TheNewGeopoliticsoftheSouthCaucasus

ProspectsforRegionalCooperationandConflictResolution

ShireenT.Hunter

January2017

ReportofaconferencesponsoredbyCarnegieCorporationofNewYork

HeldattheCenterforMuslim-ChristianUnderstanding

GeorgetownUniversitySchoolofForeignService

October28,2016

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TheNewGeopoliticsoftheSouthCaucasus:

ProspectsforRegionalCooperationandConflictResolution

Introduction

Ithasbeenexactlytwenty-fiveyearssincetheSovietUnionofficiallycametoanendonDecember31,1991.FollowingtheUSSR’sdisintegration,allitsconstituentrepublics--includingthe three located in the South Caucasus, Azerbaijan, Armenia, and Georgia -- becameindependent states. After gaining their independence, these new states faced dauntingchallenges of building new economic and political systems and developing frameworks forinteractingwiththeirneighborsandotherinternationalactors.BecausethedevelopmentoftheirsenseofnationhoodandstatehoodhadbeenstuntedasaresultofRussian/Sovietdominationfornearlytwohundredyears,theyneededtoforgenewnationalidentities.TheyalsorequirednewvaluesystemstoreplacethoseoftheSovieteraandunderpintheirpost-Sovieteconomic,social,andpoliticalstructures.

Giventhemagnitudeof theirchallenges,duringthe lastquarterofcentury, theSouthCaucasian states havemade considerable progress in establishing functioning economic andpoliticalsystemsmoreinlinewithprinciplesofopeneconomiesanddemocraticpolitics.Theyhavebecomeindependentactorsontheregionalandinternationalscenes,andtheirpoliciesandchoices have influenced the political dynamics of the South Caucasus and the neighboringregions. In turn, the South Caucasian states have become important factors in the politicalcalculationsandpoliciesofkeyinternationalandregionalplayers.TheapproachesandpoliciesoftheseexternalplayerstowardstheregionhaveconsiderablyimpactedtheshapingthepoliticaldynamicsoftheSouthCaucasusandtheneighboringareas,andeventhedomesticevolutionofSouthCaucasianrepublics.

Despitetheirachievements,theSouthCaucasianstateshavenotyetdevelopedefficientandself-sustainingeconomiescapableofprovidingdecentlivingconditionsfortheirpeople.Norhave they established well-functioning and participatory political systems, capable ofguaranteeingtheirpeople’sbasicrights.Andtheyremainvulnerabletotheactionsandpoliciesofkeyregionaland internationalplayers,andoften find itdifficult toeffectivelynavigate thetreacherouswatersofinternationalpolitics.

Many factors have contributed to the South Caucasian states’ shortcomings on thesefronts.Someof themrelatetothosestates’historical,cultural,geographic,anddemographiccharacteristics, including theirpeculiarethno-religiousmakeup, their resourcebases, and thelegacy of the Soviet era. Other factors include the character of regional and internationalenvironmentsand thepoliciesandactionsof key regionaland internationalplayers. Inother

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words,theyarerelatedtothecharacterofthe internationalpoliticalsystemand itschangingdynamics.Thenegativeimpactofthelatterfactorshasnotbeenequallyfeltbyallstates.Someof them have benefitted from systemic forces, at least temporarily andmostly in economicmatters, while others’ options have been severely limited by the shifting dynamics ofinternationalpolitics.

TimetoTakeStock

The twenty-fifth anniversary of the South Caucasian states’ independence seemed anappropriatejuncturetoconsidertherecordoftheirsuccessandfailure,toanalyzethecausesbehindthisbalancesheet,toexplorewaysforthemtoavoidpastmistakes,todiscernthemostlikelydirectionsoftheirevolution,andtoidentifythemostinfluentialfactorsontheirtrajectory.Suchareviewofthepastmightalsohelpkeyregionalandinternationalactorstodeviselessself-centeredpoliciesthatcouldhelpregionalstatesintheirprocessofdevelopment,tocontributetotheresolutionofoutstandingconflicts,preventtheemergenceofnewdisputes,andeventuallyevenencourageregionalcooperationbeneficialtoall.

By2015, becauseof the shifting geopolitical dynamicsof the region following severalsignificant international and regional developments, such an exercise had become especiallynecessary and timely. These developments included: the signing in 2015 of the JointComprehensivePlanofAction(JCPOA)betweenIranandthefivepermanentmembersoftheUnited Nations Security Council (plus Germany) about Iran’s nuclear program; deterioratingRussian-Western relations; growing political uncertainties in Turkey following a failed coupattemptinJuly2015;thefluctuatingdynamicsofTurkish-RussianandTurkish-Westernrelations.

TheProject

To draw lessons from the past in order to improve future performance, Dr. ShireenHunter,aResearchProfessoratGeorgetownUniversity’sEdmundA.WalshSchoolofForeignService,undertookaprojectfocusedonthenewgeopoliticsoftheSouthCaucasus,supportedbyagrantfromCarnegieCorporationofNewYork.Theprojecthadfivemainobjectives:examinetherecordofthelastquartercentury;derivelessonslearnedfromit;discernthefuturetrajectoryoftheregion’sdevelopmentsandthefactorsmostlikelytocontributetothem;andexplorewaysinwhichtheregioncouldbenudgedinmorepositivedirectionsandtowardslessstrifeandmorecooperation.

Onecomponentof thisprojectwas theholdingofaone-daymeetingonOctober28,2016,withtheparticipationofexpertsfromtheregionalstates,Russia,theUnitedStates,Turkey,Iran,and theEuropeanUnion.Theseexpertspresentedpaperson thecurrenteconomicandpoliticalstatusofthethreeregionalstatesanddiscussedthefactorsthathavecontributedtothepresent situation. Other experts from the United States, Russia, the EU, Iran, and TurkeydiscussedandexplainedthepoliciesofneighborsandgreatpowerstowardstheSouthCaucasusandtheirimpactonbothindividualcountriesandonthebroaderpolitical,economic,andculturaldynamicsofthatregion.Otherparticipantsincludedexpertsfromthinktanks,formerAmerican

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diplomatswhohadservedintheregion,formerambassadorsfromtheregionthathadservedintheUnitedStates,andotherregionalexperts.

Thisreportisadistillationandsummaryofthesepresentationsandthegeneraldiscussionaswellasthefindingsandprognosesoftheparticipants.Lateraneditedvolumeincorporatingvariouspapersandofferingmoredetailedanalysiswillbepublishedbyearly2017.

IwishtoexpressmythankstoCarnegieCorporationofNewYork,whichenabledmetoundertakethisproject.IhopethatthereportandtheforthcomingbookwillcontributetobetterunderstandingoftheSouthCaucasusandthefactorsthatcontinuetoaffectitsevolution.

ShireenT.HunterJanuary2017

******Post-IndependenceEconomicPerformance

Twenty-fiveyearsaftertheirindependence,thethreeSouthCaucasiancountrieshavefailedtodevelopsufficientlydiversifiedeconomies–includingaviableprivatesectorwithnewindustrialandotherventures–thatcouldguaranteeasustainableeconomyandprovidedecentlivingconditionsformostoftheirpeople.Allthreecountriesstillsufferfromhighlevelsofpovertyandlargeincomedisparities.Theurban-ruraldivideremainsstark.

Intermsofimprovinglivingconditions,Azerbaijanhashadthebestrecord.Thecountryhasmanagedtoincreasesubstantiallythesizeofitsmiddleclassandreducesharplythenumberofthoselivingatorbelowthepovertyline.Azerbaijan’ssuccesshasbeenalmostentirelyduetoitslargeenergyresources.Theseenergyrevenueshavefinancednearlyallitseconomicactivitiesaswellasitseffortstoreducepovertylevels.

Azerbaijan’sover-relianceonenergyresourceshasitsdrawbacks,includingavulnerabilitytofluctuationsinthepriceofoil.Infact,becauseofasharpfallinglobaloilprices,Azerbaijan’seconomicgrowthhadstalledby2015-6,leadingtoadevaluationofthecountry’scurrency,themanat. Azerbaijan always faced the long-term challenge of transiting to a post-oil boomeconomy.However,thesharpdropinthepriceofoilhasbroughtthischallengeforwardbynearlyadecade.

Additionally, thecountry suffers froma relativelyhigh rateof realunemployment,asopposedtoofficialstatistics,especiallyinruralareas,whichtranslatesintomorepovertyinthecountryside.Yet,despitecontributingonly5%ofAzerbaijan’sGDP,theagriculturalsectorstillaccounts for 37% of all employment. Because of high population growth, Azerbaijan’sunemploymentproblemis likelytoworsen inthefuture,unlessoilpricesrecoverand lift theeconomy.However,evenanoil-generatedrecoverywillnotbeenoughtocorrectthecountry’sstructuralunemploymentandunderemploymentproblems,suchasthoserelatedtoagriculture.

