The South Caucasus: The Limits of a Resurgent Russia

The South Caucasus: The Limits of a Resurgent Russia

For the last several years, Russia has significantly increased and consolidated its power and influence in the South Caucasus. Although this process was most obvious in 2008, in the wake of the Russian-Georgian war, subsequent moves by Moscow have reinforced this trend. Surveying the South Caucasus region at the fifth anniversary of the August 2008 war between Georgia and Russia, it is apparent that the regional landscape has shifted significantly. The direct impact of the Georgia-Russia war was profound, with lasting repercussions on both the strategic trajectories and domestic politics of each of the region's three countries.

For Georgia, the immediate aftermath of the war was devastating, as it resulted in the Russian recognition of the independence of the breakaway regions of Abkhazia and South Ossetia, set back Georgian aspirations to join the NATO alliance, and triggered a dramatic escalation of tension between Moscow and Tbilisi that persists to this day. For Armenia, the war only seemed to confirm the country's security as a Russian ally, while also demonstrating the limits of Western backing and support. And for Azerbaijan, the 2008 war only confirmed its suspicion of Russian interests in the region, while also contributing to a realization of the vulnerability of its statehood amid Russia's projection of power.

On a broader level, therefore, this shift in Russia's policy toward EU engagement with former Soviet states stems from a much larger and more assertive Russian stance, driven by an attempt to consolidate Russian power and position within the former Soviet space and to deter Western "interlopers" in what Moscow views as its natural "sphere of influence," or the "near abroad," referred to as blizhneye zarubezhye (ближнее зарубежье), which has been elevated and expanded into a wider "post-Soviet space." Moreover, this trend of a boldly assertive Russia has only deepened in recent years, and is now evident in the larger context of Moscow's policies toward the U.S. and over Syria.

Putin's Power Posture

Another demonstration of this trend has been Russia's heavy-handed use of coercive measures targeting some of its neighbours. But the utility of such a combative and assertive posture for Russian President Vladimir Putin, both politically and personally, is also important. As seen in Putin's own personal image as a firm and decisive leader, the projection of a strong Russia endows a degree of power-based legitimacy for Putin, a significant asset given his own decline in personal popularity. In this context, Putin has exercised a much more combative and assertive "power posture," allowing him to display strong leadership as the defender of Russian interests.

But over the past several years, there has been a pronounced reliance on a more sophisticated use of Russian "soft power" in the region. For each of the three countries of the South Caucasus, this upsurge in the use of Russian soft power has been marked by a diverging set of tactics and tools, which have combined to further consolidate Russia's position in the region.

This new policy of "least resistance" centres on a three-prong approach. First, for Armenia, Russia's traditional ally and partner, the emphasis was on consolidating its dominant position as military/security provider, while ensuring its entrenched hold over the Armenian economy.

Second, regarding Azerbaijan, the Russian focus was more nuanced, aimed to enhance Azerbaijan's military aspirations while also undermining the Baku government by exploiting underlying tension and instability. And third, Georgia was increasingly targeted by a strategy designed to isolate and marginalize the country, limiting Georgia's options and cementing the Georgian loss of the breakaway areas of Abkhazia and South Ossetia. And finally, for the region as a whole, this new Russian strategy reflected a more sophisticated and seductive use of soft power, aimed at longer-term dividends instead of short-term gains.

There have been three main factors making Russia's use of soft power in the South Caucasus a success. First, the legacy of seven decades of Soviet rule has not been without its positive moments for many in Armenia, Azerbaijan and Georgia. Whether it is rooted in an Armenian perception of Russian patronage as protection from Turkey, or Azerbaijan's early experience of state-building, and even Georgia's strange embrace of Stalin as a native son, there is a lingering nostalgia for the Soviet period. And this has only been exacerbated in the wake of market reforms that diminished the social safety nets, reduced pensions and sparked unemployment in each of these economies.  

A second factor explaining the effectiveness of Russian soft power is related to the inherent advantages of Russian language, culture and an overall shared heritage and history. But unlike the Soviet nostalgia, the simple fact is that Russia is close and familiar, in contrast to the West, which is both alien and physically distant.

