Historically, the South Caucasus has been a battleground for influence among major powers due to its strategic location at the crossroads of Europe and Asia. For decades, Russia has maintained a significant presence in the region, wielding considerable political and military influence. As the war in Ukraine is entering its third year, the significance of Europe’s eastern neighbourhood in the overall security of the European Union has become more prominent. With bitter lessons learned from Ukraine, having failed to keep Belarus away from Russia’s claws, and facing a ticking bomb of Kremlin-fuelled escalation in Moldova, the South Caucasus is currently among the most critical regions for the EU’s geopolitical future. But this time, a lot more is at stake.
Everybody wants a piece of the pie
The South Caucasus, encompassing Georgia, Armenia, and Azerbaijan, holds a pivotal role in the geopolitical landscape of the European Union’s eastern neighbourhood. Since 2020, the region has been in constant turmoil and has undergone a massive transformation. The Nagorno-Karabakh war, the escalation of the conflict between Armenia and Azerbaijan, as well as domestic repressions in Azerbaijan and, more recently, in Georgia, have proved that the gradual democratisation of the region in the early 2010s (before the Eastern Partnership became a political ghost) was fragile and in fact only superficial.
While in the past five years the South Caucasus has no longer been simply Russia’s ‘backyard’, it has not been fully the EU’s either. The European Union has long quietly competed for influence in its eastern neighbourhood, mostly through exporting its values and soft power to help the ex-Soviet countries catch up with the rest of the continent. While traditionally, the competition has been mostly with Russia, in recent years, more regions and global actors, such as Iran and Türkiye, have started to take more ownership of the region.
One of the biggest players in the South Caucasus in recent years has been China. Much like in the Western Balkans, China has fully utilised economic and geostrategic opportunities to gradually make its way in without aggressively challenging any of the big or small powers and has even cooperated with them. The South Caucasus is the shortest corridor from China’s western Xinjiang province to the EU and a strategic region for connectivity, trade, and energy. Almost a year ago, China and Georgia signed a strategic partnership agreement. In May 2024, China and Azerbaijan revamped their collaboration on the joint construction of the Belt and Road Initiative. China is also Armenia’s second trade partner in terms of trade turnover, and the two countries have very friendly and cooperative relations.
China is not the only country using the weakening of Russia’s influence to increase its presence in the region. In the past few years, three South Caucasus countries have strengthened their ties with the broader Middle East region, establishing more diplomatic representations and increasing cooperation on trade, investment, and infrastructure projects. In addition to Türkiye, Israel, and Iran, the list of South Caucasus ‘suitors’ now includes Saudi Arabia and the Gulf states. Türkiye seeks to enhance east-west connectivity, bypassing ‘traditional Russia-sponsored’ routes and maintains close political and economic ties with Azerbaijan and Georgia. Iran aims to establish robust transport corridors to strengthen regional trade and energy infrastructure. Israel relies on Azerbaijan for significant oil supplies and military cooperation against Iran. Overall, the whole region serves as a vital link for trade, energy, and geopolitical influence for these Middle Eastern powers, with a potential that the EU has not yet fully acknowledged.
Another key aspect of the puzzle is that while the South Caucasus is no longer simply a zone of interest for Russia alone, the Kremlin hovers like the sword of Damocles over the three republics. The massive weeks-long protests against the ‘foreign influence’ law in Georgia are the most recent demonstration of how Kremlin-friendly oligarchy can strike at the most unexpected moment, threatening to completely alter the domestic and foreign policy course of any of the republics, throwing away years of hard work and consistent relationship-building with the West.
To sum up, the South Caucasus is up for grabs. Once a single-lane road controlled by one driver, it has now become a bustling intersection where each driver is trying to impose their own rules.
In contrast to the period when the South Caucasus was experiencing EU fever on the political and societal levels, the current governments of the three republics are much more pragmatic and are increasingly balancing their foreign policies among multiple powers. This pragmatism often translates to a willingness to engage with multiple players and keep options open to secure economic, security, and political benefits. At the same time, South Caucasus countries finally understand that they do not function in a vacuum, so at last, there might be a window of opportunity to adopt a regional approach on top of a bilateral one, which so far has been impossible for the EU.
By underestimating the influence and interests of any major actor in the region, the EU will once again reach an impasse in maintaining its sway and fostering stability, thus putting overall European security in danger.
Does Brussels miss the point?
Over the past decade, the European Union has established various partnerships and agreements with South Caucasus countries, aiming to foster stability, democratic governance, economic development, and European integration at a preferred pace. After it became clear that the multilateral Eastern Partnership platform was unable to bridge the major differences between the three countries of the region, the European Union moved to a tailored approach with each of these countries.