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ThesituationinArmeniaandGeorgiaisnotmuchbetter.Nearlyone-thirdofArmenia’spopulation livesatorbelowthepoverty line,andthesituation isnearlythesameinGeorgia,especially in rural, mountainous, and isolated areas – even though both countries haveexperiencedperiodsofhigheconomicgrowth.Georgiaisexpectedtoregisterpositivegrowthrates in the coming year. Both countries also have unemployment and underemploymentproblems.InGeorgia,theagriculturalsectorisstillthehighestsourceofemployment,at53%oftheworking-agepopulation. InArmenia,39%of theworkforce isengaged inagriculture.Theeconomicproblemsofthesetwocountriesarepartlyduetotheirpoorresourcebase,includingtheirdependenceontheimportofenergy.

Allthreecountriesregisterhighincomedisparities,withGeorgiahavingthehighestrate.In Georgia’s case, the large number of people still engaged in fairly primitive and almostsubsistence-levelagriculturalactivityisaprimarycauseofvasteconomicdisparities, includingbetween rural and urban centers, and among different regions. A small percentage of thepopulationinallthreestates–indeedjustafewindividualsorfamilies–dominatetheeconomyand ownmost of the national wealth. The existence of thesemonopolistic and oligopolisticstructuresalsoactsasamajorbarrier toeconomicreformandtheestablishmentofastrongprivate sector. Reforms often tend to clash with the parochial interests of such groups andindividualswhointurnpreventtheirimplementation.

PoliticsandGovernance

Progress towards establishing functioning and at least relatively free and fair politicalsystemsandinstitutionscapableofguaranteeingtheirpeople’sbasichumanrightsandlibertieshasalsobeenquitedisappointing,albeittovaryingdegreesinthethreestates.

Inthisrespect,Azerbaijanhastheworstrecord.Thecountry’spoliticalsystemissimilarto ahereditarydynastyunder the guiseof a republic,withpowerbeing vested in theAliyevfamily.HaidarAliyevruledthecountryfrom1993to2003beforepassingonthepresidencytohissonIlham,whohasruledeversince.AcultofpersonalityhasalsodevelopedaroundtheAliyevfamily,whichattributesspecialvirtuestoHaidarAlievandhisdescendants.ShouldIlham’ssonsucceedhisfather,asaconstitutionalrevisionnowmakespossible,thesystemcouldbeturnedintoadefactomonarchyofthemoreauthoritarianandabsolutistratherthanconstitutionaltype.

ParliamentaryelectionsinAzerbaijanarehardlyeverfairorfree,andallegationsofriggedelectionsarerampant.Oppositionparties,meanwhile,areweakand ineffective.Violationsofhumanrights,includingadisregardforfreedomofspeechandpressand,attimes,evenreligion,arefrequent.Inthelastseveralyears,theauthoritieshavearrestedjournalistsaswellashumanrightsandpoliticalactivists.

Thesituation inArmeniaandGeorgia isonlymarginallybetter. InArmenia,oppositionpartiesroutinelyaccusethegovernmentinpowerofelectionrigging.Inthepast,mistrustaboutthefairnessofelectionshasresultedindemonstrationsandevenviolence.Ithasalsocontributedto the polarization of public opinion that is not conducive to a well-functioning democracy.

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HumanrightsconditionsinArmeniaarealsofarfromsatisfactory.Manypeoplecomplainoflimitson freedom of press and expression, aswell as the often-heavy-handed police treatment ofprotesters.However,Armeniancivilsocietyhasgrownquitemature,andthepeople’sinterestinvariousaspectsofnational lifehas intensified.Asa result, theyhave scored somesuccess inprotectingtheenvironmentandhistoricandculturalheritage.Thegrowthofcivilsocietyalsoindicates the politicalmaturation of Armenian people, which is a good omen for the futurestrengtheningof thecountry’spolitical institutionsandacceleratedmovement towardsmoredemocraticpolitics.

InGeorgia,mistrustof the country’s power structure andpolitical leadership led to apopularrevolutionin2003–theRoseRevolution.Althoughimplementingcertainreforms,thepartythatformedthegovernmentfollowingtheuprisingalsotriedtoconsolidateallpowerinitsown hands. This development caused popular discontent and eventually led to a change ofgovernmentin2012.Sincethen,however,Georgiahasmadeconsiderableadvancesinensuringfairelectionsatlocalandnationallevels.Georgia’srecordonhumanrightsisalsorelativelygood,andtherehaven’tbeenanyhigh-profilecasesofhumanrightsabuses.However,manycomplainofpoliticallymotivatedharassmentandimprisonment,andpolicebrutality.

CausesofEconomicandPoliticalDeficiencies

ThefollowingfactorspartlyexplainthelargelypoorrecordoftheSouthCaucasianstates’economicandpoliticalperformance.

Historical/CulturalFactorsandtheSovietLegacy

Despitetheirlonghistory,thethreeSouthCaucasianstateslackasustainedexperienceofindependentstatehoodandeven,tosomedegree,nationhood.Duringmostoftheirhistorygoing back to antiquity, they had been part of various empires. Their efforts to establishindependentrepublicsfollowingtheendofWorldWarOnein1918wasveryshort-lived.By1921,theyhadbeenincorporatedintothenewlyformingSovietUnion.

ThevariousempiresandkingdomsthatdominatedtheSouthCaucasuslefttheirculturalimprinton the region, creatingdiversepatternsof sympathyandenmityamong the region’spopulation towards neighboring states and peoples. Moreover, the location of the SouthCaucasusatthecrossroadofmajorhumanmovement,fromtheIndo-IraniansandArabstotheTurks andRussians, has resulted in a very intricate ethnic, linguistic and sectarianmap,withconsiderablepotentialforstrife.Thesedifferenceshavealreadyledtoseveralconflictsthathavedrainedtheresourcesofthesestatesandunderminedtheirdevelopmentprospects.

ThelegacyoftheSovieterahasweighedmostheavilyontheSouthCaucasianrepublicsandhadthemostinfluenceontheirpost-independenceevolution.Afterall,despitethefictionofitsbeingafederationofindependentrepublics,theUSSRwasrunasasinglecountryintermsofeconomicplanningandrulesofgovernance.Forinstance,theeconomiesofvariousrepublicswerenotgearedtowardscreatingfairlyself-sustaininganddiversesystems.Rather,eachrepublic

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wasmerelyalinkinthelongchainofagriculturalandindustrialproductionthatmettheneedsandrequirementsoftheentireUnion,witheachrepublicassignedaparticulartask.ThelargestpartoftradewasalsowithintheUnion.Becauseofthisexcessiveinterdependence,theUSSR’sdisintegrationentailedsevereeconomicdeclineandpainforthenewSouthCaucasianstates.Ittookthemnearlyadecadetorestoretheireconomiesto1989levels.Furthermore,becauseoftheUSSR’scommandeconomytheserepublicslackedaprivatesectorandeventherudimentsofamarketeconomy.

In short, the economic legacy of the USSR and the economic shock produced by itsdisintegration handicapped the South Caucasian states post-independence economicdevelopment.Meanwhile,thevariousnetworksofeconomicinfluenceatboththefederalandrepublicanlevelssurvivedtheSovietUnion’scollapse.Intime,theymorphedintocorruptlocaloligarchiesoreconomicmonopolies,whichhaveslowedeconomicreformsandcontributedtocurrenteconomicdifficultiesandshortcomings.Thisfactoralsopartlyexplainswhyafewfamiliesorindividualsstilldominatetheeconomiclifeofthethreestates.

ArmeniaandGeorgiawerealsoheldbackbytheir lackofadequatenaturalresources,especiallyenergy,andtheirsmallpopulations(hencetheirsmalldomesticmarkets).

PoliticalDevelopmentandGovernance

HistoryandculturehavemadethetransitionofthethreeSouthCaucasusstatestolaw-based methods of governance and democratic practices with well-functioning politicalinstitutionsverydifficult.Thepoliticalculturesofthesesocietieshavelongbeenbasedontheveneration of powerful individuals,whether kings, emperors, or the secretary general of theCommunistParty.Thistendencytolinknationalfatetostrongand/orcharismaticleaders,ratherthantoviableinstitutions,hassurvivedintothepost-independenceperiod.

