Similarly, and terminals to the building of new ports, Europe to China. Experts’ data indicate that there Saudi Arabia’s vulnerability to ex- enhance energy It is estimated that will be visible outcomes for China ternal attacks would motivate the partnership with pipelines, highways, and the region would as a result of supply disruption. country to build up a security co- the Gulf region. In terminals to enhance en- need around $3 Although China has an option to operation relationship with China part, China’s energy partnership with the trillion invest- pivot towards Iran and increase that would help Riyadh halt armed ergy partnership Gulf region. ment for BRI-re- the volume of imported crude oil conflicts in the region. with the region’s lated infrastructure

Vol. 4 | No. 3 | Spring 2021 116 117 Vol. 4 | No. 3 | Spring 2021 BAKU DIALOGUES BAKU DIALOGUES projects between 2018 and 2030. At ome claim that China’s expan- China’s most active oil-related proj- Salalah on the coast), which is ex- the China-Arab States Cooperation Ssion in the Gulf region is hap- ects in the region are located in pected to become home to several Forum held in 2018, Beijing pro- pening because of certain external Iraq, with significant stakes in the enterprises, including petrochem- posed $20 billion in loans and $106 actors’ immense power vacuum. Al-Ahdab, Rumaila, and Halfaya ical and railway infrastructure proj- million in financial aid to Middle The U.S. is reducing its political oil fields. With regard to oil supply, ects. China has pledged to spend Eastern countries. and security commitment to the the regional countries’ oil produc- $10.7 billion by 2022 to develop the region while its major NATO/EU tion over this period will rise by 29 Duqm special economic zone. This While demand for crude oil allies are going through a period of percent, and China is expected to investment plan can be viewed as a is declining slightly in Western political and economic instability emerge as the world’s largest con- main pillar of China’s strategic cal- countries, the importance of for well-known reasons that do not sumer of energy: in 2035 it is ex- culation to lay down an effective sea crude oil as an important part of need to be repeated here. All told, pected to account for 26 percent of route for international trade. As in Chinese foreign policy strategy— the effects of all this have provided global energy demand. Oman, Saudi Arabia also admires and that of other big Asian hydro- China with a suitable platform to the BRI project as an irreplaceable carbon-consuming states—will make inroads into the domestic raq is not the only Gulf state contribution to its “Vision-2030” rise in the coming decades. More- markets of the GCC states. For in- Ibenefiting from Chinese infra- agenda. over, Chinese leader Xi Jinping has stance, during its post-war rehabili- structural investments and energy clearly and repeatedly emphasized tation, Beijing was particularly sup- cooperation within the BRI frame- earing in mind the figures the GCC region’s geostrategic im- portive of Iraq. China helped the work. Oman, which is another ac- Bfor oil consumption of Asian portance in various fora. For in- country rebuild its oil industry and tive oil supplier to China, is also countries (both current and pro- stance, his speech at the opening restore its national telecommunica- actively involved in the BRI project. jected), especially China, it is safe ceremony of the Sixth Ministerial tions service, whereas the Western Oman is of particular interest and to say that any further major con- Conference of China-Arab States coalition’s promises to rebuild local importance for China due to its tribution to meet oil demand will Cooperation Forum, held in Bei- infrastructure in Iraq and boost position as a politically stable and almost certainly have to come from jing in 2014, formally gave a green economic growth remained an illu- neutral country, especially when the Gulf region; and that this de- light to Chinese state-owned and sion. China sees itself contributing compared to other neighboring mand will be a crucial element in private companies to flood local to the region differently. states. The country’s easy, direct the economic growth plans of the markets in the GCC, particularly access to the Indian Ocean doesn’t regional oil-producing states. It those related to energy. Simply Iraq became one of the first hurt, either. thus seems evident that the Gulf put, China intends to build a regional states that publicly ap- countries’ reorientation towards transcontinental link that connects plauded the BRI project and Overall, China’s purchases of China is not a temporary phenom- Asia, Africa, and Europe. As such, formed a committee to coordinate Omani oil reached 70 percent of enon, but rather integral to their re- in November 2019, UAE’s Min- future projects under the initiative. the total Omani oil exports in June spective long-term visions. istry of Economy and the China Following this, two Chinese com- of 2019, according to an official Venture Capital Research Institute panies—Power-China and Norinco source. Additionally, under the BRI The new pro-Chinese trend (CVCRI) inked a memorandum International—signed a new agree- project Oman received significant emerging in the Gulf region is of understanding for a long-term ment with the Iraqi government to investments from China to establish firmly bound to the current political strategic partnership to share rebuild a new oil refinery at the port a joint industrial park in the Duqm situation in the European Union sources, enhance trade, and boost of Fao on the Gulf with the capacity special economic zone (Duqm is lo- and its implications for the giant BRI-related investments. to produce 300,000 barrels per day. cated halfway between Muscat and energy companies that have op-

Vol. 4 | No. 3 | Spring 2021 118 119 Vol. 4 | No. 3 | Spring 2021 BAKU DIALOGUES BAKU DIALOGUES erated in the Gulf Iraq explicitly de- by interstate conflicts and a high hina’s wisest subsequent for decades. The The new pro-Chinese stabilized Chinese level of tension will face some Cstrategy would be to make an growing push in trend emerging in the oil interests in problematic issues, such as effort to bring regional states to rec- Europe for greater Gulf region is firmly Iraq a few years whether to support one state onciliation through proactive ne- diversification and ago, things are against another, accurately bal- gotiations. In other words, to boost bound to the current po- the massive decar- getting back to ance between them, or find a way energy partnership and secure its bonization policies litical situation in the (new) normal for to support none but still be able to investment projects in the Gulf, associated with European Union and its Beijing’s interests. penetrate the market. This issue China must actively endeavor to developing alterna- implications for the giant This is in part due applies to Western countries and defuse tensions with regards to the tive energy sources energy companies that to Western coun- China alike. Western states usu- Saudi Arabia-Iran dispute; it also that nearly all EU have operated in the Gulf tries leaving the ally take an ignorant position or needs to take measures to ensure member states country’s energy take a concrete side in regional the intra-GCC dispute between are implementing for decades. market, as noted conflicts in the Middle East, and Qatar and the Saudi-led coalition, are the main rea- above. Thus, we their involvement in regional af- which now looks to have been sons behind declining oil demand see China looking to safeguard fairs does not bring visible posi- resolved, stays resolved. in Europe. A consequence of this its oil interests through expanded tive outcomes. Simultaneously, policy is that the EU is no longer a bilateral cooperation with the au- unlike Western countries, China Some experts claim that China major hydrocarbon trade partner thorities in the semi-autonomous has wisely avoided taking sides in has enough diplomatic leverage anymore. On the other hand, big Iraqi Kurdistan region, where the intra-Gulf disputes and disagree- to bring the various Gulf states to Western companies like Exxon- political situation is more stable. ments, helping to shape its image the negotiating table because of Mobil, Shell, Chevron, and others as a “positive and neutral actor.” the region’s active involvement in have found the working conditions ith the giant Western en- the BRI project. For now, how- and oil contracts in the Middle East Wergy companies leaving This means that China prefers ever, China has less influence in unprofitable, due to the escalating Iraq, the local energy market’s com- to create and boost its soft power this sense than its Western coun- security risks and interstate crises petitiveness level decreased, which in this region by successfully in- terparts, which stand ready to that became inflamed following the opened new horizons for Chinese tegrating it into the BRI project, offer military support in the “res- Arab Spring. oil companies. Another fact is that thereby obtaining outcomes in olution” of intrastate disputes. the U.S.-imposed sanctions on both sides’ mutual interest (the Beijing is unlikely to do so. Rather, In this regard, Iraq has the most Iran, which is another major oil ‘win-win’ formula). Nevertheless, China’s influence in the Gulf lies robust business terms for foreign supplier in the Gulf region, delib- unresolved disputes, inflamed ten- in economic links and energy co- energy companies, even those from erately made conditions tougher for sions, or the onset of yet another operation, which allow for the de- China. Thus, Shell agreed to sell its Western companies, as was the case armed conflict in the Gulf could velopment of good relations with entire stake in Iraq’s West Qurna with France’s Total, which pulled inflict severe damage on Chinese the governing circles of regional oilfield, which produces 405,000 out of the Iranian energy market in interests here, particularly en- states, but this does not provide BPD, to Japan’s Itochu Corp. The May 2019. ergy interests. Still, one balance, the desired leverage. The historical company (along with Exxon) with- there are good reasons to conclude record indicates that close energy drew a bid to renew its rights to a Historically, any major power that the region will bear witness partnerships and investment proj- massive oil concession in the UAE. attempting to develop relations with China’s peaceful rise and the de- ects cannot, by themselves, be un- Although the ISIS insurgency in states in a volatile region hampered clining influence of the West. derstood as sufficient leverage to

Vol. 4 | No. 3 | Spring 2021 120 121 Vol. 4 | No. 3 | Spring 2021 BAKU DIALOGUES BAKU DIALOGUES be able to exert enough pressure However, America’s gradually could become a mutual partner- on a regional state to engage in a decreasing influence in the Gulf re- driving force of re- From the Gulf states’ ships beyond en- process of reconciliation. gion and other parts of the Middle gional energy inte- point of view, a growing ergy. Unlike tra- East, coupled with a general shift gration, boosting energy partnership with ditional Western in the global balance of power, the construction of China would allow them partners, China is China’s Energy Strategy in suggests that China is not far from new pipelines and building new sea- the Gulf Region becoming a contemporary global electricity trans- to obtain a greater role in ports, industrial power. Considering China’s crude mission infrastruc- a newly emerging inter- parks, and tele- hina’s state-centered ap- oil and natural gas imports and its ture, as well as the continental trade process communication Cproach towards energy se- huge investment projects launched implementation and benefit from a new systems in the Gulf, curity has motivated it to enhance within the framework of BRI, of energy security partnership. thus strengthening relations with a number of ener- Beijing is already playing a more initiatives. commercial rela- gy-rich countries, critical role in this tions in various both in its imme- region than at any From the Gulf states’ point of trade and investment fields. While diate neighbor- America’s gradually de- previous period in view, a growing energy partner- all these projects and growing part- hood (i.e., in many creasing influence in the history. Nonethe- ship with China would allow them nership ties are complementary not parts of what the Gulf region and other less, the successful to obtain a greater role in a newly only for China but also for the Gulf editors of Baku parts of the Middle East, implementation of emerging intercontinental trade states, Beijing is also keen to receive Dialogues call the the BRI project to process and benefit from a new more sponsorship from wealthy Gulf Silk Road region) coupled with a general ring-fence an en- partnership. Thus, although China countries in order to amplify the stra- and beyond, in- shift in the global balance ergy partnership views the Gulf region as an energy tegic relevance of its economy, since cluding North Af- of power, suggests that with the region hub that can satisfy its own needs, this represents a perfect opportunity rica and the Middle China is not far from be- is highly depen- it is actively attempting to diversify to bring the region closer to China. BD East. As mentioned coming a contemporary dent on intra-Gulf above, China is in- global power. political stability creasing its power as well as rap- projection in the prochement with Middle East—especially in the Gulf Iran, another important regional region—even though it still cannot country and energy supplier. Still, (and does not seek to) fully replace given that BRI can (and should) the United States as the only power be viewed as an “energy road” (es- in the region. Despite the growing pecially in the context of the Gulf bakudialogues.ada.edu.az volume of imported crude oil and region), the flow of hydrocarbon natural gas, and the participation resources is likely to grow in the of regional states in at least some years to come. aspects of the BRI project, America still remains the only external power Because of China’s seemingly that can provide a unique security endless appetite for hydrocarbons umbrella in the Gulf. For now. originating in the Gulf, China