Moreover, the Russian advantage in this regard is also due to Western "benign neglect" over the last few years. Unlike the 1990s, when Western policies toward the region were dominated by the development and export of Caspian energy resources, there is no longer any clear or coherent Western policy in the region. Rather, the Western, and especially the US approach to the region and its three divergent countries has devolved into a subset of broader US or EU relations with Russia, and as a secondary component of Western policies toward Turkey and Iran.

This has created a virtual strategic vacuum for Moscow, especially since the West has largely recognized the projection of greater Russian power and presence in the region after the 2008 war with Georgia. At the same time, the South Caucasus has also become a trade-off, sacrificed to Russia in return for airspace access through the Caspian region to reach Western bases in Central Asia and Afghanistan. Thus, Russia has only won from a rather one-sided Western desire to transform the region from an arena for competition to an area for professed cooperation, often at the expense of the sovereignty and independence of the South Caucasus countries.

And the third factor making Russia soft power successful, at least in the short-term, has been driven by an active and assertive diplomatic agenda, most notable in taking the lead to mediate the Nagornyy Karabakh conflict. But as Moscow has now overtaken others in mediating between Armenia and Azerbaijan, there is increasing concern over Russia's deeper design, as many see this new diplomatic offensive as a troubling trend based on a reassertion of Russian power and influence in the region.

Despite a lack of success in mediation, Russia does see some advantage and expects some benefit from its diplomatic engagement. The value stems from several factors. First, by assuming the lead role as mediator of the Karabakh conflict, the West basically accepts Russian power and influence in the South Caucasus. And by ceding the diplomatic initiative to Moscow, such Western passivity offers Russia a degree of respect as a regional power, a Russian objective that is far too often underestimated or misunderstood.

Georgia Charts a New Course

In the wake of Russia's recognition of the independence of Abkhazia and South Ossetia, and the Russian military build-up in both regions, the virtual deadlock between Moscow and Tbilisi continued for several years after the ceasefire of August 2008. Yet even though Russia continued to label Georgian President Saakashvili a "war criminal" and refused to deal with his government, Tbilisi did seek to ease tension with Moscow by agreeing to support Russia's application for membership in the World Trade Organization (WTO). But the real promise for a breakthrough only came once the opposition "Georgian Dream" coalition came to power in the October 2012 parliamentary election, ending the nine-year dominance of Saakashvili's ruling United National Movement (UNM).

Lingering Tension

By late May 2013, tension between Georgia and Russia remained high. In an incident seemingly aimed at provoking a Georgian reaction, Russian troops installed several hundred meters of barbed-wire fencing beyond the administrative boundary of Georgia's breakaway region of South Ossetia, deeper inside Georgian territory. In response, local residents complained that the new fence effectively denied them use of lands which they had previously used for grazing. More importantly, the move was also a direct violation of the terms of the 12 August 2008 ceasefire agreement and, in that context, represented as much a challenge to the European Union (EU) as a further blow to Georgian sovereignty.

The "Eurasian Union"

Another, more recent example of Russia's re-assertion of its power and influence was evident in September 2013, in Armenia's sudden decision to abandon work on an "Association Agreement" with the European Union (EU) in favour of committing to join the Russian-led "Customs Union". Against a backdrop of Russian power and coercion, the Eurasian Union concept represents an attempt at integrating the states within Russia's near abroad. The move is a natural expansion of existing Russian-led projects of reintegration, based on the Commonwealth of Independent States (CIS), but further building on both the Russian-dominated Customs Union. Yet in many ways, the concept of the Eurasian Union is both incoherent and undefined, marked more by its lack of practical benefits and absence of substance. And even the potential economic incentive for states to enter the Eurasian Union is fairly weak, with membership offering rather meagre and marginal economic benefits, while gains would mostly accrue to Russia. While Russian attempts to institutionalize the "reintegration" of the near abroad are nothing new, the timing reveals a belated, but serious Russian response to the recent trend of greater EU engagement along Russia's periphery.

Russia's Use of Energy as Leverage

Throughout much of the 1990s, Russia's policy was driven by a need to protect its waning power over the newly independent former Soviet states. The infant states comprising Russia's so-called "near abroad" were especially vulnerable to their shared Soviet legacy of a reliance on Russia for trade, transport and energy. These structural vulnerabilities were only heightened by the daunting challenges of a transition marked by severe economic decline and state sovereignty threatened by a series of ethnic conflicts and border disputes.