Moreover,becauseoftheessentiallydictatorialcharacterofthepoliticalsystemstheyhadexperienced,theserepublicslackedacultureofdialogueandgive-and-takeandrespectforhuman rights and individual freedoms when they became independent. Because of theirdomination by Russian and Soviet empires, these states had not even experienced therudimentaryexperimentswithparliamentarypoliticsoftheirneighborsTurkeyandIran.Theironly experience was the short-lived republican period between 1918-1921. Therefore, uponindependence, theyhadto learn thebasicsofestablishingdemocraticpolitical systems,evenhow to conduct an approximation of free and fair elections. Also challenging was thedevelopmentofacultureofdialogueandrespectforindividualfreedoms.

TheMessyProcessoftheUSSR’sDisintegrationandItsConsequences

ThereformsinitiatedbyMikhailGorbachevbeginningin1987eventuallyledtotheSovietUnion’sdissolutionandhadseveralnegativeconsequencesontheSouthCaucasianstates’post-independence development. One outcome of the reform process and the USSR’s gradualdisintegration was the outbreak of separatist and nationalist movements within the union,

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includingintheSouthCaucasus.Incertaincases,theriseofthesemovementsledtointer-ethnicdisputes and even armed conflicts such as the Armenian-Azerbaijani dispute over Nagorno-KarabakhandtheseparatistmovementsinGeorgia’sSouthOssetiaandAbkhazia.Theseconflictsentailed significantmaterial and human costs, and deepened existing cleavages both withinregionalcountriesandbetweenneighbors,notablyArmeniaandAzerbaijan.For twodecadesnow, these so-called frozen conflicts have posed a security threat to regional states andpotentially to neighboring countries aswell, including Russia.Minor incidents, intentional orotherwise, couldunfreeze theseconflicts, ashappened inApril2016,whena four-daywar—brokeoutbetweenArmeniaandAzerbaijan.

The conflicts and rivalries that Gorbachev’s reforms generated within the top Sovietpoliticalleadershipwerealsoreflectedattherepublicanlevel.EachrepublicangrouphaditsalliesinMoscowandtheywereinfiercecompetitionwithoneanother.Theseconflictscarriedovertothepost-independenceera.Bymanipulatingactualand/orpotential inter-ethnicconflictsandrivalries, these competing factions exacerbated these tensions. They might have evencontributedtotheoutbreakofarmedconflicts,asinNagorno-KarabakhaswellasSouthOssetiaandAbkhazia.

TheImpactofConflicts

Theso-called frozenconflictshavehadseriouslynegativeconsequences for theSouthCaucasian states’ economic and political development. From an economic perspective, bydiverting funds tomilitary expenditures, they have deprived economic and social sectors ofneeded resources.This has dearly cost Armenia in particular, for it has been forced, despitelimitedfinancialresources,tomaintainaroughmilitarybalancevisavisAzerbaijan.ConflictsinOssetiaandAbkhaziahavebeenaneconomicburdenonGeorgia.Theonlycountrywithadequateresources so far to financebothmilitaryexpendituresand investment ineconomyandsocialwelfarehasbeenAzerbaijan.Butit,too,couldfaceadilemmainthenot-too-distantfuture.

TheimpactofthesefrozenconflictsonthetrajectoryofSouthCaucasianstates’politicaldevelopmenthasbeenevenmorenegative.Theyhavetendedtofosterexcessivelynationalistandethno-centricmindsets.Inturn,thistrendhascontributedtotheextreme“otherization”ofneighborsandevennationalminorities.InAzerbaijan,forexample,theconflictwithArmeniahasstrengthened an excessively Turko-centric national identity, which has alienated non-TurkicminoritiesandexacerbateddisputeswithArmenia. InArmenia, theconflicthas strengthenedextremenationalistfeelings,contributingtointra-eliterivalryandthepolarizationofdomesticpolitics. The conflicts have pushed security matters to the top of national agendas, thussecuritizing issues that normally should not be so. For example, ordinary dissent on politicalissuesoranythingrelatedtotheseconflictshasbeenelevatedtomattersofnationalsecurity.Moreover, the securitization of mundane issues has enabled political leaderships to justifyrepressivemeasuresbyarguingthatopendissentcouldemboldentheenemy.Inthisway,theyhave contributed to the growth of authoritarian tendencies. These conflicts have alsomadepeoplemorewillingtoacceptlimitsontheirfreedomsforthesakeofnationalsecurity.Finally,

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the frozen conflicts have presented opportunities for external actors, both regional andinternational,tomanipulatethesedisputesandinfluenceinternalpoliticaldynamicstotheirownadvantage.

TheImpactofPoliciesofRegionalandInternationalActors

Theevolvingcharacterofpost-ColdWarinternationalpoliticshasnothelpedtheSouthCaucasiansstates’economicandpoliticaladvancement.Despitehopesforamorecooperativeworldorder,theendoftheColdWardidnotstopeitherinter-staterivalriesorstates’desirestomaximizetheirowneconomicandpoliticalgains.BecauseofitsgeopoliticallocationnearbothRussiaandtheMiddleEast,alongwith itsconsiderableenergyresources,theSouthCaucasusbecameamajorarenaofregionalandinternationalcompetition.

ThePersistenceofRussianInterest

TheendoftheUSSRdidnotmeanthelossofRussianinterestintheSouthCaucasusanditspoliticaldevelopment.Theregion’sproximitytotheRussianFederation’ssouthernprovinces,includingtheNorthCaucasus,alongwiththeoverlappingofsomeoftheregion’speopleswiththoseoftheRussianFederation,madethemofsignificantandenduringimportanceforRussia’sownsecurity.ThecontinuedsignificanceoftheregionforRussia’ssecurityalsomeantthatRussiawould endeavor to prevent the establishment of actively anti-Russian governments in thesestates,whiletryingtoconsolidateitsownpositionandinfluence.

Similarly, the USSR’s demise did not mean the end of Russia’s desire to remain animportant international player. In particular, Russia saw the former Soviet space as a specialarena for its activism. Therefore, as early as the early 1990s, Russiawas keen to reassert itsinfluence in the former Soviet republics. For this purpose, it initiated several cooperativeventuresintheeconomicandsecurityfields,suchasthoseaimedatcreatingEurasianintegrativestructures like theCommonwealthof IndependentStates (CIS), theCollectiveSecurityTreatyOrganization(CSTO),andtheEurasianEconomicUnion(EAEU.)

Russia’spoliciestowardstheSouthCaucasushavehadmixedandunevenresultsfortheevolutionofregionalstates.InGeorgia’scase,Russia’sapproachhastendedtoexacerbatethecountry’sproblemsofseparatism.Russia’ssupportofAbkhazianandSouthOssetianseparatistshasledtothedefactoseparationofthesepartsofGeorgiafromthestate.Russia’streatmentoftheNagorno-Karabakhconflicthasalsobeenambiguous.Byandlarge,Russiahaspreferredthefrozen status quo,whichhas enabled it to retain control overArmeniawhile also exerting aconsiderable degree of influence over Azerbaijan, despite periods of cool relationswith thatstate.Sofar,theconflicthasprovenlucrativeforRussia’sarmsindustry;ithasbeensellingarmstobothAzerbaijanandArmenia.Whentherehasbeenaseriousriskoftheconflictturninghot,however, Russia has tried to stop it, as it did in 2016, and thus has helped prevent regionaltensionsfromgettingoutofhand.

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The remittances sent back home by immigrant workers in Russia has helped SouthCaucasus economies. However, this connection has made these states vulnerable to thefluctuation in Russia’s economic conditions, which often has resulted in shortfalls in thoseremittances.

AmericanandEuropeanPolicies

Westernstates,especiallytheUnitedStates,becameinfluentialactorsinthepost-Sovietspace.BecauseofitsgeopoliticalproximitytoRussiaandtheMiddleEastandtheconsiderableenergyresources located inAzerbaijan, theSouthCaucasusbecameofspecial interest to theWest.Therefore,theWesttriedtobringSouthCaucasianstatesintoWesterninstitutionsandreducetheirdependenceonRussia.Theywerealsokeentoseepost-SovietstatesadoptWesternvalues, formsofgovernment,andeconomicpractices. Inshort,althoughRussiaofferedthesestatesaEurasianintegrationproject,theWestpresentedthemwithaEuro-Atlanticalternativein the formofcooperativearrangements suchas thePartnership forPeacewithinNATOandassociationagreementswiththeEU.

ThesecompetingvisionsofthefutureoftheregionwereeventuallycaughtupintheRussian-Westernrivalrythatresumedinthelate1990s.TheWest’sdesiretokeepthesestatesoutsideRussian-sponsoredstructuresovershadowedtheirinterestinseeingtheimplementationofeconomicandpoliticalreforms.Inparticular,theWesttendedtoignorewhenthesestatesengagedinnon-democraticbehaviorandviolationsofhumanrights.Forexample,becauseofitseconomicintereststhereandthecountry’spro-WesternpositionsintheregionandtheMiddleEast,theWestignoredAzerbaijan’sdrifttowardsauthoritarianism.ThisstancemightalsohavecontributedtotheWest’sneglectofArmenia,makingitmoredifficultforthatcountrytoescapeexcessiveRussianinfluence.