This approach worked up until the 2020 Nagorno-Karabakh war, during which the EU’s geoeconomic interests clashed directly with the values of democracy and human rights the Union had been trying to export to the region. For policymakers both in Brussels and in the Caucasus, it became apparent that the lack of a coherent regional policy and the inability or unwillingness to use its existing leverage to establish stability was harming the credibility of the EU. The lack of a coherent regional policy from the EU and the mixed signals it has sent are also the reason why motivation for the democratisation of the countries has declined, leaving an open door for foreign actors and more pragmatic, power-focused policies.
In addition, since the beginning of Russia’s war against Ukraine in 2022, it has become undeniable that the South Caucasus is a critical region for the EU, particularly in terms of energy security and connectivity. The Southern Gas Corridor, which brings Caspian gas to Europe, reduces the EU’s reliance on Russian energy supplies. However, the simple transfer of energy dependence from Russia to Azerbaijan and Türkiye (neither of which has the level of foreign policy alignment with the EU that it did previously) creates another set of challenges. As a prime example, Türkiye helped Russia cash €3 billion through a sanctions loophole, which allowed it to resell Russian oil to Europe by relabelling it.
Besides contributing to the EU’s energy security, the region serves as a crucial transit route for goods and energy between Europe and Asia. The EU’s loss of influence in the South Caucasus in favour of Russia, China, or even Türkiye would severely undermine the EU’s strategic interests, making its eastern flank more vulnerable to external pressures and destabilisation. Ensuring the stability and alignment of the South Caucasus with European values and interests without compromising economic interests is essential for safeguarding the EU’s security.
What’s next on the agenda?
The EU must now double down on its efforts to engage the region, providing more robust support for political reforms, economic integration, and security cooperation. Initiatives such as increased infrastructure investment, enhanced political dialogue, and targeted assistance programmes can help fortify the region against external influence. However, these exercises will be futile and short-term if the European Union does not put democratisation at the core of its regional policy by maintaining a hard line against authoritarian and hybrid regimes in the region.
Nevertheless, even with robust economic cooperation, what kind of meaningful stability can we talk about if the citizens of these countries cannot benefit from that cooperation because of corruption and massive human rights abuses? Authoritarian governments have no value compass and no loyalties: they wage wars to justify their rule, dragging the whole region into more chaos and instability. To cut through this vicious cycle, the EU should actively engage in conflict resolution efforts and establish a proper cordon sanitaire against any form of aggression and abuse of power, both inside and outside these countries.
The May 2024 Memorandum of Understanding between the European Bank for Reconstruction and Development (EBRD) and the United States Agency for International Development (USAID), which commits to enhancing connectivity between Europe and Asia through the South Caucasus, is proof that policymakers are starting to catch up with the realities of the region.
The stability of the South Caucasus is integral to the security of the European Union. Failing to recognise that right now and adopt a more proactive approach to the region as a whole would be a disastrous foreign policy decision and would cost the EU dearly.
Policy recommendations
If the European Union were to create a regional strategy for the South Caucasus in the next mandate, what would be the cornerstones of the policy?
Firstly, the EU must support democratisation in the region by making economic cooperation and European integration contingent on reforms. This approach can halt Georgia’s slide into autocracy, encourage Armenia’s momentum to strengthen its institutions and distance itself further from Russia, and pressure Azerbaijan to improve its domestic human rights record.
Secondly, the EU should transform from a passive mediator to an active player in regional security. Using its economic and political leverage to establish peace in the region and showing intolerance towards any form of military escalation will make the EU a more credible actor and signal the Union’s commitment to the region. It is clear that this approach will be difficult, however, considering the composition of the European Council and the good relationship that the countries of the region have established with more right-leaning governments of the EU.
Thirdly, the EU should spearhead economic and investment projects in energy, transport, and connectivity, fostering regional cooperation and inclusivity among the three countries. The region’s economic interconnectedness will not only increase the efficiency and scale of the projects, which will be beneficial for the EU, but also encourage cooperation and fill the vacuum which other regional powers could exploit.
Finally, the EU must adopt a new mindset regarding the South Caucasus. Despite being the most distant part of the European neighbourhood, its central location makes it highly sensitive to geopolitical shifts, such as Russia’s war in Ukraine and conflicts in the Middle East. When talking about Russia and Ukraine, the EU should also talk about the South Caucasus – without singling out Georgia as the only part of the European family in the region.
In conclusion, for the EU’s regional policy on the South Caucasus to succeed, democracy, security, and the economy cannot be tackled in isolation. Security requires democratic governments and resilient economies. At the same time, economic growth demands regional peace and cooperation. The new European mandate, as well as the change of leadership in major European institutions, offers an opportunity for a fresh start. And there is no better motivation for the EU to act than for the sake of its own security and economy.