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and gas pipelines to supplement the countries, the souring of Russian- Trilateral Cooperation mainly north-south conduits built Turkish relations following the during the Soviet period between downing of a Russian warplane in Russia and the other Soviet repub- 2015, and the subsequent imposition of Between Azerbaijan, Turkey, lics, which all too often subordinated Russian sanctions on Turkey, called these states to Moscow. The new into question the wisdom of Turkey’s and Georgia east-west hydrocarbon pipelines, rail energy dependence on Russia. The and road links, and fiberoptic cables major Russian-Turkish energy proj- A View from America have proved critical in sustaining ects have included energy pipelines Azerbaijan’s economic autonomy and a nuclear power plant, and the and strategic significance. Whereas overall relationship has also seen sub- Richard Weitz Azerbaijan’s foreign economic policy stantial increases in trade and tourism. initially concen- Through various trated on attracting By pooling their capabil- initiatives, Turkey ince the breakup of the So- complex geopolitical regions, foreign investment, has amplified its viet Union, Azerbaijan, with several external powers Azerbaijani capital ities Azerbaijan, Turkey, regional economic Turkey, and Georgia have competing for regional influ- has since gained and Georgia aim to en- and security influ- achievedS unprecedented levels of ence. By pooling their capabilities a significant foot- hance their autonomy, ence in the South economic and security collabo- Azerbaijan, Turkey, and Georgia hold in neigh- security, and prosperity— Caucasus and the ration. Through this expanding aim to enhance their autonomy, boring countries, though they could ben- Caspian Basin, be- including Georgia coming an essential cooperation, the three countries security, and prosperity—though efit by receiving greater have established themselves as a they could benefit by receiving and Turkey. To transit corridor and collective hub of Eurasian energy greater support from the United complement these support from the United energy hub between extraction and multi-model trans- States and its European allies. economic ties, States and its European these regions and portation. Their growing ties have Azerbaijani diplo- allies. Europe. In addition accelerated since the opening of macy has pursued to becoming a key the Baku-Tbilisi-Ceyhan (BTC) oil National Perspectives better diplomatic transit zone and pipeline in 2006 to extend to the ties with its neighbors to enhance its hub for Azerbaijani gas flowing to construction of additional pipe- ince regaining indepen- foreign-policy flexibility. Europe, Turkey’s good relations lines, the launching in 2017 of the Sdence, Azerbaijan’s economy with Georgia have increased re- Baku-Tbilisi-Kars (BTK) railway, has grown at an astounding rate. Though Turkey’s “Zero Prob- gional stability while reducing the holding of regular trilateral mil- The country’s hydrocarbon ex- lems with Neighbors” policy has Turkey’s reliance on Russia and itary exercises, and the convening ports, marked by the discovery of generally failed, Ankara’s troubled other states. of frequent high-level leadership the massive Shah Deniz field in ties with many European and Asian meetings. The South Caucasus 1999, benefited from the extensive countries may have increased its in- elations between Azerbaijan remains one of the world’s most construction of new east-west oil terest in deepening relations with Rand Turkey have traditionally Azerbaijan and Georgia. In addi- been close due to shared ethnic, Richard Weitz is Senior Fellow and Director of the Center for Political-Military tion to its strained ties with some cultural, linguistic, and religious Analysis at the Hudson Institute in Washington, DC. European and Middle Eastern ties. The consistent and warm

Vol. 4 | No. 3 | Spring 2021 124 125 Vol. 4 | No. 3 | Spring 2021 BAKU DIALOGUES BAKU DIALOGUES official discourse between Ankara construction of a new petrochem- countries have also Russia’s goal of pre- and Baku highlights their special ical complex and urea (carbamide) hosted joint mil- The enhanced Turkish serving its balance relationship: observers sometimes plant. The two states have also agreed itary exercises to security role in the South of interests across characterize their people “one na- to construct rail and pipeline links show solidarity and Caucasus helped thwart multiple states is tion, two states”—a phrase coined between Turkey and Azerbaijan’s rehearse protec- the major reason by Heydar Aliyev and repeated Nakhchivan Autonomous Republic, tion of critical in- Moscow’s strategy of ma- why Moscow de- often ever since. In September 2020, whose main international links until frastructure, such nipulating tensions to clined to inter- Turkey’s trade minister, Ruhsar now have been through Iran. as the BTC pipe- control escalation dy- vene militarily on Pekcan, announced that Ankara line. Turkey has namics in its favor. Armenia’s behalf, plans to sign a free trade agree- ell before the Second regularly backed despite their shared ment with Azerbaijan, noting the WKarabakh War that was Azerbaijan in its membership in importance of the “Georgia-Azer- fought in late 2020, Azerbaijan has conflict with Armenia, providing the Collective Security Treaty baijan-Caspian direction” that links received substantial military training critical diplomatic, economic, and Organization (CSTO). Turkey and Central Asia and em- and capacity building from Turkey. military support (though almost all of phasizing the importance of pre- The 1996 Azerbaijani-Turkish Agree- Azerbaijan’s major weapons systems In the Second Karabakh War, viously undeveloped trade routes ment on Cooperation in the Fields come from Russia). Russian President Vladimir Putin amidst the economic disruptions of Military Technology and Military chose to throw Russia’s formal ally caused by COVID-19 pandemic. Training provided a foundational In earlier years, Turkish dip- Armenia under the bus to sustain framework for deep security col- lomats unsuccessfully attempted influence with Azerbaijan and In addition to receiving and trans- laboration. The 2010 Agreement on to encourage Armenia to return Turkey. By refusing to intervene porting Azerbaijani oil and gas, Strategic Partnership and Mutual Azerbaijani-occupied territory in militarily on Yerevan’s behalf and Turkey has become a major partner Support between Azerbaijan and exchange for economic and dip- pressing Armenia into an agree- in Azerbaijan’s other hydrocarbon Turkey furthered this bilateral de- lomatic concessions from Turkey, ment that consolidated Azerbai- projects. Thousands of Turkish fense cooperation through a commit- including resumed trade and offi- jan’s gains, Putin secured another companies operate in Azerbaijan, ment to render mutual assistance in cial diplomatic ties. The failure of Russian military foothold in a many in Azerbaijan’s energy sector, the case of armed aggression towards these overtures contributed to the South Caucasian statelet carved out which attracts the bulk of Turkish one or both parties. The agreement April 2016 border clash between of Nagorno Karabakh, while pun- foreign direct investment. Azerbai- also provides for joint military exer- Azerbaijan and Armenia as well ishing a stubborn Armenian leader jani entities also have invested bil- cises, joint training, and defense in- as the 2020 war, when the benefits for failing to heed Russian recom- lions of dollars in Turkey’s economy. dustrial cooperation. These security of previous Azerbaijani-Turkish mendations to compromise on the Recent Azerbaijani investment proj- ties with Turkey have over several security cooperation were evident. dispute before the onset of the war. ects in Turkey include the building decades helped Azerbaijan deter mil- of the new oil refinery in Izmir, itary threats from Russia and Iran as reviously, Moscow had ex- Yet, the enhanced Turkish se- which will produce millions of tons well as, most recently, recover occu- Pploited tensions between Azer- curity role in the South Caucasus of diesel each year, saving Turkey the pied territories from Armenia. baijan and Armenia to sell weapons helped thwart Moscow’s strategy costs of importing petroleum and to both states and generate leverage of manipulating tensions to con- making the country more energy In recent years, companies in for Russian diplomatic efforts to trol escalation dynamics in its independent. Future Azerbaijani both states have jointly manu- push Baku toward Moscow-led favor. Ankara tenaciously backed projects in Turkey will feature the factured defense systems. Both regional integration structures. Baku in its successful recovery of

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Armenian-occupied territories Turkish investments provide and Georgia can be an example for of the advantage of routing energy and has a guaranteed role in the Georgia with attractive alterna- other countries.” trade through the region. It trans- post-conflict diplomacy thanks to tives to Russian imports and cap- ships oil from the Azeri-Chirag- the joint Russian-Turkish mon- ital, decreasing Georgia’s economic This trilateral partnership has Deepwater Gunashli field in itoring center in Azerbaijan and dependence on Russia. Of note, boosted employment, investment, Azerbaijan, as well as from fields Turkey’s continuing participation Azerbaijan continued to deliver and revenue for the participating in Kazakhstan and Turkmenistan, in regional diplomatic dialogues. gas and electricity even during states, making them more im- to the Turkish Mediterranean sea- Georgia’s 2008 war with Russia. portant partners to Europe and af- port of Ceyhan. A parallel 1,000km zerbaijan and Turkey have Since then, Baku and Ankara have fording them greater leverage with South Caucasus Pipeline (SCP, aka Aalso become two of Georgia’s resolutely supported Georgia’s sov- Euro-Atlantic ac- the Baku-Tbilisi- largest trading partners. Thanks ereignty and territorial integrity tors. Their cooper- Erzurum Pipeline) to its comprehensive post-Soviet despite the risks of challenging the ation also attracts The ties that Azerbaijan, moves natural gas economic and political reforms, Russian occupation. external invest- Georgia, and Turkey have from the Shah Georgia has become a top regional ment to the region built over the years have Deniz field through economic performer. Authorities in and contributes Baku and Tbilisi Tbilisi have worked diligently to re- Trilateral Economic and to greater global enhanced their collective before flowing to- duce barriers to trade and improve Energy Ties energy security clout with other states wards Erzurum their country’s foreign investment through the diver- and boosted the overall in eastern Turkey. climate, contributing to a substan- he ties that Azerbaijan, sification of world global importance of the The Trans-Anato- tial expansion in Georgia’s export TGeorgia, and Turkey have export routes. South Caucasus. lian Natural Gas revenues, inward capital flows, and built over the years have enhanced Lastly, their trilat- Pipeline also draws economic growth. Georgia’s free their collective clout with other eral energy collab- from the Shah trade agreement (FTA) with Turkey states and boosted the overall oration is rooted in the comple- Deniz field, connecting with the came into effect in 2008, while its global importance of the South mentary geographic location and SCP on the border of Georgia and FTA with Azerbaijan has been in Caucasus. Bilateral partnerships resource endowments of the three Turkey, and extends to the Tur- force since 1996. are mutually beneficial, but they countries. For example, geographic key-Greece boundary. The recently can be enhanced through tri- considerations allow for the oil and completed Trans-Adriatic Pipeline Azerbaijani and Turkish inves- lateral economic, energy, secu- gas riches of the Caspian Basin to (TAP), which connects with the tors have thus assumed leading rity, and diplomatic ties. In 2017, reach European markets through Trans-Anatolian Pipeline and the positions in key Georgian eco- Turkey’s Foreign Economic the South Caucasus. SCP, sends these energy exports nomic sectors such as transporta- Relations Board member Rona further, into Southern Europe. tion and energy. For example, the Yircali noted, “We, as three neigh- arious projects have ad- State Oil Company of the Azer- boring countries, should work Vvanced mutual investment in These conduits together feed baijan Republic (SOCAR)—repre- together for the continuation of energy, transportation, and other into the newly launched 3,500km sented in the country by SOCAR economic development in our re- infrastructure. The 1,800km BTC Southern Gas Corridor (SGC), Georgia Gas LLC—has become a gion. Development of economy oil pipeline (with about 450km which has begun transporting enor- leading investor in the Georgian will bring peace and prosperity to in Azerbaijan, 250km in Georgia, mous volumes of gas from the Cas- economy. Among other benefits, the region. [...] The effective coop- and 1,100km in Turkey) has be- pian Sea region to Europe (including Azerbaijani gas shipments and eration among Turkey, Azerbaijan, come the most prominent example several EU member states) through