TheMiddleEastprioritiesofWesterncountries,especially theUnitedStates,affectedtheirapproachtotheSouthCaucasianstates.TheU.S.policyofcontainingIran,togetherwithitsdetermination to sharply limit its interactionwith these, aswell as other, post-Soviet states,foreclosedcertainoptionsfortheSouthCaucasiancountries.BydiscouragingcooperationwithIran, the United States deprived energy-poor Armenia and Georgia of alternative sources ofenergy,perpetuatedtheirrelianceonRussia,andthusironicallyservedRussianinterests.Evenafter theBaku-Tbilisi-Ceyhanpipelinebegan tobringAzerbaijan’soil toGeorgia, thatcountryneededenergyimportsfromRussia,especiallynaturalgas.ThisenergydependencyincreasedMoscow’sleverageoverTbilisi.

Moreover, the United States often rewarded any anti-Iran positions these countriesadopted. Certainly, it tended to be more indulgent regarding such issues as human rightsviolations.Therefore,someregionalstates,notablyAzerbaijan,usedtheiranti-IranposturetowinapassfromtheWestonhumanrightsviolationsandothernon-democraticbehavior.Thesametrade-offapplied foradoptingpro-Israelipositions.Azerbaijanskillfullyused this factor.However,Georgia’spro-Westandpro-Israelposturedidnotmeanhostile relationswith Iran,

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althoughbilateral ties remained limited. These factors,plusGeorgia’s troubled relationswithRussia,contributedtoitsconsiderationformembershipinNATO.

Although Armenia was not particularly harshly treated because of democraticdeficiencies,itwasneverthelesskeptoutofmanyregionaleconomicandenergyschemes,partlybecauseofitscloserelationswithRussiaandrelativelygoodtieswithIran.However,RussiahasalsobeenreluctanttoallowArmenia’srelationswithIrantogobeyondalimitedpointsothatMoscowcouldretainitsexcessiveinfluenceinthatcountry.Forexample,Russiahasnotfavoredtheexpansionofenergyandtransportation linksbetweenIranandArmenia.ThelackofsuchconnectionshasnegativelyimpactedArmenia’sdevelopmentprospects.

Ironically, the West’s objectives regarding Russia and Iran often conflicted with oneanother. For instance, discouraging cooperationwith Iran on energy only helped perpetuatesomeofthesestates’dependenceonRussiafortheirenergysupplies.However,asnotedattheconferencebyaformermemberofamajoroilcompany,decisionsonpipelinesandotherenergy-relatedprojectswerebasedonconsiderationsofsecurityandeconomicviabilityandnotpoliticalcalculations.Therefore,heargued,ifsomecountrieswerenotincludedinenergyandpipelineprojects,itwasbecauseoftheseconsiderations,especiallythesecurityofprospectivepipelineroutes.However,othershavedisputedthisviewandmaintainthatdecisionsonpipelinesweremostly influencedbypolitical considerations suchas isolatingandcontaining Iran,promotingTurkey,andreducingRussianinfluence.

Europe’s interests in the region have also been largely limited to the energy sector.AlthoughEuropeancountriesandtheEUhavepromotedideasofdemocraticreformandofferedassistanceforcountriestoadopt freereconomicandmoredemocraticpoliticalsystems,theyhaveneverbecomedeeplyengagedintheregion.TheEuropeanUnionhashadtodealwiththeEastEuropeancountries’problemsandpreparethewayfortheireventualmembershipintheUnion.IthasalsofacedchallengesemanatingfromitssouthernbordersintheMediterraneanandbeyond.

NeithertheUnitedStatesnorEuropehavebeenparticularlyactiveinconflictresolution,althoughboththeUnitedStatesandFrancearemembersoftheOSCE’sMinskGroupsetuptobringaboutasolutiontotheNagorno-Karabakhdispute.TheconferencepaperdealingwiththeEU’s policy towards the region identified one reason for this failure: the lack of a united EUposition on the conflict. As co-chair of theMinskGroup, France essentially followed its ownparochialinterests,respondedtosomedomesticpressures,andhencehadabasicallyambivalentandopportunisticapproachtowardstheconflict.Forinstance,indealingwithArmenia,Francetendedtofavortheprincipleofnationalself-determinationasthebasisfortheresolutionoftheKarabakh issue, a posture that appeared to favor Karabakh’s separation from Azerbaijan.Meanwhile, in dealingwith Azerbaijan it leaned towards the principle of territorial integrity,whichmeantthatitfavoredthereturnoftheregiontoAzerbaijan.Theseconflictingmessageswerenothelpfulinencouragingthetwostatestobemoreaccommodating,whichcouldhavemadeacompromisesolutionpossible.

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WorseningRussian-WesternRelations

TheRussian-WesternrapprochementbeganafterGorbachev’sreformsandreacheditspeakduringthefirstfewyearsofBorisYeltsin’spresidencyfollowingtheUSSR’sdisintegration.This rapprochement lastedonlya short time,andby themid-1990sstrainsappeared in theirrelations. By the end of the 1990s, strategic competitionwas resumed, and in the followingdecadeandbeyondrelationsfollowedanessentiallydownwardtrend.

AmajorcauseofRusso-Westerntensions,especiallyregardingtheSouthCaucasus,hasbeenRussia’sperceptionthattheWestdoesnotadequatelyappreciateitssecurityconcernsintheregion.Consequently,theWestandespeciallytheUnitedStatestendtoviewRussianeffortstoprotectitsownsecurityandeventerritorialintegrityasproofofitsneo-imperialambitionsintheSouthCaucasusand,indeed,intherestofthepost-Sovietspace.Overtime,Russiahasalsogrown suspicious of the real purpose of Western promotion of democratic values, freeeconomies,andrespectforhumanrightsintheformerSovietrepublics.ItbelievesthatthroughsuchpoliciestheWesthastriedtoputinpoweranti-RussiangovernmentsinSouthCaucasianandotherpost-Sovietrepublics.Thus, ithasviewedthedevelopmentofpopularmovements,suchas various so-called color revolutions inplaces likeUkraine,Kyrgyzstan, andGeorgia, assponsoredbytheWesttoweakenRussia’spositionintheseregions.

Ingeneral,RussiabelievesthattheWestwantstoexcludeitfromtheSouthCaucasus.CertainWesternstatementshavereinforcedthisbeliefsuchasNATO’spledgein2008,repeatedin2016, tomakeGeorgiaaneventualmemberof theAlliance.Russia interpreted this talkasindicationthatNATOintendstosurroundRussianotonlyinitsEuropeanneighborhoodbutalsoonitssouthernborders.

ThisRussianperceptionledMoscowtosupporttheSouthOssetianseparatistsmilitarily,which led to an eight-day war with Georgia in 2008. Russia believed that the West hadencouragedGeorgiatoattackSouthOssetiainordertoembroilitinaproxywarwiththeWest.MuchtoGeorgia’sdismay,WesternpowersdidnotrespondmilitarilytoRussia’suseofforce.Nevertheless, Russo-Western relations severely deteriorated in the following years. TheyreachedaparticularlylowpointwithRussia’sannexationofCrimeain2014anditsinvolvementthatyearinthecivilwarthateruptedinUkrainefollowingthefallofthegovernmentofPresidentViktorYanukovych,becauseofpopularprotestsknownastheEuro-Maidanrevolution.

TheWestsawRussia’sactioninGeorgiaasproofofitsneo-imperialpoliciesinthepost-Sovietspace.Bycontrast,asnotedbytheexpertfromRussiaatthemeeting,Moscowsawitsactions in Georgia as defensive. He added that theWest did not believe that Russia wouldinterveneinGeorgiaandthereforewasshockedwhenithappened.ButtheWestshouldhavebeenneither surprisednor shocked.Russiahad seen itsposition inGeorgiaweakenandwasdeterminedtostopanyfurthererosionofitsinfluence.Moreover,RussiawasconcernedaboutthespilloverofethnicconflictsinGeorgiatoitsownethnicminoritiesintheNorthCaucasus.

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Regardlessoftheparties’realmotivations,theRussian-GeorgianwardidnothelpeitherRussia or the West and least of all Georgia. Russia’s relations with Georgia remain tense,complicatedfurtherbytheproblemoftwounviabledefactoindependentstateswithinGeorgia.Meanwhile,becauseitdidnotrespondtoRussianactions,theWest’scredibilitydeclinedasareliableallyandprotector.ManyGeorgiansresentthefailureoftheWesttostanduptoRussia.TheybelievethatthisWesternpassivitycontributedtolaterRussianactionsinUkraine.However,hadtheWestreactedmilitarilytoRussia,theriskofabroaderconflictwouldhavebeenveryreal.