The preservation of Russian power in this early period relied on a combination of outright intimidation and intervention, against a backdrop of new conflicts and ethnic tension. Yet Russia's attempt to protect its vastly degraded influence and power were limited in turn by its own decline and conflict in Chechnya. By 1999, however, there was a shift in Russian policy, with the ascension of Vladimir Putin to the Russian premiership and the presidency soon after. The shift was marked by a graduation from the basic protection of Russian power to the projection of Russian power and influence. Under Putin, a new, much more effective tactic was developed, based on the use of energy resources as a tool for consolidating and projecting power. This strategic use of energy leverage emerged as the new standard for Russia, in effect replacing the more traditional reliance on "hard power" politics with a new exercise in "soft power."

Despite its development as a tool for power projection, this Russian use of energy for extorting as much as exporting is not new. The Russian energy position was clearly a major element in Soviet policy and was based on the Soviet system's structure of core-periphery relations as a classic model for dependence. Even in the waning days of the Soviet Union, was a weapon of first resort in attempting to contain the rumblings of the early independence movements in the Baltic States. And even during the Yeltsin period, Moscow routinely utilized energy to pressure both the Baltics and Ukraine. For today's Russia, such a strategy is seen as an updated concept, based not on the traditional view of energy security defined by the reliability and diversification of energy suppliers, but as a concept of energy security actually defined by energy as security, or more specifically, energy as an element of security policy.

This Russian inclusion of energy as a pillar of its security policy consists of three core components. First, it has been able to project Russian power and influence within the so-called "near abroad" of former Soviet states along Russia's periphery. The success of this tactical adaptation is most clearly demonstrated by Russia's steady accumulation of control and even acquisition of much of the energy sectors in the South Caucasus and Central Asia. Second, Russia's use of energy also served as a tool for strengthening state power. This was more than simply filling state coffers with greater energy revenue, however, as it more broadly empowered Russian status as both a regional and even Asian power. And thirdly, the Russian energy card provided an attractive avenue to restore the country's international significance and regain its reduced geopolitical relevance.

There is also a broader strategic dimension to Russia's tactical use of energy leverage, however. The Russian strategic perspective views energy as an integral part of an overall projection of Russia's power and dominant position. It is energy that most clearly marks an eastward Russian shift, away from Europe and toward Asia. And as an aspiring Asian power, Russia sees an opportunity for greater engagement, as is evidenced by its participation in the six-party talks over North Korea, and the recent warming of relations with Japan. In fact, Moscow sees no real threat or challenge from Japan (other than an unresolved territorial dispute). But it views China more as a rival power, and despite its rather reluctant partnership with Beijing, Moscow is consumed by a fear of Chinese expansion and penetration into the vulnerable Russian Far East.

Although the use of energy leverage has been one of the most visible outward signs of Russia's strategic vision, there is a second stage to this strategy. Specifically, the imposition of sharp price increases for Russian natural gas imports to the highly dependent former Soviet states was driven not simply by a desire to receive more revenue or to adjust subsidized prices to global market levels. The longer term goal was to foster greater dependence by forcing the neighbouring consumer states to accumulate greater arrears for Russian gas imports. It was envisioned that, as these importing states had neither the money to pay for the higher-priced gas nor the time to secure alternative supplies, Russia would be able to either acquire a dominant share in these countries' energy sectors outright or accumulate control over their pipelines.

There is also a Russian imperative to maximize its energy position in the face of inherent weakness. In this way, Russia's effective use of energy as leverage is still largely limited by fundamental weakness over the longer term. For example, despite the tactical gains from the use of energy as leverage, Russia's energy sector remains beset by four serious shortcomings: it has no unutilized capacity; its oil is relatively expensive to produce; it has limited pipeline capacity; and it is still far from being a global energy player. Moreover, this weakness is compounded by a second longer-term weakness, namely the fact that the more Russia utilizes the energy tactic for short-term leverage and pressure, the more it damages its reputation and standing as a reliable energy ally, thereby undercutting its broader strategy to regain its global role and relevance.

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