Cracks in Russia's influence in South Caucasus offer opening to Middle East

TBILISI — The South Caucasus has for the past two centuries been considered part of Russia’s exclusive sphere of influence. Even the end of the Soviet Union failed to radically change the dynamic. Although Turkey and Iran were actively involved with the newly established republics of Armenia, Azerbaijan, and Georgia in the 1990s and early 2000s, Russia remained the dominant force, exerting control both economically and in terms of security.

Things have changed in the past several years, with evident cracks in Russia’s influence in the South Caucasus emerging. While Moscow's influence is not collapsing, it is in "managed decline" amid an uncomfortable repositioning in the last two years. One reason is Russia’s invasion of Ukraine, which consumed almost all of Moscow’s military resources from the South Caucasus and compromised its prestige as a great power. 

Turkey and Iran expand Influence

Another is Turkey and Iran’s growing power; the two countries are among the first to have benefited from the emerging power vacuum. Ankara has been Azerbaijan’s traditional ally, and the Turkish military was instrumental in helping Baku regain control in 2020 over the Nagorno-Karabakh enclave and the surrounding territories that were lost in the early 1990s, after the first war with Armenia. Since 2020, Turkey has expanded its alliance with Azerbaijan in military and economic areas. For instance, Ankara has pushed for the opening of a new trade and transit corridor across Armenia’s southernmost territory, which would allow Turkey to connect via Nakhchivan with Azerbaijan proper.

This has unnerved Iran, which has looked at Armenia not only as a way to balance Azerbaijan but also as the only physical link to the Caucasus not under Turkic influence. The fear of a potentially emerging, uninterrupted corridor running from Turkey to the Caspian Sea pushed Tehran to build closer ties with Armenia and claim that, if necessary, the Islamic Republic will intervene. Iran is still constrained in its economic ability to project power northward compared with what Turkey and Russia can do. Yet the level of intensity of Iran’s involvement in the region is unprecedented. 

Geography matters

The corollary of Russia’s relative decline and the growing interconnectedness of the South Caucasus with the Middle East could also be a return to the historical norm. Indeed, seen from a millennia-long perspective, Russian domination could be regarded as an aberration — a rather short period in the otherwise long tradition of Middle East powers dominating the South Caucasus. Indeed, Achaemenids, Romans (Byzantines), Sasanians, Ottomans, Safavids along with other Iranian dynasties for millennia played a central role in the history of the region. And they were Middle East powers. Each tried to dominate the South Caucasus, a vital trade route connection and an extensive base for raising armies, as was aptly done by Iranian and Ottoman rulers. The region also served as a buffer zone against the barbarous Eurasian steppe zone and later the growing Russian power.

Geography also matters. Though often seen as linked to Russia, the South Caucasus is in fact a geopolitical continuation of the wider Middle East. Russia is beyond the powerful Caucasus mountains, which continue to play a constraining role in regional geopolitics. The Middle East, on the contrary, is far more easily accessible.

Moreover, increasingly the growing links between the Middle East and the South Caucasus now go beyond Turkey’s and Iran’s rising influence. There is an intensifying trend of cooperation between the Gulf Cooperation Council with Georgia and especially Azerbaijan. The latter approved the Joint Action Plan 2024-2028, with the GCC envisaging the development of political, energy and commercial links. The Joint Intergovernmental Commission is actively working between Azerbaijan and the United Arab Emirates, which facilitated the purchase of a stake in the Absheron gas field in the Caspian Sea by the Abu Dhabi National Oil Company. Meanwhile, the Saudi ACWA made massive investments in the renewable energy of the South Caucasus state and pledged to add a further $5 billion in the coming years.

With Georgia, the GCC has likewise intensified investment and trade ties. In early 2024, AD Ports Group — the operator of industrial towns and free zones in Abu Dhabi — purchased a controlling share (60%) in a major dry port in Tbilisi. Moreover, in January, Georgia and Saudi Arabia set up the Intergovernmental Coordination Council, aiming to advance investment and political cooperation. 

A new trade route for Eurasia

The logic here is clear. The GCC, one of the biggest global investors, sees the growing potential in the South Caucasus where the Eurasia-wide trade route, dubbed the Middle Corridor, is being developed. Envisaged as a corridor from the Black Sea to Central Asia, it is set to attract up to 20% of the containerized overland shipment between the EU and China.

The South Caucasus countries, on the other hand, look toward the Middle East countries as potential balancers in their struggle to limit Russia’s influence. A multivector foreign policy is an increasingly attractive tool to diversify their foreign policy. The larger the number of actors involved in the South Caucasus, the easier it is for the local countries to maneuver.

Other Middle East actors are also growing increasingly interested in the South Caucasus. Israel is one of them, enjoying close security and political ties with Azerbaijan. Spearheaded with Israeli military high-tech, Azerbaijani forces were quick to retake the lost territories in 2020 and again in 2023. More importantly, the Israeli factor worries Iran and bears heavily on Tehran’s relations with Azerbaijan, reflecting growing geopolitical links between the Middle East and the South Caucasus. There is also an energy component, with most of South Caucasus' energy potential now tied to the Middle East. Turkey is a major benefactor, but there is also Israel, which is being supplied from Azerbaijan via Turkish Mediterranean ports.

Then there is growing connectivity. Pipelines from Azerbaijan to Turkey or the Middle Corridor are just part of shifting infrastructure in the South Caucasus, which has traditionally been directed toward Russia. The International North-South Trade Corridor that runs from Russia to Iran goes mostly via Azerbaijan. Iran is also actively engaging in discussion on another corridor to the Black Sea via Armenia and Georgia, while Turkey — as mentioned — pushes forward with its own plans to connect to Azerbaijan. In this race for new trade corridors, the tendency highlights the growing ties between the South Caucasus and the Middle East.

These expanding links lead to a peculiar development when geopolitical instability in the Middle East impacts the South Caucasus. Whether it is the war in Gaza or spiraling tensions between Iran and Israel, South Caucasus countries find themselves in a precarious position, as they are expected to take sides or position themselves as neutral. Tensions between Armenia and Azerbaijan or Azerbaijan and Iran equally invite Middle East powers to seek more active political involvement.

Thus, the age of exclusive Russian dominance in the South Caucasus has come to an end, opening the way for other actors. In a highly congested geopolitical area, Middle East powers now play an increasingly active role — a clear sign that the old order has ended and the new one is dawning, characterized by a multivector foreign policy.