Ingeneral,Russo-Westerntensionshavenothelpedthecauseofpeaceandstabilityinthe region. The lack of cooperation by the two sides has only complicated the resolution ofconflicts.Thesetensionshavealsoledtothepolarizationofregionalpoliticsalongthelinesofpro-Westernandpro-Russianstates.Thishasmadeitmoredifficultforregionalstatestopursuea balanced foreign policy that allows for reasonably good relations with both parties. Forexample,Armeniahasfounditmoredifficulttofollowsuchastrategyof“complementarity”inits foreignpolicy.Meanwhile,Georgia’spro-Westernstandhasmade itvulnerable toRussianpressures.Sofar,onlyAzerbaijanseemstohavebeenabletonavigatereasonablywellbetweenthesetwopoles.Finally,thepolarizationoftheregionalongpro-Westernandpro-Russianstateshasunderminedprospectsforregionaleconomicandpoliticalcooperation.

RegionalActors

The geopolitical dynamics of the South Caucasus have also been influenced by thepolicies,ambitions,andrivalriesofkeyneighboringandMiddleEasternactors.

Turkey:ItsPoliciesandTheirImpact

FollowingtheindependenceoftheSouthCaucasianstates,Turkeybecameaninfluentialactorintheregion.ItshistoricallinkstotheSouthCaucasus,itslinguistictieswithAzerbaijanisamongothers,plusitsreligiousaffinitieswiththeregion’sSunniMuslimscontributedtoTurkishregionalactivismandinfluence.However,themostimportantfactorbehindTurkey’ssuccesswasthatithadthefullsupportoftheWestforitsregionalrole.TheWestpromotedTurkeyasamodeltobeemulatedbypost-Sovietrepublicsandasitsmainintermediaryforinteractionwiththem.

However,someaspectsofTurkey’sambitionsintheSouthCaucasusandmorebroadlyinthepost-Sovietstatescomplicatedregionalpoliticsandmaderesolutionofoutstandingconflicts,especially that over Nagorno-Karabakh, more difficult. Turkey’s ambition to simultaneouslybecomethecenterofanewversionofEurasiaandtheleaderofaglobalTurkiccommunity,plusitseffortstolimitanypotentialIranianinfluence,ledittoadoptahighlyone-sidedpostureontheNagorno-KarabakhconflictthatfavoredAzerbaijan.Turkeywentasfarasclosingitsborderwith Armenia. This aspect of Turkish policy intensified Armenia’s sense of isolation andexacerbated its internal polarization, making it more difficult for it to accept a compromisesolutionfortheNagorno-Karabakhdispute.Turkey’spolicyoflinkinganeventualnormalizationof relations with Armenia to the latter’s withdrawal from Azerbaijani territories added toArmenia’s sense of entrapment. It also made Turkish policy towards Armenia hostage to

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Azerbaijani manipulations, as the latter tended to sabotage efforts at Armenian-Turkishreconciliation,ashappenedin2009.ThisaspectofTurkishpolicyalsoenabledRussiatotightenitsholdonArmenia.Meanwhile,theWesteithercouldnotorwouldnotinsistthatTurkeydelinkrelationswithArmeniafromthequestionofAzerbaijaniterritoriesunderArmenia’scontrol.

Turkey’scompetitionwithIran,itspromotionofTurkicunity,andeven,tosomeextent,Pan-Turkic sentiments, contributed toAzerbaijan’s excessively Turko-centric identity-building.This posture exacerbated Azerbaijan-Iran tensions and increased Armenia’s sense of beingsurroundedbyaTurkicworldlargerthanmerelytheRepublicofAzerbaijan.InviewofArmenia’shistoricalexperiencewithTurkey, inparticularthe issueoftheArmenianGenocide,thiscloseAzerbaijan-Turkey identification has not help promote conflict resolution and regionalcooperation.

Iran

AtthetimeoftheUSSR’sdisintegrationandtheemergenceofindependentstatesintheSouthCaucasus,Iranhadbarelyemergedfromadevastatingeight-yearwarwithIraqandhadjustcompletedtheprocessoftransitiontothepost-Khomeiniera,followingAyatollahRouhollahKhomeini’sdeathinJune1989.Atthetime,Iranwasfocusedondomesticissues,especiallyitspost-warreconstructionandpoliticalconsolidation.Largelyundertheinfluenceofitspresident,AkbarHashemiRafsanjani,IranwastryingtomoderateitsforeignpolicyandevenreachouttotheWest,includingtheUnitedStates.Iran’sothermajorconcernwastokeepitsrelationswithRussiastableandavoidanybehaviorthatcoulddisturborantagonizeRussia.

Given its relatively long borders with Azerbaijan and Armenia, Iran was principallypreoccupiedwithhowtopreventdisturbancesintheSouthCaucasusfromspillingoverintoitsownterritory.Asaresult,incontrasttoitsideology-lacedandactivistpolicyintheMiddleEast,Iranadoptedalow-profile,cautious,andpragmaticpolicyofmaintainingnon-hostilerelationswithallthreerepublicsandhelpingresolvetheoutstandingconflicts.In1992,ittriedtomediatetheNagorno-Karabakhconflict,but itseffortswerescuttledbyTurkeyandtheUnitedStates,someArmenianactions,andAzerbaijan’sultra-nationalist,Pan-Turkic,andanti-Iranelements.IransubsequentlytriedtomaintainabalanceinitsrelationswithAzerbaijanandArmenia,withpossiblyapreference forArmenia, largelybecauseof theRepublicofAzerbaijan’s irredentistclaimstowardsitsprovinceofAzerbaijananditssupport—togetherwithTurkey--forseparatiststhere.

Iran’spolicytowardstheregionhasbeenfreeofanynostalgiaforthepast,eventhoughpartsoftheregion,notablytheRepublicofAzerbaijan,wereuntil1828partofIran.NorhasIranpursuedaPan-IslamistorPan-Shiaapproachtowardstheregion,despitetheexistenceoflargeShiacommunities inAzerbaijan. Itdidnot seriously try to leverage its religious linkswith theregion’sShiapopulation,notablyinShia-majorityAzerbaijan,atleastnotopenlyorextensively,despitebeingperiodicallyaccusedbyAzerbaijanofdoingso.Nevertheless,attimes,itsappealto

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theregion’sShiapopulations,coupledwithAzerbaijanigovernment’santi-Shiapositions,tendedtoexacerbatesectariantensionsthere.

Despitethispragmaticapproach,Iran’simpactonregionaldevelopmentshasbeenquitelimited,mainlybecauseoftheAmericanpolicyofcontainingIranianinfluenceinthepost-Sovietspace.IranwaskeptoutofregionalenergyschemesandwaspreventedfromestablishingotherconnectionswithSouthCaucasianstates.Yet,astrongerIranianeconomicpresenceintheregioncouldhaveactedasacounterweighttoRussia,helpeaseArmenia’sgeographic isolation,andpossibly help in conflict resolution, especially regarding Nagorno-Karabakh. Engaging Iran inregional schemes as an incentivemight have even helped its domestic and foreign policies,including its approach to Middle East problems, evolve in a more moderate direction, andpossiblyevenhelpimproveitsrelationswiththeWest.

In sum, Iran’s policy towards the region has largely been defensive, non-ideological,realistic,freeofromanticism,andpragmatic.However,becauseitwaskeptoutoftheregion,thepotentiallypositiveimpactofthisapproachwasnotfeltinregionaldevelopments.

MiddleEastActorsandPolitics:IncreasingInterconnection

Formorethantwohundredyears,RussiancontrolovertheSouthCaucasus,bothundertheTsars and the communists, isolated it fromneighboring areas, including theMiddle East.Those Middle East ties were religious, cultural, and even ethnic and linguistic. Additionally,Moscow’scontroloftheUSSR’sexternalrelationsdepriveditsconstituentrepublics, includingthose in the South Caucasus, from having an independent foreign policy and maintainingdiplomaticrepresentationsabroad.TheironlyrolewasonoccasiontohelpadvancetheUSSR’sforeignpolicygoals,forexamplewhenSovietMuslimsservedasambassadorstoMuslimstates.In otherwords, theUSSR’s constituent republicswere largely shielded from the influence ofintellectual and political developments in their neighborhood and other parts of the world,includingtheMiddleEast.Bytheearly1980s,however,theSoviet-AfghanWarhaddentedtheprotectivewallsurroundingtheserepublics.