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Georgia and Turkey. As produc- can also convey manufactured and Autonomous Re- Nonetheless, tion increases from Kazakhstan’s other non-energy goods, including public exclave to The foreign, defense, the three states Kashagan field, hydrocarbon petrochemicals, to additional mar- the Aegean port of and other ministers of weathered the shipments to Europe through kets. Although it presently provides Izmir in Turkey. Azerbaijan, Georgia, and crisis better than Azerbaijan, Georgia, and Turkey mainly freight services, the BTK Neighboring many other coun- could grow even further. The line may eventually convey a sub- countries such as Turkey now confer regu- tries. For example, Memorandum on Joint Exploration stantial number of passengers and Iran, Uzbekistan, larly to discuss trade, se- Georgia achieved and Development of the Dostuk significantly more cargo. Azerbaijan and Turkmeni- curity, sovereignty, and some success in natural gas field situated between and Turkey largely paid for the rail stan have all ex- transportation issues. limiting the spread the two countries in the Caspian line themselves, lending money to pressed interest in of COVID-19 Sea (ratified in February 2021) Georgia, as the World Bank, Asian joining the project. among its pop- has increased the prospects that Development Bank, and European The railway can help reduce the ulation. The IMF’s most recent Turkmenistan may supply gas Bank for Reconstruction and De- China-to-Europe overland transit Regional Economic Outlook fore- through an Azerbaijan-Georgia-Ro- velopment each declined to fund time to approximately two weeks. casts renewed growth for the South mania Interconnector project, the route. The three countries also Several other initiatives to con- Caucasus in 2021, especially if their though a separate gas pipeline must established a permanent commis- nect Asia with Europe are already leaders focus on renewing human be built under the Caspian Sea to sion to oversee cooperation be- in progress, including China’s Belt capital, promoting innovative dig- the coast of Azerbaijan—or lique- tween their respective customs and Road Initiative (BRI), which ital information industries, creating fied natural gas (LNG) must be de- bodies. encompasses all three states as more space for the private sector to livered through the sea via tankers well as most of their neighbors. compensate for their state-heavy for this plan to be realized. With additional partners and ca- The Trans-Asia-Europe fiber-optic interventions in 2020, and fur- pacity, the BTK railway could even- communications line also travels ther boosting regional economic he South Caucasus also tually rival Russia’s Trans-Siberian through these countries and con- cooperation. Tfunctions as a gateway for Railway. In the interim, however, nects Shanghai to Frankfurt. non-energy trade and transit be- the partners need to encourage tween the Caspian Basin region and cultivate increased demand ue to the impact of the global Diplomatic and Security and Europe. Azerbaijan, Georgia, for the railway. One of the new DCOVID-19 pandemic, the Coordination and Turkey continue to build con- transport line’s main uses will be South Caucasus suffered a major duits connecting these two regions the shipment of oil exports from economic slowdown in 2020 fol- eflecting their better rela- through their territories. They have Kazakhstan’s Kashagan oil field, lowing the collapse of global trade Rtions, the foreign, defense, followed BTC and TANAP with whose discovery was the largest and tourism, lockdowns, curtailed and other ministers of Azerbaijan, the BTK railway of its kind in the remittance flows, and a fall in global Georgia, and Turkey now confer that connects Azer- past forty years. energy prices. The governments had regularly to discuss trade, security, baijan to Turkey’s With additional partners Azerbaijan and to raise their debt-to-GDP ratios to sovereignty, and transportation is- much larger rail and capacity, the BTK Turkey are plan- cushion labor markets and enter- sues. In these high-level meetings, network through railway could eventual- ning to expand prises from the slowdown, even the three governments have repeat- Georgia. Unlike ly rival Russia’s Trans- the system to at the risk of renewed inflation, a edly reaffirmed their territorial -in the pipelines, Siberian Railway. connect Azerbai- rise in non-performing loans, and tegrity, growing security ties, and though, the railway jan’s Nakhichevan currency depreciations. European connections. In 2014, the

Vol. 4 | No. 3 | Spring 2021 130 131 Vol. 4 | No. 3 | Spring 2021 BAKU DIALOGUES BAKU DIALOGUES presidents of Azerbaijan, Turkey, efense and security coop- professional military education. Eurasia and has benefitted enor- and Georgia met for the first time Deration among the three Another emerging area of collabo- mously from the larger role the in a trilateral format; they have countries has also been growing. At ration has been decreasing the vul- region has taken in global energy held half-a-dozen joint meetings their November 2018 session in Is- nerability of their information sys- commerce. Turkey has long sought since then. Their foreign minis- tanbul, the ministers signed a joint tems to cyberattacks and malware. additional energy imports to sat- ters have also met approximately cooperation protocol addressing isfy domestic demand, but also has annually since 2012, in rotating their intent to provide security for Thanks to Ankara’s being a used its relations with the South locations among the three states their multinational economic proj- member of NATO and the EU Caucasus region to expand its role (the latest meeting took place in ects. Zakir Hasanov, Azerbaijan’s Customs Union, Turkey offers as a leading economic bridge be- February 2021). Their agenda Defense Minister, stated that Azerbaijan and Georgia connec- tween Asia and Europe. Georgia’s typically includes managing re- “Azerbaijan, Georgia, and Turkey tions with these Euro-Atlantic economic managers want their gional conflicts, boosting eco- share the same views in particular institutions. Georgia, a member country to become more attrac- nomic collaboration, catalyzing on the regional stability, mutual of NATO’s Partnership for Peace tive to foreign partners, especially new business-to-business coop- cooperation, finding peaceful solu- program, has a particularly strong as Tbilisi seeks further integration eration, and extending collabora- tions to the problems and protecting relationship with the Trans- with Western institutions like the tion to science, culture, and other the territorial integrity of countries. Atlantic alliance and regularly hosts European Union and NATO. The humanitarian areas. [...] The aim of our meeting is to joint military exercises that project trilateral format pursued by Baku, ensure the security of strategic en- NATO capabilities toward Russia. Tbilisi, and Ankara has helped in- In their 2012 Trabzon ergy projects realized by the three Georgia’s prospective membership stigate broader Eurasian-European Declaration, reaffirmed in their countries and to support peace and in NATO was affirmed at the 2008 energy collaboration and foreign 2018 Istanbul Declaration, each stability in the region.” Bucharest Summit prior to the 2008 policy coordination in a region country pledged mutual support Russo-Georgian war. Azerbaijan traditionally lacking both. for the others’ territorial integ- Military exercises involving is also a NATO Partner for Peace, rity, increasing the volume of Azerbaijan, Turkey, and Georgia has contributed forces to both Notwithstanding their vigorous passenger and cargo transpor- also regularly occur, either as part NATO missions in Kosovo and diplomacy, impressive economic tation along the Trans-Caspian of larger multilateral drills (some- Afghanistan under Turkish military growth, and other achievements, East-West Corridor, and collec- times with the United States mil- command, and cooperates with the these countries remain relatively tively endorsed their aspirations itary as a participant) or on a Alliance on counterterrorism and weak compared with their great for memberships in international three-nation basis, with the drills natural disaster response. power neighbors. The nations of organizations. During the eighth focusing on defending their trans- Azerbaijan, Turkey, and Georgia trilateral meeting of foreign min- border gas pipelines. For example, have been objects of rivalry between isters in 2019, Turkey, Azerbaijan in November 2018, the three coun- Concluding Observations the Persian, Ottoman, and Russian and Georgia signed the Tbilisi tries’ armed forces rehearsed how empires for centuries. Their leaders Statement and adapted a trilateral they plan to protect the BTC oil he three countries’ mutual understand that by pooling re- sectoral cooperation action plan pipeline. Tcooperation has been mu- sources, they can better manage the for 2020-2022 that encompassed tually beneficial on several fronts. constraints of their being situated such areas as agriculture, culture, The Azerbaijani, Georgian, Azerbaijan has traditionally been a at the crossroads of great-power education, environment transpor- and Turkish defense commu- driver of trilateral efforts to foster competition. Though none of these tation, trade, and tourism. nities also aim to expand ties in energy ties between Europe and three governments characterize the

Vol. 4 | No. 3 | Spring 2021 132 133 Vol. 4 | No. 3 | Spring 2021 BAKU DIALOGUES BAKU DIALOGUES nature of their alignment as directed Georgia. Their cooperation can continue to possess a strategic in- Most notably, Georgia became the against any other country, their mu- enhance Western energy secu- terest in blocking the construction of largest non-NATO contributor of tual support has helped compen- rity, balance Russian and Chinese competing energy pipelines that cir- forces to the International Security sate for their exclusion from many predatory behavior, and promote cumvent Russian territory. From the Assistance Force. Euro-Atlantic projects as well as stability in a perennially troubled east, China beckons all three states helped them navigate the Moscow- region. with promises of vast economic aide, The United States and its allies led Eurasian integration projects but actual assistance and concrete should recognize the commitment of (such as the CSTO and the Eur- Although the signing of the projects have been far fewer than these states to Western political and asian Economic Union) and Chi- Convention on the Legal Status of pledged. Furthermore, the growing security institutions and affirm that na’s BRI. Moscow’s and Beijing’s re- the Caspian Sea in August 2018 presence of China in their national these states’ sovereignty and their gional integration frameworks offer has potentially paved the way for economies has the potential to economic integration with the West opportunities for projects that tra- serve as a Trojan Horse and impede remain foreign-policy priorities. They Azerbaijan, Turkey, verse that sea, Azerbaijan, Turkey, and Georgia should pursue more vigorous public and Georgia but at Azerbaijan, Turkey, and the prospects of from integration with Euro- information campaigns, exchange the risk of decreased Georgia have been objects a Trans-Caspian Atlantic partners. Meanwhile, in- programs, and cultural diplomacy to independence. energy pipeline in fluential players in Georgia are- be more clearly emphasize appreciation These trilateral ties of rivalry between the the future remain coming frustrated by the obstacles of the trilateral partnership’s impor- also have helped Persian, Ottoman, and unclear. Though placed along the route to greater tance. Aside from traditional military them manage long- Russian empires for cen- all the countries Euro-Atlantic orientation. The exercises and missions to counter standing regional turies. Their leaders un- with shorelines 2016 Association Agreement as terrorism, NATO members should security issues, such derstand that by pooling bordering the Cas- well as the Deep and Comprehen- also engage with these states more on as the so-called resources, they can better pian Sea—Russia, sive Free Trade Agreement between non-traditional missions that are rele- frozen conflicts in Iran, Kazakhstan, the European Union and Georgia vant to their security such as refugee the occupied re- manage the constraints of Azerbaijan, and represent a promising start but management, countering regional gions of Azerbaijan their being situated at the Turkmenistan— needs more consistent execution. trafficking, managing natural disasters and Georgia and crossroads of great-power signed the Con- In 2018, NATO Chief Secretary and other major crises, responding to the tensions sur- competition. vention, dividing General Jens Stoltenberg reiterated cyber-attacks, and thwarting hybrid rounding Iran. The the body’s natural that Georgia will one day join the political-military subversion. Western Russian-Ukraine resources will re- Alliance and restated “full support for diplomats need to work with their re- conflict has highlighted the security quire further negotiations (not- Georgia’s sovereignty, security, and gional counterparts to secure the end dilemmas of all Eurasian countries withstanding the recent agreement in territorial integrity,” but Georgian pa- of illegal territorial occupations, which that find themselves outside of NATO principle between Turkmenistan and tience for indefinitely extended time- create ungoverned spaces for tran- or other regional security blocs. Azerbaijan on exploiting and trans- lines for ascension is wearing thin. sitional criminal groups and WMD porting Caspian gas to the West). proliferators. he United States and its ll three South Caucasus TEuropean allies need to For example, the Caspian gas Acountries have contributed s former U.S. Ambassador to render more support for this un- pipeline between Turkmenistan, to the NATO mission in Afghani- AAzerbaijan Matthew Bryza precedented trilateral partnership Kazakhstan, and Russia has made stan and supported realization of observed in the previous issue between Azerbaijan, Turkey, and little concrete progress. Russia will other Western security objectives. of Baku Dialogues, the ceasefire

Vol. 4 | No. 3 | Spring 2021 134 135 Vol. 4 | No. 3 | Spring 2021 BAKU DIALOGUES BAKU DIALOGUES arrangement that ended the Second Azerbaijan and keep them focused Karabakh War offers these states a on future opportunities rather than historic opportunity for long-term past grievances. Regarding the reconciliation, to their mutual ben- latter, they can aide in the return efit as well as that of the West. of Azerbaijani refugees into the newly liberated territories and, as Armenia and Azerbaijan can the current population chooses, the build on their November 2020 preservation of the Armenian pop- tripartite declaration and their ulation in Nagorno-Karabakh or Moscow meeting of January 2021 its movement back into Armenia’s by concentrating on regional eco- internationally recognized terri- nomic development and recon- tory. Western governments should struction. Armenia in particular also oppose military revanchism would benefit from and challenges to the dismantling of civilian control prewar trade bar- Armenia and Azerbaijan in Armenia while riers, which largely can build on their encouraging the excluded Armenia November 2020 tripar- Armenian armed from the benefits forces to identify of the Azerbaijan- tite declaration and their the location of Turkey-Georgia Moscow meeting of January the many land- regional integra- 2021 by concentrating on mines scattered tion processes for regional economic develop- throughout the overcoming its ment and reconstruction. former occupied constraining land- territories, which locked status. will impede re- Azerbaijan has helpfully pledged gional development opportunities. to facilitate this process, as well as Western help may also be needed ensure the protection and integra- to circumvent Russian and Ira- tion of its Armenian minority in the nian impediments to trans-Cas- recovered territories. pian energy projects and secure the departure of Russian peace- Western countries can do their keepers from Nagorno-Karabakh part to assist this process, especially according to the agreed timetable. by providing economic and diplo- These and similar measures could matic support. For example, they help avert renewed conflict in this can encourage mutual strategic increasingly critical geopolitical restraint between Armenia and crossroad. BD

