The EU or Russia? Interests and ties in the South Caucasus

Frequently described as a post-Soviet neighbourhood in Eastern Europe, it is very clear that the South Caucasus is a region of its own. Georgia, Azerbaijan and Armenia are characterised by a variety of foreign policy interests and economic ties, each relevant to the countries’ own political and economic situation. Maybe due to the fact that the EU has no borders with South Caucasus, the EU-South Caucasus political and economic relationship has been frequently overlooked in favour of a perspective focusing on Russia’s backyard. Paola Lo Bue Oddo gives an introduction to the big lines of foreign policy in the region’s countries.

Georgia, with an Euro-Atlantic orientation

At the height of the Eastern Partnership programme, Georgia seems to be the most Western-oriented country in the South Caucasus, both with regard to politicians and the civil society.

Considering Georgia’s complicated relationship with Russia (which reached a low point in the Russian-Georgian war of 2008), Georgia had been progressively sliding towards the EU ever since the Rose Revolution. Headed by the first female president in any former Soviet country (excluding the Baltics), Georgia’s high-level politicians have been highlighting the possibility of Georgia becoming a full member of the EU as well as joining NATO in the next years.

From an economic point of view, Georgia signed an Association Agreement with the EU in 2014, which was a clear breakthrough in the EU-Georgian relationship. Moreover, in 2016 the EU implemented a visa-free travel regime for Georgia, quickly followed by Russian President Vladimir Putin’s proposal to allow Georgians to visit Russia visa-free in December 2016. Even though Russia insists that Georgia’s future should be with its fellow Orthodox Christian neighbour, with whom it shares traditional values, Georgia’s youth seems to be ever so supportive of further ties with the West.

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Azerbaijan, keeping a careful equilibrium

Careful to keep a foreign policy equilibrium with both the EU and Russia, Azerbaijan tends to interact with the two powers in an equally cool manner.

Sensitive to external interference, Azerbaijan is annoyed both by Russia’s “support” of Armenia in the still ongoing Nagorno-Karabakh conflict and by constant EU criticisms on human rights abuses in Azerbaijan. The same goes for the economy, where Azerbaijan rejected both Russia’s invitation to join the Eurasian Economic Union in 2014 and the Association Agreement with the EU in 2016.

Not yet a member of the World Trade Organisation, Azerbaijan’s economic system is overshadowed by oligopolies and inequalities but it is blessed with mineral riches and oil reserves which generate high revenues for the country. Most foreign policy analysts pinpoint the EU’s economic interests in the country as the main reason for which the EU does not have much influence in human rights issues in Azerbaijan.

However, alternative energy sources could even allow the EU to focus on Azerbaijan from a more cultural perspective rather than a purely economic one.

With the EU being Azerbaijan’s largest trade and investment partner, more substantial economic ties could ensue and it is quite clear that stronger relationships with the EU will focus on the economic and not on political aspects. Still, President Putin declared a strategic partnership between Azerbaijan and Russia in 2016, cementing it at a trilateral summit with Iran in 2017 whilst focusing on trade and transport links.

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Armenia, relying on Russia for security reasons

Considered by many foreign policy analysts to be a gateway to the Middle East and Iran, Armenia is a geopolitical point of interest for both Russia and the EU. With difficult relationships with both Turkey (who still denies the 1915 Armenian genocide) and Azerbaijan (because of the Nagorno-Karabakh conflict), Armenia has been relying on Russia for security reasons, even housing a large Russian base near the Turkish border. Considering current internal issues in the EU, it is unlikely that the EU will focus on creating an actual army anytime soon, even though the army could have provided countries in Eastern Europe with a further sense of security.

As for economics, Armenia joined the Eurasian Economic Union (EEU) whilst pulling out of a planned association agreement with the EU in 2013. It is therefore quite interesting that, based on a series of surveys by EU Neighbours East, 54 % of Armenians trust the EU and only 47% the EEU. Indeed, in March 2017 Armenia completed talks with the EU on a new agreement, presenting the possibility of stronger economic relationships with the EU in the future.

Still, treaty links with Russia remain firm, and it is Russia which is Armenia’s biggest trade and investment partner, with Armenia importing 69% of its oil from Russia and 83 % of its gas at a heavily discounted price, based on UN data. Moreover, Russia is the largest country of migration for Armenians, a fundamental cultural tie which allows many Armenian workers in Russia to send money back home, contributing 8% to Armenia’s GDP according to the Bank of Russia.

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Final considerations

The internal and geopolitical situation of South Caucasian states will most likely influence the EU’s and Russia’s evaluations of how to proceed in the region. Georgia is edging away from Russian political influence and is relatively open towards a stronger relationship with the EU, Azerbaijan is quite taken by domestic and foreign policy related issues, and Armenia seems to have been quite merrily entrenched in the Russian sphere in the past years.

Even though it’s true that a country having good relationships with Russia does not prevent that country from also having good relationships with the EU, it’s quite obvious that we live in a multipolar world, currently characterised by tensions between the EU and Russia. Russia wouldn’t exactly be delighted with EU influence expanding eastwards, as they clearly demonstrated with regard to Ukraine. As such, to a certain extent, the countries in the South Caucasus will continue to need to tread on a wire in their foreign policies.

The author wishes to thank the Young Ambassadors from EU Neighbours East for providing background information for this article.

Photo : Vahramashen Church, completed in 1026, next to the Amberd fortress in Armenia. Crédit : CC0

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