ThecollapseoftheUSSRendedtheSouthCaucasianstates’isolationfromregionalandglobaldevelopmentsandinfluences.Theybecameindependentstatesandautonomousactorsattheregionalandinternationallevelsandthusofinteresttootherregionalandinternationalplayers.BecauseoftheirproximitytotheMiddleEast,plustheirreligiouslinkswithMiddleEaststates,theSouthCaucasusbecameafactorinthepoliticalcalculationsofneighboringregions.Inturn,thecountriesoftheSouthCaucasussoughttouseMiddleEasternstatestobalancelargerandmorepowerfulneighborsandadvancetheirownnational,regional,andinternationalgoals.

Forexample,IsraelhasusedAzerbaijanaspartofitsstrategyofpressuringIran,aswellasasourceofenergysupplyandexportmarketforitsmilitaryhardware.Meanwhile,AzerbaijanhasusedIran’sdifficultrelationswiththeWestandIsraeltoenhanceitsownimportancebothregionallyandinternationally.Georgia,too,establishedgoodrelationswithIsrael,partlytogaininfluence intheUnitedStates.Arabstates,notablySaudiArabia,alsobecameengagedinthe

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regionastheytriedtoenlistAzerbaijanintheircompetitionwithIran.Bycontrast,caughtinawarwithAzerbaijan and facing a Turkey that has sided completelywithAzerbaijan,ArmeniatendedtofavorbetterrelationswithIran.

Theregion,especiallyitsMuslim-inhabitedareas,alsobecamevulnerabletopoliticalandreligiousideologiesemanatingfromtheMiddleEast.ThemostpotentiallydestructiveoftheseinfluenceshasbeenSalafi-inspiredIslamicmilitancy,particularlytheso-calledIslamicState(IS).However,suchtendenciesexistedasearlyastheearly1990sandplayedasignificantroleintheChechenwarsandotherconflictsandterroristactsintheNorthCaucasus.Theiractivitiesevenextended as far as Russia’s major cities. By the late 1990s, pockets of Salafi militancy haddeveloped in the South Caucasus, partly because of the Chechen war. Initially, states likeAzerbaijansawthesegroupsasacounterweighttotheirShiapopulationandtoIran’sinfluence,and therefore did not interferewith their activities. As the influence of such ideologies andgroups has increased, Salafi-inspired extremismnowposes serious threats to the security ofregionalstates,especially thosewithMuslimpopulations. Inthe lastdecade, theMiddleEastregion’srisingsectariantensionsbetweentheSunnis,especiallytheSalafis,andtheShiashaveexacerbatedsimilartensionsintheSouthCaucasus,notablyinAzerbaijan.VolunteersfromSouthCaucasus’SunniandShiapopulationshavefoughtintheSyriancivilwaronoppositesides.

Equallysignificantintermsofimpactontheevolutionofregionalpoliticaldynamicshasbeen the tendency of some key international actors, such as the United States and someEuropeanstates,toseetheregionthroughtheprismofMiddleEastpoliticsandtoshapetheirpoliciestowardstheregionaccordingly.Forexample,theWest’sdesiretolimitIran’spresencein the region led it topromoteanexcessivelyprominentTurkish role in theSouthCaucasus.Althoughwelcomedbysomeregionalstates,thisapproachincreasedtheanxietiesofothers.Forthesamereason,theWesthasbyandlargefavoredAzerbaijan,despiteperiodicdisagreementsoverhumanrights.

GrowinglinkageswiththeMiddleEasthavetendedtocomplicatetheregion’spolitics.Byexacerbating sectarian tensions, such linkages have had a divisive influence on domesticconditionsintheSouthCaucasusstatesandcauseddilemmasfortheirforeignpolicies.

Outlook:TheDomesticContext

Theshort-termoutlookforthedirectionofSouthCaucasianstates’economicandpoliticalevolutionismixed.Thechancesofasignificanteconomicuptickarenotverystrong,atleastintheshortterm.ReducedoilpricesandRussia’seconomicdifficultieshavedimmedprospectsforeconomicgrowth.Moreover,allthreestatesfacesignificantstructuralproblemsandchallengesthathaveprovendifficult tocorrect.Evenaresource-richstatesuchasAzerbaijanwill faceadifficult transition to a post-oil-boom period. However, if oil prices recover, its economicprospectsmightbrighten,althoughitslong-termchallengeswillremainsignificant.

Without noticeable economic improvement, the risk of social unrest will remain.Politically, those states that have even a rudimentary system of leadership change through

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electionsarelikelytofarebetter.However,excessivepolarizationofpublicopinioncouldmakethepeacefulandlegitimatetransitionofpowermoredifficult.Electionresultsmightbecontestedand lead to confrontation. In places like Azerbaijan,where power is highly personalized andconcentratedinonefamily,transitionmightprovedifficultandthusincreasetheriskoffurtherdrifttowardsauthoritarianism.

RegionalandInternationalContext

TheevolutionofregionalandinternationalpoliticswillalsoimpactthepoliticaldynamicsoftheSouthCaucasus.Inthiscontext,thefollowingissuesareespeciallyimportant.

TheFateoftheIranNuclearDeal

WhathappenstotheIrannucleardealandUS-IranrelationsmoregenerallywillhaveaconsiderableimpactontheevolutionoftheSouthCaucasus’politicaldynamics.AUSdecisiontoendthedeal,coupledwithareturntoexcessivelyhostileandconfrontationalrelationsbetweenAmericaandIran,wouldcomplicateregionalstates’policychoicesandadverselyaffectprospectsforbroaderregionalcooperationandconflictresolution.

ShouldtheDonaldTrumpadministrationdecideonapolicyofincreasedpressureonIran,possibly even resurrecting the so-called military option vis-á-vis that country, the securityconditionsoftheSouthCaucasianstateswoulddeteriorate.AUS-Iranconfrontationwouldhavenegativeconsequencesfortheregionalstates,withsomeevenpressuredintohelpingtheUnitedStatesbyallowingtheirterritoriestobeusedforlaunchingmilitarystrikesagainstIran.Insuchaneventuality,theywouldbecomevulnerabletothespilloverofaUS-Iranconfrontation.SuchasituationwouldbeverydamagingnotonlytoArmenia,reinforcingitsphysicalisolation,butalsotoAzerbaijan,whichsharesmanyreligiousandethnictieswithIran.ThelattercouldfacethedifficultchoiceofeitherrefusingtohelptheUnitedStatesandthusincurringitswrath,ortakingpartinmilitaryactionagainstIran,whichcouldharmIranianAzerbaijanisandalsoposetheriskof internal turmoil or retaliation by Iran or both. However, if the JCPOA survives and Iran’srelationwiththeUSbecomeslesshostileovertime,manyopportunitiesforregionalcooperationcould emerge. A possible example could be transport and energy cooperation among Iran,Armenia,andGeorgia,whichcouldextendtoAzerbaijan,providedtheKarabakhissueisresolved.Amoreconstructiveengagementby Iran intheregionwoulddiminishthepolarizationoftheSouth Caucasus by competing coalitions and create a better environment formore inclusivecooperationschemes.

Turkey’sDomesticEvolution,andItsShiftingForeignPolicy

The evolution of Turkey’s domestic and foreign policies will also have significantramificationsfortheSouthCaucasianstates.Inthepost-Sovietera,theWestheldupTurkeyasamodel for thepost-Soviet states to emulate, fully supporting Turkey’s regional role and itsfunctionasaconduitthroughwhichWesternvaluescouldbetransmittedtothesestates.

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Duringtheearlyyearsofthesestates’independence,thisapproachmadesense,althoughTurkey’sleadershipclaimscontributedtoadegreeofregionalpolarizationandtheformationofrival informal groupings. Turkey was a secular country intent on modernization and withaspirations to join the European Union. However, by themid-1990s, significant cultural andpoliticalchangeshadalteredtheculturalandpoliticallandscapeinTurkey.ThemostimportantofthesechangeswasthegrowinginfluenceofIslamandtheriseofanewpoliticalpartywithroots in Turkey’s earlier Islamist political parties, namely the Justice and Development Party(AdalatvaKalkinmaPartisi-AKP.)

Initially, theparty,which gainedpower in 2003, portrayed itself as amodernist partycommitted to secularism, democracy, and Turkey’s eventual integration in Europe. Itimplementedcertainjudicialandpoliticalreforms,includingtheseverecurtailingofthepowerof the military. The EU in particular welcomed these reforms as indispensable for Turkey’seventualadmissiontotheUnion.

However,under theguiseofdemocratic reforms, includinggreater freedomofchoiceregarding female attire, the AKP-led governments gradually diluted the country’s Kemalistsecular values and culture andhelped to raise Islam’s profile and role in Turkish society andpolitics. Islam’s rising political influence also affected Turkey’s foreign policy outlook. Ankarabegantoshowmore interest inMiddleEastdevelopmentsandmorewillingnessto intervenedirectlyinMiddleEastconflictsanddisputes,suchasthoseinSyria,Iraq,andEgypt.