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in the ranks of Russia’s proxies in political, economic, informa- Ukraine’s Strategic Relations the Donbas. During the Second tional, humanitarian, and other Karabakh War, the Ukrainian measures—applied in coordina- media, President Volodymyr tion with the protest potential of with the South Caucasus Zelenskyy and all political parties the population.” He then adds: “All (except one pro-Russian one) en- this is supplemented by military With References to Turkey and thusiastically supported Azerbaijan. means of a concealed character, including carrying out actions of Russia informational conflict and the ac- Hybrid Warfare and tions of special-operations forces.” Frozen Conflicts And he concludes: “The open use Taras Kuzio of forces—often under the guise t would be very wrong to be- of peacekeeping and crisis reg- Ilieve that hybrid warfare ulation—is resorted to only at a kraine’s relations with the the EU priority goals, which also and information warfare were certain stage, primarily for the three Southern Caucasian played a role in bringing Kyiv and invented by Russia’s President achievement of final success in the states of Azerbaijan, Tbilisi together. Azerbaijan pur- Vladimir Putin or the country’s conflict.” Georgia,U and Armenia have been sued a multi-vector foreign policy Chief of the General Staff Valery varied during the three decades of integration without membership Gerasimov who famously pub- But if we take a step back, we since the disintegration of the in these two institutions, managing lished in February 2013 an article realize that the Soviet Union had Soviet Union. Ukraine has paid to be cautiously pro-Western but entitled “The Value of Science in pursued these or similar policies greater attention to pro-Western at the same time not anti-Russian. Prediction” that analyzed hybrid for decades, and that even in the Georgia and multivectoral Armenia, on the other hand, has warfare (or what the Russians call pre-internet era was a master at Azerbaijan, and the least attention been a member of all Russian-led “non-linear warfare”). propagating disinformation (fake to pro-Russian Armenia. regional integration projects since news). Assassinations abroad the early 1990s, and therefore Kyiv Still, the latter’s essay is a bench- (“wet operations”) by the Soviet In Soviet times, the Ukrainian has had few common interests with mark and is worth quoting at the secret services stretch back to and Georgian dissident and nation- Yerevan. onset. Reflecting on the Arab the 1920s; in 1926, 1938, 1957, alist movements maintained close Spring, Gerasimov writes that the and 1959, four Ukrainian nation- ties, and this influenced the devel- Relations with Armenia have de- “very ‘rules of war’ have changed. alist leaders were murdered in opment of friendly relations be- teriorated since 2014 because of He then explains that “the role of Paris, Rotterdam, and Munich. tween Ukraine and Georgia in the Armenia’s support for Russia’s nonmilitary means of achieving The Soviet regime spread fake post-Soviet era. From the late 1990s annexation of Crimea and the political and strategic goals has news about the 1933 Holodomor onwards, Ukraine and Georgia presence of Armenian merce- grown, and, in many cases, they (Murder Famine) that murdered made joining both NATO and naries fighting against Ukraine have exceeded the power of force four million Ukrainians, admit- of weapons in their effective- ting only in 1990—one year be- ness.” He goes on to define “non- Taras Kuzio is Professor of Political Science at the National University of Kyiv- fore the USSR disintegrated—that Mohyla Academy and a Non-Resident Fellow at the SAIS Foreign Policy Institute, Johns military measures” in the fol- an artificial famine had taken Hopkins University. lowing manner: “the broad use of place in Ukraine.

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In the 1990s under President were forced to flee from Armenian ussia supported separatism of Ukraine with both Azerbaijan Boris Yeltsin, Russia continued pogroms and occupation. Two mil- Rin Ukraine’s Crimean region and Georgia, which have survived to pursue hybrid warfare in the lion people have fled or were pres- throughout the in high and low former Soviet region by seeking sured to leave Russian-controlled 1990s, which led GUAM was an points up to the to undermine central govern- Donbas, of which 1.7 million are to Ukrainian secu- present day. Re- ments through political insta- IDPs in other parts of Ukraine rity policy having Azerbaijani idea put for- lations between bility and inter-ethnic and re- and the remainder are refugees in common interests ward in the 1990s when GUAM partici- gional conflicts. Frozen conflicts Russia. with Azerbaijan the country had a limit- pating states have were engineered in the early and Georgia—as ed number of allies and gone through three 1990s in Azerbaijan, Georgia, The third is assassination at- both had suffered when Ukraine’s President periods: a high and Moldova, as well as nearly in tempts against political leaders and from similar activ- point from 1997 to Crimea, Ukraine. terrorism in regions outside the ities. Frozen con- Leonid Kuchma provided 2009, a low point in frozen conflict. The fourth is the flicts fomented by various forms of assis- 2010-2013, and a re- t is important to recognize six weaponization of energy through Russian-backed tance, including export- vitalization of rela- Iconsistent policies pursued by blockades and corruption of local separatists in ing military equipment. tions since the 2014 Russian security policies towards elites. Russia’s biggest export in Azerbaijan’s crisis in Ukraine. Russia’s neighbors since 1992. The Europe is corruption, not energy. region of Nagorno-Karabakh, first of these is covert backing of Georgia’s regions of South separatist proxy forces by sup- The fifth consists of contradic- Ossetia and Abkhazia, and Relations in the First plying them with military equip- tory rhetoric of officially sup- Moldova’s Trans-Dniester, coupled Period ment and inserting Russian special porting the territorial integrity of with Russia’s failed attempt to do forces (spetsnaz). Russia’s neighbors the same in Crimea, was a major f GUAM’s four participating This aims to create while unofficially factor behind the formation of Ostates, Ukraine and Georgia frozen conflicts Russia’s biggest export in backing separatist what is now the GUAM Organiza- wished to join NATO, called for the in favor of the Europe is corruption, not forces. This plank tion for Democracy and Economic Atlantic Alliance to keep its doors separatists who energy. of Russian policy Development in 1997 (GUAM open, and rejected Russia’s de- are given direct was swept away in stands for Georgia, Ukraine, mand for a veto over former Soviet Russian (South 2008 when Russia Azerbaijan, Moldova; three years countries joining NATO. Ukraine, Ossetia, Abkhazia, Trans-Dniester, (alone in the CIS) recognized the later Uzbekistan joined before with- Azerbaijan, and Georgia by and Donbas) or indirect Russian “independence” of South Ossetia drawing in 2005). GUAM was an large supported NATO enlargement (Nagorno-Karabakh) assistance. and Abkhazia and in 2014 when Azerbaijani idea put forward in the into post-communist countries and it annexed Crimea. The sixth and 1990s when the country had a limited backed high levels of integration The second is ethnic cleansing, last is the positioning of Russia number of allies and when Ukraine’s and cooperation by their countries as exemplified in the success of as a negotiator and peacemaker President Leonid Kuchma provided with a wide range of NATO struc- Russian-led separatist forces from with proposals to resolve frozen various forms of assistance, including tures. Nagorno-Karabakh and the sur- conflicts through federalization exporting military equipment. rounding seven districts, as well leading to weak central govern- Ukraine, Azerbaijan, and Georgia as South Ossetia and Abkhazia. ments and weak neighboring GUAM epitomized the close na- actively participated in NATO-led Nearly one million Azerbaijani’s states. tional security and energy relations peacekeeping operations and

Vol. 4 | No. 3 | Spring 2021 140 141 Vol. 4 | No. 3 | Spring 2021 BAKU DIALOGUES BAKU DIALOGUES created a peacekeeping battalion Kuchma, Azerbaijan’s Heydar and largest nuclear weapon arsenal that noticeably did not include under NATO auspices. Remem- Ilham Aliyev, Georgia’s Eduard had been inherited from the USSR. Armenia), and various energy bering the ethnic cleansing con- Shevardnadze, and Moldova’s Vlad- It took Yeltsin three years to travel to transportation projects. Azerbaijan ducted by Russian-backed sepa- imir Voronin each adopted multi- Kyiv to sign an inter-state treaty that believed that it was in its security ratists in Georgia and Azerbaijan, vector foreign policies of integra- recognized the Russian-Ukrainian interests to support Ukraine’s en- GUAM participating states sup- tion with the West and cooperation border and another two years be- ergy independence from Russia and ported NATO’s operation against with Russia and the CIS. fore it was ratified by both houses exported the first consignment of Serbia in 1999. All four GUAM of the Russian parliament (in other 50,000 tons of oil in 1999 through a countries held a suspicious atti- Although Kuchma had come words, this took Kuchma’s entire pipeline that crossed Georgia. tude towards Russia because of to power in 1994 on a moderately first term in office, which lasted its support for separatism and its pro-Russian platform, he quickly from 1994 to 1999). The Budapest he Georgian Rose and unwillingness to became pro- Memorandum and the subsequent TUkrainian Orange Revo- recognize their Western because inter-state treaty were both flouted lutions changed the dynamics of sovereignty and Russia’s relations with of Russian intran- by Russia in 2014 when it invaded GUAM and Ukraine’s relations territorial integ- Ukraine were far more sigence over rec- and annexed Crimea. with the South Caucasus states, but rity. Thus, GUAM’s ognizing Ukraine’s also with Russia founding docu- problematic than with territorial in- In the 1990s, and Turkey. Na- ment called for the any other post-Soviet tegrity, borders, Kyiv also devel- The Georgian Rosetional democratic recognition of the state because Moscow and sovereignty. oped relations with and Ukrainian Orange leaders Mikhail inviolability of the never accepted Ukrainian Russia’s relations Ankara. Turkey Revolutions changed Saakashvili and territorial integ- independence, claimed with Ukraine were positioned itself the dynamics of GUAM Viktor Yushchenko rity of states and Ukraine was an “artifi- far more prob- as the protector of came to power rejected “aggres- lematic than with Crimean Tatars, and Ukraine’s relations in Georgia and sive separatism,” cial state,” and denied the any other post-So- although not to with the South Cauca- Ukraine, respec- “ethnic intoler- existence of a separate viet state because the same extent sus states, but also with tively, and they ance,” and “reli- Ukrainian nation. Moscow never ac- as during the sub- Russia and Turkey. moved away from gious extremism.” cepted Ukrainian sequent period multi-vector for- independence, claimed Ukraine of Recep Tayyip eign policies, in- olitical leaders during the first was an “artificial state,” and - de Erdogan’s rule. Kemalist Turkish stead prioritizing relations with Pperiod of Ukraine’s relations nied the existence of a separate politicians were less keen on ex- the West. In 2005-2007, politics with the South Caucasus came Ukrainian nation. porting Turkish soft and hard in Russia turned in a national- from the Soviet nomenklatura and power compared to Turkish Is- istic direction with the creation of because of this they approached In 1994, Russia, the U.S. and lamic nationalists. From the onset the Russian World Foundation, dealing with Russia in a cautious the UK signed the Budapest Ukraine became an active partic- an extensive cyber-attack against manner; this was very much in Memorandum with Ukraine, ipant in the Turkey-led Organi- Estonia, the assassination of the contrast to their nationalist critics which provided security assurances zation of the Black Sea Economic Russian FSB defector Alexander at home whose rhetoric and actions for Ukraine’s territorial integrity Cooperation (BSEC), the Caucasus Litvinenko in London, and Putin’s would often inflame relations with and sovereignty in exchange for Stability and Cooperation Pact xenophobic speech to the Munich Russia. Hence, Ukraine’s Leonid Ukraine giving up the world’s third initiative (which in some versions Security Conference.

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Meanwhile, Turkey began moving the Second Karabakh War. In con- Under Yushchenko, GUAM be- intelligence increased its subver- away from a political system domi- trast to GUAM participating states, came institutionalized with the cre- sive activities in the GUAM partic- nated by Kemalist politicians to one Armenia has always supported ation of a parliamentary assembly, ipating states. In 2008, Yushchenko led by Islamic nationalists after the Russian military bases on its territory. which received observer status at rallied Polish and Baltic leaders in Erdogan-led Justice and Develop- the UN. A headquarters and sec- support of Georgia during Russia’s ment Party (AKP) came to power Iran and Russia have long viewed retariat were established in Kyiv invasion when Russia was incensed in 2003. In contrast to his Kemalist the West in negative terms. Russia with coordinating offices located in its aircraft had been shot down by predecessors, Erdogan has demon- is very hostile to what it claims is each participating state. GUAM re- Georgian forces using Ukrainian strated greater preparedness to as- the West encroaching on Russia’s ceived a moniker, becoming known surface to air missiles. In 2009, sert Turkish leadership over the “privileged sphere of influence,” as officially as the GUAM Organiza- Ukraine expelled three Russian Sunni world and to export Turkish Dmitry Medvedev described Eur- tion for Democracy and Economic diplomats for espionage and pro- soft and hard power throughout asia in 2008. Iran backs Russia’s Development. GUAM expanded viding support to separatists and Ukraine and the Greater Middle view of a multipolar system and its its interests beyond security to extremists in Crimea and Odessa, East, as seen in Azerbaijan, the opposition to a U.S.-led unipolar the economy and transportation, which led to a very undiplomatic eastern Mediterranean, Egypt, international system. Russia never business cooperation, security and open letter protest from President Syria, Libya, and elsewhere. condemned Iran’s building of nu- combatting organized crime, cul- Medvedev. clear weapons and when Ukraine ture and tourism, and youth and his re-configuration was succumbed to U.S. pressure by sports. The heads of state of GUAM Ttaking place against the back- halting its supply of nuclear tur- meet twice a year at international GUAM, Russia, and the ground of the Greater Middle East bines to Iran, Russia went ahead summits such as the UN General West Under Yanukovych having become divided into two geo- and supplied them. Debate, and foreign and defense political groups that have remained ministers meet twice a year as well. he second period of re- more or less constant to the present kraine’s relations with Tlations between GUAM day. On the one side stands Greece UAzerbaijan are continuing to Saakashvili and Yushchenko had participating states (2010-2013) (although a NATO member), Ar- develop in several areas. Ukraine’s very bad relations with Putin over was quieter during Viktor Yanu- menia, Russia, and Iran. On the large military industrial complex is a wide range of factors, including kovych’s presidency of Ukraine. other stands Turkey, Azerbaijan, a source of weapons for Azerbaijan NATO’s explicit endorsement of Yanukovych’s election signaled a Georgia, and the other two GUAM as it has been for Georgia. Both Ukraine and Georgia’s aspirations return to “normality” for Russian participating states. Iran and Russia countries’ intelligence services have to join the Atlantic Alliance (“we leaders, as he was viewed as a satrap see eye to eye on designating the fruitfully cooperated. Ukraine and agreed today that these countries in similar fashion as is Belarus’s Caspian as an “internal lake,” op- Azerbaijan have always supported will become members of NATO,” President Aleksandr Lukashenko. pose alternative Azerbaijani energy each other’s territorial integrity, to quote from the April 2008 Bu- Yanukovych and his Party of routes, and back Russia’s monopo- as in 2014 when Crimea was an- charest Summit Declaration) and Regions was hardline pro- lization of peacekeeping in Eurasia nexed. It is therefore little wonder written support for Kyiv and Tbilisi Russian: its electoral stronghold (or what is coming to be known in Ukraine’s relations with Armenia to each apply for Membership in the Donbas resembled Crimea some circles as the Silk Road re- never progressed, as Yerevan al- Action Plans (MAP) at an undis- in the strength of its inhabitants’ gion). Iran remains very sensitive ways backed Russian policies, in- closed future date. Although espi- pro-Russian sentiments and their over its large Azerbaijani minority, tegration initiatives, and hybrid onage against fellow members was deeply-felt Soviet nostalgia. In which actively supported Baku in warfare in Eurasia. not permitted in the CIS, Russian the CIS (Russia aside), only the

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Party of Regions and its allies—the relations; rather, each demand and third strands of the Russian Moscow’s recognition of the “in- Communist Party of Ukraine and Ukraine fulfilled simply led to strategy to include Ukraine in the dependence” of two separatist Crimean Russian nationalists— further Russian demands. De- Eurasian Economic Union (with its Georgian territories, South Ossetia backed Moscow’s 2008 recognition spite fulfilling virtually all of core being the three eastern Slavic and Abkhazia, six years earlier. Ini- of the “independence” of South Medvedev’s demands, Russia nations of the Russian World). It tially Moscow appeared to have Ossetia and Abkhazia. charged Ukraine the highest was also a result of Putin’s personal made a proper judgment. Western gas price in Europe throughout anger at having been humiliated sanctions only became tougher in Yanukovych implemented what Yanukovych’s presidency. In ad- for a second time. The first oc- July 2014, after a Russian BUK mis- Medvedev had demanded the year dition, Yanukovych and his gas curred during the Orange Revolu- sile shot down the MH17 civilian before, which included dropping oligarch allies had no interest in tion, which denied Yanukovych’s airliner that killed 298 civilians and Ukraine’s goal of seeking NATO Ukraine seeking energy inde- fraudulent election, and has been a month later when the Russian membership and replacing it with pendence from Russia, of which described by Russian political army invaded Ukraine. a vague “non-bloc” foreign policy. Azerbaijan was an important ele- technologist Glen Pavlovsky as NATO membership had been sup- ment, because they were making “Putin’s 9/11.” rmenia has been a long-term ported by both Kuchma and Yush- billions of dollars from corrupt gas ARussian ally since the disin- chenko and by intermediaries. Ukraine and the Greater tegration of the USSR in the early Yanukovych when 1990s; Yerevan’s pro-Russian stance he had been prime Despite fulfilling virtual- Following Putin’s Middle East in the can be seen in the fact that Yerevan minister during ly all of Medvedev’s de- re-election in 2012, Aftermath of the 2014 Crisis has never condemned Russian Kuchma’s presi- mands, Russia charged Russia pursued a military aggression anywhere in dency. Although Ukraine the highest three-fold strategy. he 2014 crisis—Russia’s an- Eurasia, including in Ukraine in Yanukovych con- First, pressure Tnexation of Crimea and the 2014. Armenia benefitted from tinued to claim gas price in Europe would be brought onset of hybrid warfare in Donbas— Russian hybrid warfare when he supported throughout Yanukovych’s to bear on Armenia brought Ukraine, Georgia, and former Soviet troops assisted Ukraine’s par- presidency. and Yanukovych to Azerbaijan closer together in a Armenia in occupying Nagorno- ticipation in the drop the signing similar manner to what happened Karabakh and the seven districts Eastern Partnership, which offered of the EU-Ukraine Association during the 2008 Georgian-Russian surrounding the region during the integration with but not member- Agreement, which happened in crisis. First Karabakh War. ship in the EU, his relations with November 2013. Second, Russia Brussels were strained over the im- would ensure Yanukovych’s re- Russia’s brazen In Eurasia there prisonment of opposition leaders election as president in January annexation of Yerevan’s pro-Russian are two types of Yulia Tymoshenko and Yuriy 2015. Third, a re-elected Crimea was un- stance can be seen in the color revolutions: Lutsenko. Yanukovych would take Ukraine pro-European and dertaken in the fact that Yerevan has nev- into the Eurasian Economic Union belief the West pro-Russian. The lesson Ukraine has learnt (as the CIS Customs Union was would react in a er condemned Russian former has in- Afrom that presidency was renamed). Russia’s annexation of weak manner, as it military aggression any- cluded Ukraine that agreeing to all of Russia’s Crimea and the onset of hybrid war had in response to where in Eurasia, includ- (2003-2004, 2013- demands never led to an im- in eastern Ukraine was its angry re- Russia’s invasion ing in Ukraine in 2014. 2014) and Georgia provement in Russian-Ukrainian sponse to the failure of the second of Georgia and (2003), whose

Vol. 4 | No. 3 | Spring 2021 146 147 Vol. 4 | No. 3 | Spring 2021 BAKU DIALOGUES BAKU DIALOGUES leaders then sought NATO and Ukrainians rose up against Ottoman Empire and later Turkey. because of the closeness of Turkish EU membership; the latter has in- Yanukovych when he attempted In 1944, Crimean Tatars were vic- and Crimean Tatar languages, cul- cluded Armenia (2018) and Belarus to end Ukraine’s path to European tims of genocide when half of them ture, and history. This sizeable (attempted in 2020), and in both integration in the same year died during Stalin’s ethnic cleansing Crimean Tatar minority is vocal, cases the countries have remained Yerevan turned its back on Europe— campaign and the other half ended active, and influential in Turkey. in the Eurasian Economic Union. a major contrast. Russian policies up in Central Asia. Crimean Tatars In the 1990s, Turkey supported succeeded in Armenia but failed began returning to Ukraine in the Crimean Tatars and Ukraine’s terri- In 2013, Armenia withdrew in Ukraine. Armenians did not late 1980s, were staunch supporters torial integrity, but this support be- from the EU’s Eastern Partner- protest their country’s shift from of Ukrainian independence, and came more vocal and active starting ship and joined European to Eur- their representatives were elected in the early 2000s. the CIS Customs asian integration to the Ukrainian parliament as part Union (from 2015, Ukrainians rose up against while Ukrainians of Yushchenko’s Our Ukraine and Turkey played an important be- called the Eurasian Yanukovych when he at- protested in the the Poroshenko Bloc. Pro-Russian hind-the-scenes role in supporting Economic Union). tempted to end Ukraine’s millions and hun- forces in Ukraine and nationalists Ukraine’s campaign to achieve reli- Armenia’s 2018 dreds were mur- in Russia have traditionally sup- gious autocephaly (independence) color revolution path to European inte- dered during the ported Stalin’s ethnic cleansing of from the Russian Orthodox Church. brought Nikol gration in the same year Euromaidan Rev- Crimean Tatars while Ukrainian Moscow’s control over Ukraine, Pashinyan to Yerevan turned its back on olution in defense national democrats which began in the power and did not Europe—a major contrast. of their country’s and centrists have seventeenth cen- lead to an ‘Armex- European choice. condemned this Turkey played an tury, was declared it’—a withdrawal of genocide. In 2015, important behind-the- uncanonical by Ec- Armenia from the Eurasian fter 2014, Georgia and the Ukrainian par- scenes role in supporting umenical Patriarch Economic Union. Had the oppo- AAzerbaijan aligned with liament recognized Ukraine’s campaign to Bartholomew I of sition come to power in Belarus, Ukraine in defense of its territo- Stalin’s ethnic Constantinople in it also would not have engen- rial integrity. Turkey also stated cleansing as an act achieve religious auto- January 2019 in a dered a ‘Belexit’—a withdrawal of it would never recognize the an- of genocide com- cephaly (independence) Tomos (decree) of Belarus from the Eurasian nexation of Crimea. One reason is mitted against the from the Russian Autocephaly to the Economic Union. Countries can because Turkey has longstanding Crimean Tatars. Orthodox Church. Orthodox Church only be in one customs union, historical ties with the Crimean Since 2014, 30,000 of Ukraine. which for Eurasian countries means Tatars who have been subjected to Crimean Tatars either the Eurasian Economic centuries of discrimination. The have fled to the Ukrainian main- The loss of 40 percent of the Union or the EU. Pashinyan’s rule Crimean Khanate had existed for land, Crimean Tatar institutions worldwide total number of Russian was more nationalistic than it was three centuries before the penin- have been closed down, hundreds Orthodox Church parishes, which democratic and his bombastic sula was annexed by the Tsarist of activists have been imprisoned, had been located in Ukraine, was a statements on Nagorno-Karabakh Russian Empire in the 1780s. In and dozens have been murdered. geopolitical disaster for Russia and and his military aggression in July the nineteenth and twentieth cen- a defeat for Russian soft power in 2020 ultimately laid the ground turies, millions of Crimean Tatars In Turkey, where there an esti- Ukraine. President Putin called an for the Second Karabakh War and had fled from Russian and later mated six million Crimean Tatars, emergency session of the Russian Armenia’s defeat. Soviet persecution towards the they are often called Crimean Turks Security Council to deal with this