More seriously, AKP’s leaders, especially the country’s one-time prime minister andcurrent president, Recep Tayyip Erdoğan, began to display authoritarian tendencies. ThisbehaviorledtodivisionswithintheAKPaswellasbetweentheleadershipandgroupssuchasthe Islamist movement headed by Fethullah Gülen, which had greatly contributed to AKP’spolitical success. These growing divisions and disputes culminated in the failedmilitary coupd’étatofJuly2016.

Sincethefailedcoupattempt,Turkishpoliticshavemovedinanevenmoreauthoritariandirection.PresidentErdoğanseemsintentonestablishinghisdictatorialpowersinthecountrythrough widespread purges, curtailment of civil liberties and eventually changes in theconstitution.Turkey’srelationswithitsKurdishminorityhavealsosuffered.Althoughbytheendof2016conflictwithKurdshadnotreachedthelevelsofthe1980s,prospectsforreconciliationdidnotseembright.AworseningofTurkey’sdomesticconditionsandtheresumptionofarmedconflictwith theKurdswouldbedetrimental to SouthCaucasian statesbydestabilizing theirneighborhood.

Meanwhile,Turkey’spost-coupmeasureshaveoutragedEuropeancountriesandbroughtintoseriousquestionTurkey’sconsiderationforEUmembershipletaloneitseventualadmission.ThisEuropeanattitudehasledPresidentErdoğantodeclarethatTurkeyhasotherchoicesanddoesnotneedtheEU.EvenTurkey’srelationswiththeUnitedStateshavesuffered.

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Turkey’sdrifttowardsauthoritarianismanddistancefromEuropecouldharmthefutureevolution of regional countries, especially since Turkey has close relations with two of theregional states,AzerbaijanandGeorgia. Inparticular, it could strengthen thealreadyexistinganti-democraticandauthoritarianleadershipandpatternsofbehaviorofAzerbaijanwhichtendstoemulatedTurkey.

Should Turkey distance itself from theWest and consider a Eurasian alternative thegeopoliticaldynamicsoftheregionwouldchangedramatically.Inthiscontext,thefuturestateofRussian-Turkishrelationswouldbeofgreatsignificance.TenseRussian-Turkishrelationswouldcomplicatetheregionalstates’choices,forcingthemtochoosebetweenthetwokeyplayers.Itwouldalsomakeregionalcooperationmoreproblematicandwouldnothelpthecauseofconflictresolution.

AcloserrelationshipbetweenRussiaandTurkey,whichbytheendof2016didnotseemoutofthequestion,wouldalsoaffectregionalalignments.Forinstance,Turkish-Georgiantiescouldlosesomeoftheirwarmth,anditcouldforceGeorgiatomakeitsowndealwithRussia.CloserTurkish-RussianrelationswouldalsoreduceIran’sregionalprofileevenfurther.ItcouldevenleadtoasortofRussian-Turkishcondominiumovertheregion.However,thisalternativeisunlikelytomaterialize.TurkeywouldnotlikelyforgoallthebenefitsofitspartnershipwiththeWest and put all its eggs in the Russian basket. Also, Russia and Turkey still have manydisagreementsregardingissuesintheMiddleEast,notablyovertheSyrianCivilWar.ThebestalternativefromtheperspectiveofregionalstateswouldbeaTurkeythatremainspartoftheWest,hasnon-hostilerelationswithRussia,andismorewillingtoshareinfluenceintheregionwithotherplayers.

WesternPoliciesandtheFutureofRussian-WesternRelations

ThepoliciesthatWesternpowers,notably,theUnitedStatesandtheEuropeanUnion,adoptvis-á-vistheregionwillsignificantlyaffectthefuturedynamicsoftheSouthCaucasus.EventheirpoliciestowardssuchMiddleEastplayerssuchasIranwillbeconsequentialfortheregion.

Likemanyotheraspectsofitsforeignpolicy,thedirectionofAmerica’spolicytowardstheSouthCaucasusunderPresidentDonaldTrump,whoassumedpoweronJanuary20,2017,isnotyetclear.AmoreintrovertedAmericafocusedondomesticissueswouldlikelypaylessattentiontotheregion.ConferenceparticipantsnotedthattheSouthCaucasuswillnotbeaprimefocusofAmericanforeignpolicyandcertainlywillnotreceivethe levelofattentionthat itenjoyedduringthepresidencyofGeorgeW.Bush(2001-2009).However,shouldtheUnitedStatesdecideonamorehostileapproachtowardsIran,itmightbeforcedtopaymoreattentiontothesestatesaspartofitsIranstrategy.Suchanapproachwouldrevivesomeoftheolddilemmasthatthesestatesfacedbefore.

AlackofUSattention,orafocusasaby-productofIranstrategy,alsoimpliesthatAmericawouldnotbeveryactiveinconflictresolutionattempts,especiallyintheabsenceofanysuddenflare-ups.

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The character ofUS-Russian relationswill also affect the geopolitical dynamics of theregion.LesstenseRussian-Americanrelationswouldenlargetheregionalstates’choices.ItcouldalsohelpinconflictresolutionbybringingcombinedRussian-Americaninfluencetobearupontheconflictingparties.

The European Union,meanwhile, is unlikely to pursue an activist policy in the SouthCaucasusinthecomingyears.ConferenceparticipantsnotedthattheEUhasdecidedonamorepragmaticandrealist,ratherthanidealistic,approachtowardstheregion.Therefore,itwillavoidmegaprojects andwill focus insteadonmore long-termprojects aimed at capacity building,especiallyinthefieldsofgovernanceandcivilsocietydevelopment.Similarly,theEUwillhaveamoredifferentiatedapproachtowardstheregionalstates.Thus,itwouldworkforclosertieswithGeorgia,whichismoreinterestedintheEuropeanoption.However,aswasnotedatthemeeting,it is not clear how long Georgia can continue on the reform path and pursue its Europeanaspirationssinceitdoesn’tnowfitintotheEuropeanconceptionofthecontinent’sgeography,culture,andidentity.Also,becauseof itsoverall lowprofile,theEUisunlikelytobecometooactiveinconflictresolutionefforts.

RussianPolicy

Russiawilllikelycontinueitspolicyofretainingandenhancingitsinfluenceintheregionand trying to integrate it within its Eurasian structures. However, it won’t likely succeed inenticingAzerbaijanandGeorgiatojoinitsEurasianEconomicUnion,at leastnot intheshort-term.GeorgiahasoptedfortheEuropeanoption,althoughmembershipintheEUisnotinsight,atleastintheforeseeablefuture,andAzerbaijanwouldnotabandonitsWesterntiesoritsabilitytopursueanindependentforeignpolicy.

Underthesecircumstances,ArmeniawillremainRussia’smainpartnerintheregion,evenas Russia tries to keep on good terms with Azerbaijan. However, there are indications thatArmenia is growing disenchanted with Russia. Russia’s arms sales to Azerbaijan, its lack ofsupportforArmeniaintheKarabakhdispute,anditsrathercavaliertreatmentofthecountryisbeginningtomakeArmeniansquestionthevalueoftheirpartnershipwithRussia.However,aslongasthecountrydoesnothaveaviableWesternoptionanditsrelationswithTurkeyremainstrained,Armeniawon’tlikelyendangeritsRussianties,whichgiveitsomesenseofsecurity.

Meanwhile,RussiawillcontinuetoretainleversofinfluenceintheSouthCaucasusbymanipulatingregionalconflictsandbysponsoringbreakawayentitiessuchasSouthOssetiaandAbkhazia.

TurkishPolicy

TheevolutionofTurkey’spolicytowardstheregionwilldependtoagreatextentonitsdomestic political developments and on the direction of its broader foreign policy. Certainaspects of Turkey’s basic approach towards the region are unlikely to change. For instance,

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TurkeywilldowhateverisnecessarytokeepitstieswithAzerbaijanstrong.ThisisimportantforTurkeyfromanenergysecurityperspectiveandalsointhecontextofitsrivalrywithIran.

Turkey will also retain its ties with Georgia, but without antagonizing Russia. AbreakthroughinTurkish-Armenianrelationsisunlikelyintheshortterm,astheissueofKarabakhand the legacy of the Armenian Genocide remain significant barriers. However, if Turkeycontinuestopursueapolicyofmendingriftswithneighborsandotherplayersinthepost-coupperiod,asithasdonewithRussiaandIsrael,itmightresumeinformalcontactsandeventalkswithArmenia.