Vol. 4 | No. 3 | Spring 2021 148 149 Vol. 4 | No. 3 | Spring 2021 BAKU DIALOGUES BAKU DIALOGUES religious conflict occupation and Zelenskyy is as unhappy with the a joint statement issued by the in Ukraine. The The Crimean Platform is contradict Mos- lack of achievements of the Minsk two presidents said, “we agree to Russian Orthodox needed because the West cow’s thesis about Protocol over the last six years continue our efforts towards de- Church is no longer has focused on the war in the irreversibility as Azerbaijan was of the OSCE occupation of the Autonomous the largest of the of its hold on Minsk Group’s results regarding Republic of Crimea and the city of autocephalous Or- the Donbas while consent- the peninsula.” Nagorno-Karabakh over nearly 30 Sevastopol, as well as restoration thodox Churches ing to Russia’s demand Ukraine’s First years of existence. France adopted of Ukraine’s control over certain and is now sim- that Crimea’s status is Deputy Foreign pro-Armenian and pro-Russian areas in Donetsk and Luhansk re- ilar in size to the non-negotiable. Minister Emine stances in the Minsk Group and the gions of Ukraine.” The joint Turk- Romanian Dzhaparova— Minsk Protocol, respectively, which ish-Ukrainian statement also raised Orthodox Church. herself of Crimean disqualified Paris as an impartial the plight of Crimean Tatar and Moscow cannot understand the Tatar origin—has said the Crimean and neutral negotiator. Ukrainian prisoners held by Russia Russian World without Ukraine Platform is part of Ukraine’s and the protection of human, na- and the historic city of Kyiv, which strategy for the “de-occupation of krainian-Turkish relations de- tional, and religious rights in Crimea. is 600 years older than Moscow. Crimea.” It is designed to work on Uveloped in a more sustained four levels: through foreign heads and productive manner under both A related point is the fact that kraine, Azerbaijan, and of state, foreign and defense minis- Poroshenko and Turkey, Azerbaijan, UGeorgia are longstanding ters, an inter-parliamentary group, Zelenskyy. At an Georgia, and pro-NATO and pro-Western and experts. October 2020 joint Zelenskyy is as unhappy Ukraine have de- former Soviet states in a contested press conference with the lack of achieve- veloped common region that Russia demands the The Crimean Platform is needed with Zelenskyy, ments of the Minsk Pro- interests in the West recognize as its exclusive because the West has focused on Erdogan said, area of Black sphere of influence. As a NATO the war in the Donbas while con- “Turkey sees tocol over the last six Sea security in member, Turkey supports their in- senting to Russia’s demand that Ukraine as a key years as Azerbaijan the aftermath of tegration into and cooperation with Crimea’s status is non-negotiable. country for en- was of the OSCE Minsk Russia’s November NATO. Erdogan support’s Ukraine Thus, Crimea was never included in suring stability, Group’s results regard- 2018 naval piracy and Georgia’s NATO membership the largely unproductive Normandy peace, and pros- ing Nagorno-Karabakh in the Azov Sea. aspirations. Format bringing together Ukraine, perity in our region. over nearly 30 years of Turkey, the U.S. France, Germany, and Russia—the Within this frame- and the UK sup- Turkish-Ukrainian security co- last meeting of which was held in work we have al- existence. port the rebuilding operation is growing through the December 2019, the first to be held ways supported and of Ukraine’s navy, Quadriga (2+2) comprehensive di- since October 2016, and the sixth to will continue to support Ukraine’s which is being boosted by Ukraine’s alogue formula of foreign and de- be held since it was set up in 2014. sovereignty and territorial integrity, purchase of Turkish MILGEM- fense ministers as well as through Additionally, Crimea was never in- including over Crimea.” Erdogan class corvettes. Kyiv’s Crimean Platform initia- cluded in the OSCE-led negotiations then added, “Turkey has not recog- tive, which is described by analyst within the Protocol on the Results of nized and does not recognize the nother important point Vladimir Socor as a “a multi-level Consultations of the Trilateral annexation of Crimea.” In language Ais the fact that coopera- framework for devising actions that Contact Group (known as the reminiscent of Turkish support for tion between Turkey, Ukraine, would raise the costs of Russia’s Minsk Protocol). Azerbaijan’s territorial integrity, Azerbaijan, and Georgia in the joint

Vol. 4 | No. 3 | Spring 2021 150 151 Vol. 4 | No. 3 | Spring 2021 BAKU DIALOGUES BAKU DIALOGUES production and use of military Ivachenko-Progress A1-450T tur- three pipelines in the Southern Gas not agree to Russia having a mo- equipment is progressing in the af- boprop engines. Other areas of mu- Corridor connecting Azerbaijan’s nopolistic sphere of influence over termath of Azerbaijan’s successful tual military cooperation include Shah Deniz II field to European Eurasia or having the CIS repre- use of Israeli and Turkish drones in unmanned fighter jets, a technology markets. The Turkish-Azerbaijani senting them in international or- the Second Karabakh War. used successfully by Azerbaijan in strategic alliance cements the ganizations. They disagreed with the recent conflict with Armenia. former as a regional energy hub the UN and the OSCE agreeing to Ukrainian policymakers and independent of Russia while en- Russian demands for a monopoly on experts are assiduously studying Azerbaijan is the main country abling the latter for the first time conducting peacekeeping operations the implications of Azerbaijan’s providing gas supplies to Turkey and to become a major gas exporter to in Eurasia. Azerbaijan and Georgia military victory for the Donbas Europe as an alternative to hydrocar- Europe and Ukraine. In addition, have sought for decades—without and Crimea theatres. Ukraine has bons originating in Russia, which has 40 percent of the oil that Israel im- success—to replace Russian with UN already purchased 48 Bayraktar major geopolitical ramifications for ports originates from Azerbaijan, or OSCE peacekeepers. Ukraine pro- TB-2 drones, which will be based the South Caucasus, Black Sea coun- an important factor which cements posed a plan to introduce UN peace- in the Donbas war zone. NATO tries, and Southeast Europe. The that particular strategic partner- keepers on the Russian-Ukrainian training, electronic warfare, mili- American pursuit of sanctions against ship. A high proportion of Jews in border only to have Russia oppose it, tary communica- Nord Stream 2, Israel are from Ukraine, and ties be- demanding instead any peacekeeping tions, intelligence, which is supposed tween Ukraine and Israel are also close. force be stationed on the contact line drones, and other Ukrainian policy- to supply Russian in the Donbas war zone. forms of military makers and experts gas to Germany, is equipment such are assiduously study- strategically good Conclusions Ukraine, Azerbaijan, and Georgia as night vision are ing the implications of for both Ukraine distrust Russia because of Moscow’s important areas of Azerbaijan’s military vic- and Azerbaijan. kraine first developed support for separatism in their re- Turkish-Ukrainian With regards to the Uclose and productive rela- spective countries. They believe it cooperation. And tory for the Donbas and former, this is be- tions with the South Caucasus and is in their interests to develop their Ukraine’s military Crimea theatres. cause it forces Russia the Greater Middle East during countries energy independence is learning lessons to continue using Kuchma’s second term (1999- from Russia. They view member- from Azerbaijan’s experience in Ukraine’s pipeline network to export 2004) and Yushchenko’s presidency ship (Ukraine, Georgia) and inte- the Second Karabakh War. Turkey gas to Europe; with regards to the (2005-2010), although both sets gration (Azerbaijan) into Trans- and Ukraine are jointly manufac- latter, this is because it would enable of ties began deepening further in Atlantic structures as a means to turing drones and other military Azerbaijan to compete with the wake of the 2014 crisis, during remain independent from Russian equipment befitting a twenty-first- Russia in supplying gas to Poroshenko’s term and continuing hegemony. Finally, they support a century army. A huge $3 bil- European customers. Ukraine has into Zelenskyy’s. Ukraine’s rela- minimalist CIS rather than having lion of Armenian military been independent of Russian gas tions with Turkey have grown into the CIS used as a vehicle to deepen equipment was destroyed by supplies since 2015 and seeks to be- a strategic partnership under Po- Russian-led integration, which in Azerbaijan in the Second Karabakh come an importer of Azerbaijani gas. roshenko and Zelenskyy, as well. turn would limit the sovereignty of War, which brought out the infe- its non-Russian members. riority of Russian military equip- Lastly, Turkey is a vital regional Ukraine, Azerbaijan, and Georgia ment. Turkey’s Akinci (Raider) hub for the Trans-Anatolian Natural have consistently supported sev- This, then, is how we in Ukraine drones are powered by Ukrainian Gas Pipeline (TANAP), one of eral shared objectives. They do see these matters. BD

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economies so as environment, Development or Regression? to integrate them Former fraternal repub- none of the states into global produc- lics look today as if they in question can ex- Eurasia’s Investment Attractiveness tion chains, a ma- are countries from dif- pect high-quality jority of them have ferent continents. Since development and squandered the in- improvements of dustrial potential the breakup of the Soviet their respective Stanislav Pritchin built during the Union, some have done socio-economic Soviet era. Conse- very well, others less so. situations without quently, the overall building the ca- n 2021 the countries of Despite the fact that in 1991 investment attrac- pacity to attract Central Asia and the South standards of living and educational tiveness of these countries remains foreign investment on the basis of Caucasus—some call it and economic attainment in the at a suboptimal level. international best practices and Eurasia,I other the Silk Road re- Soviet republics that are examined a focus on harnessing the latest gion—will celebrate thirty years of in this essay were approximately wo markers or indicators technologies. independence. Theoretically, this similar, after three decades of inde- Tstand out as effective tools period should have provided suffi- pendent development the countries to analyze the systematic work hat being said, the growth cient time for each to have formed under consideration have been sig- of a state as a responsible actor in Tof investors’ interest in the a new economic model, set and at nificantly stratified in terms of -na domestic economic policy and in countries of Central Asia and the least partially attain long-term de- tional wealth, types of political and penetrating foreign markets: its South Caucasus continues to be velopment goals, and developed a social systems, and the specifics of investment attractiveness and the facilitated by the systematic de- foreign policy model for optimal their economic activities. Former responsibility of its approach in velopment of regional integra- interaction with investors, in- fraternal republics look today as if working with non-state internal tion projects, as well as transport cluding foreign ones. However, they are countries from different and external players. infrastructure within a number the experience of the post-Soviet continents. Since the breakup of the of major projects, such as the republics under consideration in Soviet Union, some have done very Unfortunately, it can be stated Belt and Road Initiative, the this essay, which does not aspire well, others less so. that, again with a few exceptions, Eurasian Economic Union to be comprehensive but should the countries of the Silk Road re- (EAEU), the Southern Energy rather be considered a prelimi- In considering the economic gion have not been able to achieve Corridor, TRACECA, and so on. nary assessment, indicates that dimension of independent devel- serious success in creating a com- A final determination to direct in- independence is neither a prereq- opment, we can assert that, with petitive, diversified, and open vestment into a country made by a uisite for successful development a few exceptions, these countries economies with effective systems series of important factors, some nor one that centers of achieving have not managed to seriously re- for protecting private property and of which are featured in an April a sustainable increase in popular form the model inherited from the investors’ rights. Moreover, most 2020 report on the investment welfare. USSR. Instead of rebuilding their Eurasian countries have not even attractiveness of the countries officially set such a goal for them- of Central Asia and the South Stanislav Pritchin is a Senior Research Fellow at the Center for Post-Soviet Studies selves. Given contemporary global Caucasus issued by a team of IMEMO RAS (Moscow), an Academy Fellow at Chatham House, and the Executive conditions, characterized by a analysts at the Moscow-based Partner of the ECED Expert Center. cutthroat international economic ECED Expert.