Themost consequentialofTurkish foreignpolicymoveswouldbe theevolutionof itsrelationswithRussiaandtheWest.TurkeywantstorestoreeconomicrelationswithRussiaandevenincreasetheirvolume.TheSyrianepisodehasalsoshownTurkeythatahostilerelationshipwithRussiaisnotinitsinterests.However,therearelimitstohowfarTurkeycangoindevelopingbettertieswithRussiawithoutriskingitsWesternties.Afterall,thefuturecharacterofRussian-Westernrelationsisnotyetclear.DespiteexpectationsofbetterUS-RussiantiesunderPresidentTrump,thepossibilityoftheirremainingtenseorevenworseningalsoexists.ShouldRussian-American relations remain cool or even worsen, Turkey’s policy choices will become moredifficult.

UnlessPresidentRecepErdoğanstopsthecountry’smovetowardsauthoritarianismandis more receptive to Western, especially European, concerns such as those regardingimmigration,Turkey-Westrelationscouldgrowcolder.However,Turkey’seconomicwell-being,itssecurity,andevenitsregionalprestigestillverymuchdependsonitsWesternties,particularlythroughNATO.Russia cannever supplant theEU inTurkey’seconomic life. WithoutNATO’ssecurityshield,TurkeywouldbecomevulnerabletoRussianpressures.Therefore,ErdoğanwillnotlikelygotoofarinantagonizingTurkey’sWesternallies.Nevertheless,relations,especiallyregarding the SouthCaucasus, are unlikely to return towhere theywere in the 1990swhenTurkeywastheWest’sprimarypartner.

Iran

Iran is likely to remain a minor player in the South Caucasus, largely because of itsantagonistic relations with the United States and Russia’s unwillingness to forge a realpartnershipwith it, despiteperiodic rapprochement. Iran’s limited financial resourcesand itsownenormousneedswillpreventitfromplayinganactiveroleintheregion.However,betterRussian-IranianrelationscouldhelpraiseIran’sregionalprofile.Since2015,Iran-Russiarelationshavegrowncloserand the twosideshavebeen talkingof reviving the so-calledNorth-Southcorridor. There have also been trilateral meetings among Russian, Azerbaijani, and Iranianleadersfocusedonsuchprojectsaslinkingthethreecountriesbyrail.SimilarprojectscouldbeundertakenwithArmenia.However,RussiaseesIranasacompetitor,especiallyinthefieldofenergy,whichmight limit thescopeof their regionalcooperation.Whatcould fundamentallytransformthegeopoliticalmapoftheregionwouldbeatripartiteententeamongRussia,Turkey,

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and Iran. Although not totally impossible, such an entente is quite unlikely for a variety ofhistorical, cultural, and other reasons, especially as long as Turkey’s President Recep TayyipErdoğan,whoharborsanti-Iranfeelings,isinpower.

MiddleEastActors

AworseningofIranian-AmericanrelationscouldleadsomeMiddleEastactors,suchasSaudiArabia,someotherGulfstates,andIsraeltotryagaintoenlistAzerbaijanintheiranti-Iranplans.ThiswillbedetrimentaltoAzerbaijan,asitwillsharpenitssectarianproblemsanddamageits recently improving relationswith Iran. The continuation and/or exacerbation of sectarianconflictsintheMiddleEastwillalsonegativelyaffectAzerbaijan,perhapsevenforcingittomakedifficult choices. Similarly, the spread of extremist Islamist ideas and groups to the NorthCaucasus and even parts of Georgia, amajority Christian country with a substantialMuslimminority,would be detrimental to regional security. Itwould undermine chances of regionalcooperationandcouldcreatenewsourcesofconflictalongsectarianlines.

TheFutureoftheSouthCaucasianSub-System

Recentdevelopments, includingchangesintheEU’sviewoftheregionanditspoliciestowardsit,plusthegrowingimpactofMiddleEast-relateddevelopments,couldprecipitatethefragmentation of the South Caucasus as a cohesive sub-system of the international politicalsystem.

ThemeetingdiscussedhowtheEUnolongerhasaholisticapproachtowardstheregion.Ratheritisincreasinglyseeingindividualstatesashavingdistinctcharacteristicsanddynamics.Thus,theEUviewsGeorgiamoreaspartofagroupofcountriesincludingMoldovaandUkraine.Meanwhile,ArmeniaisfirmlywithintheRussian-sponsoredEurasianstructures,asmostlikelywillbethedefactorepublicsofSouthOssetiaandAbkhazia,aseitherconstituentpartsoftheRussianFederationorasindependentrepublicsunderRussianprotection.Azerbaijan,foritspart,couldbesuckedintotheMiddleEast-PersianGulfsub-system–partlybecauseofdevelopmentsintheMiddleEastandtheevolutionofAmericanpolicytowardsIran.However,itisstilltooearlytodeterminehowandwhenthesesystemicchangeswouldoccur.

However,itisalreadyclearthatSouthCaucasianstatesshouldnotbelumpedtogetherandtreatedasthoughtheywereasingleentity.Theyeachhavetheirownspecificcharacteristics,dynamics,needs,goals,andobjectivesthatdeterminetheirbehavior.Furthermore,theyarenotpassivespectatorsofregionalandinternationalpoliticalgames.Onthecontrary,theyareactiveplayers, especially on the regional scene, and their actions and policies affect the overalldynamicsofregionalpoliticsand,attimes,evenhaveinternationalrepercussions.

TheWest’sPolicyOptions

In view of the above observations,what policies should theWest adopt towards theregion?

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Firstandforemost,EuropeandAmericashouldnotignoretheSouthCaucasusbecausetheyarepreoccupiedwithotherpartsoftheworld,includingtheMiddleEast.Theyhavealreadyinvestedconsiderablefinancial,political,andintellectualresourcesintheregionandshouldnotallowthosetogotowaste.

Second,theWestshouldbemoreactiveinresolvingoutstandingconflictsinviewoftheirhighlynegativeconsequencesontheeconomicandpoliticalevolutionofstatesintheregion.

Third,ifpossible,theWestshouldnotlookattheregionmainlythroughtheMiddleEastprism. It should specifically not try to use the South Caucasian states to correctMiddle Eastimbalances.Thisstrategyhasnotworkedinthepasttwenty-fiveyearsandisunlikelytoworkinthe future. Excessive linkage betweenMiddle Eastern and South Caucasian politics has onlycomplicatedtheregion’sgeopoliticalmapandcreatedsecuritydilemmasforregionalstates.Ithas also prevented regional cooperative measures, which could have contributed to SouthCaucasianstates’economicdevelopment.

Fourth,theWestshouldrecognizetheinevitabilityofcontinuedRussianinterestintheregion.Thus,whilecounteringRussianexpansionism,theWestshouldbereceptivetoRussia’ssecurity concerns, and if possible,workoutmechanisms for reconcilingmutual interests andpreoccupations. It should also findways of cooperatingwith Russia in resolving outstandingconflicts.

Fifth, theWest should undertakemore sustained efforts to help Turkey andArmeniaresolvetheirdifferences,eventhoughthismighttakealongtime.ItshouldalsohelpArmeniaeconomically and otherwise so that the country can becomemore autonomous and free ofexcessiveRussianinfluence.

Lastly, if possible, theWest should differentiate between Iran’s policies in the SouthCaucasusanditsbehaviorintheMiddleEast.InsteadofpunishingIranforitsMiddleEastpoliciesbykeepingitcompletelyoutoftheSouthCaucasus,itshouldtrytouseitsengagementintheSouthCaucasusasaninducementtotransformitspoliciesintheMiddleEast.Iran’sisolationinthelasttwenty-fiveyearshasnotbeenhelpfultothecauseofregionalcooperationorconflictresolution.IthasonlytendedtostrengthenRussianpresenceandinfluenceoverArmeniaandevenAzerbaijan.Thus,allowingIranaroleinregionalcooperativeprojectsandconflictresolutioneffortscouldbalanceRussianinfluenceandofferregionalstatesmoreoptions.ItcouldalsohavetheaddedbenefitofpotentiallyhelpingintheimprovementofWestern-Iranianrelations.

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ListofPresenters

RichardGiragosianCenterforRegionalStudies,Yerevan

EldarMamedovAdvisortoSocialDemocrats,ForeignAffairsCommittee,EuropeanParliament,Brussels

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GhiaNodiaIliaStateUniversity,Tbilisi,FormerMinisterofEducation

StephenLarrabeeRANDCorporation,Arlington,Va.

SergeyMarkedonovInstituteforPoliticalandMilitaryAnalysis,Moscow

NonaMikhelidzeItalianInstituteofInternationalAffairs,Rome

BulentArasSabanciUniversity,Istanbul

MohammadHomayounvashFloridaInternationalUniversity,Miami,Fl.