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The purpose of that study, as well to the macroeconomic stability region countries casus countries as this essay, is to rank the coun- indices provided by three leading have significantly Political stability, conti- are largely states tries of Central Asia and the South rating agencies—Fitch, Moody’s, increased their nuity of economic and in political tran- Caucasus by ordering those that are, and Standard & Poor’s—as these presence at the top investment policies, and sition from a so- in the view of this author, the most form the basis for decisionmaking of the ratings list. cialistic political promising and potentially profitable about investments for many inves- Georgia became stability of foreign policy model. Therefore, for investors and safe from the point tors. The countries with the best the region’s un- contacts with key trade the impact of po- of view of doing business and pro- and most stable financial systems disputed leader in partners are also import- litical processes tecting property rights. In this case, in the region—namely Kazakhstan the latest report, ant parameters of invest- on investment at- investment attractiveness was as- and Azerbaijan—have the highest taking seventh ment attractiveness for tractiveness is very sessed on the basis recommended in- place overall in high. In this re- of an analysis of the vestment ratings of the global ranking. any country. gard, the current development of the With a few exceptions, the region’s coun- However, prog- political situation region’s countries, tries. Among the ress in other countries is also im- in all selected countries needs to be the countries of the Silk considerations in- other countries, pressive. On the World Bank’s list taken into account with regards to volving the stability Road region have not Georgia and Uz- of top 40 ease-of-doing-business stability and vulnerability to desta- of political insti- been able to achieve seri- bekistan form a countries from the Silk Road region bilization; potential foreign policy tutions, an evalu- ous success in creating a second-highest we see (in addition to Georgia) risks were also reviewed. ation of economic competitive, diversified, cluster. The ob- Kazakhstan and Azerbaijan. potential, and the and open economies with vious weak partic- Armenia is in 47th place, which is All this being said, we can now openness and hard ipant is Turkmeni- at first glance impressive but for turn to an examination of each of to quantify “friend- effective systems for pro- stan, which has not the fact that only a few years ago the countries that make up the liness” of each tecting private property been included on it was in 35th place. Uzbekistan is core of the Silk Road region, in country towards and investors’ rights. the lists of ratings rapidly improving its business envi- alphabetical order. domestic and for- agencies for a de- ronment, moving from 150th place eign investors. cade due to a judg- in 2016 to 76th in the latest World ment made that the statistics pro- Bank report. Kyrgyzstan has fallen Azerbaijan he first section of this essay vided by the country are unreliable. in the rankings whilst Tajikistan Tconsists of a brief discussion has moved up quite impressively. n general, the situation in the of each of the countries belonging to I have also made use of criteria Icountry is quite stable: Presi- the core of the Silk Road region, in found in the World Bank’s an- It is also critical to note in this dent Ilham Aliyev’s team controls alphabetical order. This is then fol- nual “Doing Business” flagship introductory section that political the situation in the republic, and lowed with a list rank-ordering them reporting series. There we can see stability, continuity of economic the pro-government party has a in terms of investment attractiveness, that the countries of the region are and investment policies, and sta- stable majority in the parliament with brief explanations provided. working to improve their rankings bility of foreign policy contacts after its latest electoral victory in by improving their respective busi- with key trade partners are also im- February 2020. The main challenge In making my determinations ness environments. This work has portant parameters of investment for the political system is managing on the positions of countries in brought results. Over the past sev- attractiveness for any country. The the ongoing large-scale renewal the region, I have had recourse eral years, some of the Silk Road Central Asia and the South Cau- of the political elite due to the

Vol. 4 | No. 3 | Spring 2021 156 157 Vol. 4 | No. 3 | Spring 2021 BAKU DIALOGUES BAKU DIALOGUES departure of the older generation of political system has been formed in areas for massive construction and many Armenian circles. Immediately politicians who worked under Heydar the country, which implies a fairly economic development. Mean- after the announcement of the signing Aliyev, the country’s former president balanced power vertical, a stable so- while, in political terms the of a truce with Azerbaijan with the and father of the current one. cio-economic situation, and broad November 2020 victory against mediation of Russia, protests began in electoral support for the country’s Armenian forces strengthened Yerevan demanding Pashinyan’s res- The formation of a new balance leadership. drastically Aliyev’s authority and ignation. With ebbs and flows, these of power in the Azerbaijani polit- credibility at home and abroad, have continued until the present day. ical system may be associated with From the point of view of the for- making him the most respected An early election has been called, and the emergence of points of tension eign policy model, Azerbaijan has leader in Eurasia. the prime minister’s political future re- between different political groups a pragmatic approach to building mains uncertain. Armenia continues within the elite. At the same time, relations with major regional to face months of political turbulence, the authority and political weight of players. At the same time, Baku is Armenia with ambiguous prospects for stabili- the president in many ways enables trying to build equidistant relations zation. Coupled with battlefield and him to effectively stop intra-elite with key global centers of power, n contrast to Azerbaijan, diplomatic losses due to the war, the conflicts in time and prevent such while having intensive economic IYerevan’s defeat in the Second investment and economic situation in internecine episodes from adversely ties with all of them. The existence Karabakh War brought the polit- Armenia will remain extremely nega- affecting the system as a whole. of the conflict with Armenia for ical situation in the country to the tive in the medium term. Nagorno-Karabakh has been a brink of disaster. Before the start of The main military and polit- long-term challenge for consoli- the war, the internal political situ- The border with two of its four ical challenge for the country re- dating the conditions for the estab- ation in the country has gradually neighbors (Azerbaijan and Turkey) mains the problem of Nagorno- lishment of a healthy investment stabilized after the revolutionary remains closed in the aftermath of Karabakh, whose sovereign owner- climate, as each new escalation changes that took place in April the Second Karabakh War, although ship the republic defends in a long- could have resulted in military risks 2018. By and large, the team led by that may change in the time ahead. standing dispute for Azerbaijan’s prime minister Nikol Pashinyan Relations with its other two neigh- with Armenia. The energy, industrial, had never held high positions in bors (Iran and Georgia) are not November 2020 The November 2020 vic- and transport in- government before, although in the exactly smooth, since Iran itself is tripartite ceasefire tory against Armenian frastructure. How- wake of popular street protests and under sanctions and cooperation that brought back forces strengthened dras- ever, the Second with unusually high public support with it does not sufficiently com- most of the occu- Karabakh War his team quickly gained almost pensate for the closed borders with pied lands under tically Aliyev’s authority has largely miti- complete control over Armenia’s Azerbaijan and Turkey. Ties with the direct control and credibility at home gated this threat: political system (the same could Georgia are also uneven due to the of Baku marks an and abroad, making him it brought about not be said, however, with respect complex nature of relations between important turning the most respected leader not only a military to the military and the civilian Tbilisi and Yerevan’s main geopo- point, but it is not in Eurasia. victory for Azer- security sectors). litical partner, Moscow. Given that a peace treaty. baijan but also only through the territory of Georgia opened new in- The results of the Second can Armenia trade with Russia On the scale of internal political vestment opportunities for internal Karabakh War, including the terms and other partners in the EAEU, stability, Azerbaijan is a very stable and foreign businesses. The newly- of the tripartite agreement ending the country’s difficult geopolitical state, which means that a balanced liberated territories represent new it, were considered disastrous in position is obvious.

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Georgia of political tension will remain the to become his successor. (This was it cannot become a serious destabi- prevailing reality. The situation later formalized in an election.) lizing factor. The main risks come he internal political situation may develop according to the most Thus, the first ever transition of from the uncertainty surrounding Tin Georgia is currently quite negative scenario, including some power in the history of the republic the final transition of power and unstable. The positions of the ruling sort of revolutionary change of was launched. However, a genuine the presence of a hidden split in “Georgian Dream-Democratic power. Thus, the country’s political transfer of power and resulting the political elite, hidden tensions Georgia” coalition remains vulner- stability assessment continues to be movement to a post-Nazarbayev era in society due to socio-economic able, despite having a majority in very low. has not yet occurred. Nazarbayev problems, and a complex ethnic the legislative chamber as a result of remains at the helm of the country’s situation. recent elections. Over the past few The foreign policy situation for ruling party and chairs the state’s months, the Georgian opposition Georgia is no less complicated and Security Council. Kazakhstan thus The foreign policy model of has organized mass protests, boy- tense. The key conflict factor is the maintains a sort of dual power sit- Kazakhstan, built on the principle cotting the work of the parliament, loss of Abkhazia and South Ossetia uation. On the one hand, Tokayev of a balanced multi-vector ap- and organizing what it has called and the support both breakaway is the formal president and head of proach, reflects the pragmatic- in “corridors of shame” for members territories continue to receive from state, but Nazarbayev’s ambitions, terests of the republic as much as of the ruling elite. A key demand Russia. This configuration creates political weight, and constitutional possible. The country remains an of the opposition is to switch to a long-term foreign policy tension powers make him the de facto head important part of key regional in- proportional electoral system that for Georgia, which has to deal with of state. tegration projects like the EAEU would allow it, so it says, to com- the reality of having a constant con- and the Collective Security Treaty pete on more even terms with the flict with a key economic partner, Such a dual power arrangement Organization (the CSTO), while ruling coalition. The authorities are namely Russia. For the moment, is quite risky, especially for the po- actively developing relations with not ready to grant this and other Tbilisi has no choice but to live litical class of Kazakhstan, as it al- other leading centers of power in concessions. Georgia’s Western with this contradiction, putting its lows different groups to play on the China, the United States, the EU, partners—the EU and the United political posture above its prospects contradictions and differences in and others. States—have so far been entirely for economic stability and develop- the approaches of the two leaders unable to break the impasse. ment goals. In such circumstances, to achieve their particular goals. potential economic projects have Moreover, given the presence of Kyrgyzstan Georgia is also characterized by a a significant risk of foreign policy several centers of power, Tokayev’s difficult socio-economic situation, destabilization. political weight is at a suboptimal he key event in the recent which is manifested in a sharp de- level: he has been unable to con- Tpolitical life of the country preciation of the national currency, solidate his authority sufficiently took place in October 2020 with a state budget deficit, and a drop in Kazakhstan to fully control all the levers and the annulment of the parliamen- the standard of living of the gen- mechanisms of government nec- tary elections as a result of op- eral population. The government’s n March 2019 the country’s first essary for effective leadership. The position protests and allegations anti-crisis measures do not corre- Iand only president since inde- transition remains ongoing. of vote rigging. The incumbent spond to the scale of problems in pendence, Nursultan Nazarbayev, president, Sooronbay Jeenbekov, the economy and may be ineffective announced his resignation as head In general, Kazakhstan has a resigned after appointing a prime due to a lack of available material of state and proposed his longtime stable electoral situation, and the minister who was acceptable to resources. It seems that a high level associate, Kassym-Jomart Tokayev, weakness of the opposition assures the opposition. After a period

Vol. 4 | No. 3 | Spring 2021 160 161 Vol. 4 | No. 3 | Spring 2021 BAKU DIALOGUES BAKU DIALOGUES of uncertainty, Sadyr Japarov Bishkek has relatively stable re- Russia); gradual archaization and deterioration of the economic situ- was elected president in January lations with other world power degradation of the administrative ation in the context of reduced hy- 2021, equipped with enhanced centers, notably China and the state apparatus, high level of cor- drocarbon export revenues, over- executive powers endorsed by a United States. It is also important ruption, and links with organized borrowing, and the possibility constitutional referendum. to take into account the country’s crime; dissatisfaction of regional the government will be unable to high external credit debt, most of and clan groups with Rahmon’s meet its social obligations may The political elite remains di- which is owed to China. Mean- policies and the unavailability of prompt the Turkmenistani author- vided along regional and clan lines, while at the regional level, Kyrgyz- serious channels for the authorities ities to invite new investors and and the difficult socio-economic stan regularly has border disputes to receive feedback from society; open some sectors of the economy situation in the country is such that with Tajikistan and trade disputes and the ongoing Islamization of (gas production, in particular), the new leadership will have trouble with Kazakhstan, which seriously parts of society driven by the pos- but without changing the condi- stabilizing the political one. affects the country’s overall invest- sible infiltration of radical Islamist tions for foreign investment. The ment climate. elements from neighboring coun- recently signed agreement with Taking into account the countries (Afghanistan) and the Middle Azerbaijan to jointly develop Cas- try’s socio-economic crisis, one East (Syria, Iraq). pian Sea hydrocarbons could be- can conclude that there may be a Tajikistan come an economic game-changer. rise in national populism in public Tajikistan’s foreign policy model policy characterized in part by residential elections were is generally quite balanced, with The country also faces a com- calls to squeeze out foreign in- Pheld in Tajikistan in fall smooth relations with all partners, plex set of military and terrorist vestors and conduct a policy of 2020. The country’s leader since but sometimes foreign policy fac- threats related to the situation in nationalization. Japarov came to 1994, Emomali Rahmon, was re- tors have an impact on the eco- Afghanistan. The long, weakly public prominence a decade ago elected yet again. The March 2020 nomic situation and the position protected border with an unstable through a lively campaign to re- parliamentary elections were also of investors. The risk of state insol- country as well as the appearance nationalize the massive Kumtor carried out under full control of vency is not just a theoretical pos- of Islamic State emissaries in the gold mine, and since becoming pro-government parties. sibility. A potentially worrisome border areas with Turkmenistan president has been sending mixed precedent was the transfer of rights creates a whole range of new risks signals on the issue. Moreover, Despite the ruling elite’s con- to a gold mine project to China in for Turkmenistan. while Kyrgyzstan is unlikely to tinuing success in consolidating the face of the Dushanbe’s inability withdraw from the EAEU, the power, Tajikistan remains a to repay previously received loans. Its foreign policy of official neu- possibility of torpedoing some of country with a fairly high risk of trality should ideally guarantee the country’s obligations to the political instability. This is due to the republic equal relations with Union remains actual. a number of factors, the most im- Turkmenistan all foreign policy partners, but in portant of which are: unresolved reality the situation is more com- Kyrgyzstan’s foreign policy economic problems (lack of jobs, ue to the country’s rigid plicated. Isolation, weak involve- model assumes a strong orienta- a high level of real unemployment, Dpresidential model, the po- ment in regional projects, and the tion towards the Russian Federa- rising import prices against the litical situation remains relatively insecurity of the long border with tion for reasons having mainly to background of the fall in the na- stable even in the face of difficul- unstable Afghanistan do not create do with economic interests and tional currency, the continuing ties in the socio-economic sphere. the most positive background for security issues. At the same time, outflow of Tajik migrants from At the same time, the further investment projects in the country.

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Uzbekistan is sufficient to underline that trade intra-elite conflict potential, corrup- it, and increase its attractiveness turnover in terms of volume and tion risks, and a complex inter-ethnic to investors. The main minus is the he political situation in geography, as well as investment situation are relatively low. monopolistic, semi-closed nature TUzbekistan remains stable inflows, have been growing rapidly of the non-oil economy dominated five years after the transition of in recent years. oming in second and third, by major domestic players, but also power and the arrival of Shavkat Crespectively, are Azerbaijan a high degree of state regulation of Mirziyoyev as president. The pres- and Uzbekistan. Virtually tied with the economy. ident confidently controls the - ad Rank Ordering respect to the number of points in ministrative apparatus and remains the aggregate analysis of most pa- In the case of Uzbekistan, the the most influential player in the ith this we can now come rameters, Azerbaijan holds a slight positives include a large domestic political system, even in the con- Wto rank-ordering the coun- lead due to the duration of its do- market (over 34 million people); ditions of liberalization of political tries that make up the core of the mestic stability and its recent battle- a diversified economy; the avail- and social processes in the country. Silk Road region. The country that field and diplomatic triumphs. That ability of its own resource base; Thanks to systematic work on re- tops this list is Kazakhstan. Its con- being said, all three political stability; form that are in many ways trans- fident pole position demonstrates of the Silk Road All three of the Silk and ongoing ef- formational, Myrziyoyev has a high that even against the background region’s leading forts to systemat- level of support and approval from of the current power transition, the states (Kazakhstan, Road region’s leading ically reform the the population. The parliamen- country is developing quite suc- Azerbaijan, Uz- states (Kazakhstan, country’s economy tary elections held at the end of cessfully with respect to its neigh- bekistan) have a Azerbaijan, Uzbekistan) and create favor- December 2019 showed that de- bors, using geographical transit op- fairly large market, have a fairly large mar- able conditions for spite the presence of five parties, portunities and natural resources to natural resources, ket, natural resources, investors. Disad- each of which won seats in the leg- nearly optimal advantage. and sustainable vantages include: islative chamber, they all occupy political models and sustainable political strong state in- their own niches in the existing po- The country has serious eco- that allow them to models that allow them tervention in the litical system whilst all support the nomic potential, a large domestic realize their eco- to realize their economic economy; a weak president. market of 19 million people cou- nomic and invest- and investment potential. financial system; pled with the markets of the EAEU ment potential. corruption and a Uzbekistan is becoming a countries, rich reserves of natural burdensome bu- Central Asian success story and is resources, a legislative framework In the case of Azerbaijan, posi- reaucracy (especially outside the inching towards Kazakhstan. Per- focused on attracting investors, a tives include: significant resource capital); the presence of social con- haps the most efficient reference set of programs for the develop- potential; political continuity and tradictions; low purchasing power point to gain further details on the ment of a non-resource economy, stability; good transport accessi- of the population; and low qualifi- achievements of its ongoing trans- and, accordingly, the existence of bility and developed transit oppor- cation of labor resources. formation, especially with regards favorable conditions for investors tunities; a relatively large market to its foreign policy, is to refer in these areas. (10 million people); an economic ourth place goes to Georgia, the reader to the interview with policy focused on the admission of Fthanks to its past reform its foreign minister, Abdulaziz Meanwhile, political risks associated foreign investors; streamlined ad- successes and the fact that it man- Kamilov, published in the previous with the uncertainty surrounding the ministrative services; and measures aged to maintain a high level of edition of Baku Dialogues. Here it transition of power, the presence of to reform the economy, diversify transparency and attractiveness to

Vol. 4 | No. 3 | Spring 2021 164 165 Vol. 4 | No. 3 | Spring 2021 BAKU DIALOGUES BAKU DIALOGUES foreign institutions. Domestic polit- economy, and the lack of real mech- In the case of Tajikistan, advan- to the crisis in Afghanistan; and ical turbulence has not fundamen- anisms for entrepreneurs to protect tages include: a low-cost labor over-dependence on hydrocarbon tally changed this situation, which their rights. force; availability of a number of exports to China for state revenues. is all the more impressive given that minerals; and a favorable climate the country neither has significant In the case of Kyrgyzstan, specific for the development of agricul- natural resources nor a capacious advantages include: relatively liberal ture. Disadvantages include: poor Reflecting on the Top Three internal market. legislation; the work of the author- infrastructure; a narrow domestic ities to create favorable conditions market; high risks of political de- hen speaking about the Advantages include: favorable for investment; an inexpensive labor stabilization; corruption and heavy Wfuture development of conditions for doing business; fa- force; favorable conditions for the bureaucracy; state interference in countries, it is important to take vorable transit location; relatively development of agriculture; devel- the economy; and a lack of real into account those that are most im- diversified economy; and ongoing oped light industry and a healthy mechanisms for entrepreneurs to portant in terms of the readiness of efforts to strengthen economic and tourism sector; and the country’s protect their rights. a given state to improve its business migration ties with the European participation in the work of the environment, namely assessing its Union. Disadvantages include: EAEU;. Disadvantages include: ighth place goes to Turkmen- development programs and invest- deep structural problems in the state interference in the economy; Eistan. Despite the presence of ment policies. These areas—in con- economy due to the breakdown of a number of serious precedents large hydrocarbon reserves and the trast to the availability of natural relations with traditional economic pointing to difficulties faced by state’s enormous transit potential, resources and the geographical lo- partners (e.g., Russia); unresolved foreign investors in implementing Ashgabat still has not realized its cation of the country—are change- foreign policy disputes and seces- projects in the country; repeated re- great economic potential due to its able: they can be improved if there sionist threats (e.g., the conflict visions of previously reached agree- tight political model, which implies is sufficient political will and a corre- with Russia and the situation in ments with foreign investors; lack serious control over all economic sponding desire to develop properly. Abkhazia and South Ossetia); of continuity of the political course; activity in the country. seemingly permanent political in- high risks of political instability; With respect to the countries of stability; and risks of social protests. spread of Islamist ideology; narrow- Advantages include: the presence the Silk Road region we see that, ness of the domestic market; and of large hydrocarbon reserves; high with rare exceptions, a systematic ifth, sixth, and seventh place low qualification of the labor force. transit potential; political stability approach to national development Fgo to Kyrgyzstan, Armenia, and continuity of the economic and the setting of long-term goals and Tajikistan, respectively. These In the case of Armenia, advan- course; and the adoption of mea- for economic growth is lacking. three former Soviet republics each tages include: a relatively diversi- sures by the authorities to reform the The same is true for their respective offer an inexpensive labor force, lim- fied economy; a skilled workforce; economy and maintain stability in investment policies. While each of ited but important mineral reserves, and a relatively favorable invest- society. Disadvantages include: total the countries discussed try to nom- and a favorable climate for the devel- ment climate. Minuses include: a control of the country by a tight-knit inally have progressive laws pro- opment of agriculture. At the same high risk of political destabilizaton; group centered on the head of state tecting the rights of investors at the time, they are each characterized a transport blockade; an insignifi- over the economy; lack of protec- level of legislation, in practice busi- by underdeveloped infrastructure, cant resource base; the presence of tion of property rights; high corrup- nesses and foreign investors usually a narrow domestic market, corrup- social contradictions; and psycho- tion and bureaucratic inefficiency; have virtually no real mechanisms tion and burdensome bureaucratic logical issues as a result of losing the danger of the Islamization of and institutions to protect their in- procedures, state intervention in the the Second Karabakh War. society; risk of destabilization due terests before the state authorities.

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According to this important up the ranks of various surveys on. In this regard, one of the most management as well as entrepre- criteria, among the countries of in the years to come—but it is underreported but potentially neurship, such a flagship project Central Asia and the South simply too early to make defin- game-changing factors involves a could catapult Azerbaijan to the Caucasus, at present only itive predictions. Rising popu- joint Italian-Azerbaijani initiative very top of regional rankings. By three—Kazakhstan, Azerbaijan, lation growth, job creation, and that first arose in February 2020 combining world-class academics and Uzbekistan—are carrying out economic diversification remain during Aliyev’s state visit to Italy with hands-on tech labs, fabrica- systematic, comprehensive work challenges that, in some ways, to establish an innovative aca- tion facilities, a business incubator, to develop their Georgia has ex- demic consortium spearheaded and similar ready-for-the-real- economies and ceeded in over- by the institutional home of Baku world curriculum innovations, create favorable Among the countries coming in com- Dialogues, ADA University. such a project—if successful— and comfortable of Central Asia and parison to its would go a long way towards policies for inves- the South Caucasus, eastern neighbor, With an anticipated program demonstrating Baku’s fundamental tors. Moreover, notwithstanding portfolio comprised of applied commitment not just to providing while Kazakhstan at present only three— the paucity of it hard sciences, information tech- a world-class university education has traditionally Kazakhstan, Azerbaijan, natural resource nology and computer sciences but also to advancing sustainable been singled out and Uzbekistan—are base. (including big data analytics), economic diversification plan and, in the post-Soviet carrying out systematic, business and engineering, design, in turn, help Azerbaijan move up space for its nu- comprehensive work to Here it seems food science and agrotech, and the global value chain. BD merous ambitious appropriate to development pro- develop their economies say a few addi- grams, Uzbekistan and create favorable and tional words about has made a rapid comfortable policies for Azerbaijan. In breakthrough in investors. order to realize the development its investment and successful im- potential, the plementation of a whole range of country will need to launch a industry-specific growth and de- systematic effort to promote its velopment programs, which are economy through the organiza- generally included in its five-year tion and participation of invest- structural strategy. ment fora both within the country bakudialogues.ada.edu.az and abroad. At the same time, he ambition and scale of Azerbaijan already has exten- TAzerbaijan’s economic de- sive experience in holding such velopment programs has been events, and it is recommended to boosted since the announcement focus on attracting medium-sized of various economic initiatives in foreign businesses to targeted the wake of the Second Karabakh areas that have the greatest po- War. This gives hope to foreign in- tential for development: tourism, vestors that it may further climb agriculture, construction, and so

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BAKU DIALOGUES POLICY PERSPECTIVES ON THE SILK ROAD REGION

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