Azerbaijan: the world’s next great geopolitical hot-spot

Jacob Stokes | Europe & Eurasia Fellow


I urge everyone to place the small South Caucus nation of Azerbaijan on their “ones-to-watch” list. Largely ignored by mainstream media, Azerbaijan possesses all the factors necessary to become the worlds next hot spot for great power competition. Situated at the crossroads of West Asia and Eastern Europe, Azerbaijan’s abundance of energy resources makes it a prime target for the interests of states spanning the entirety of the Eurasian continent, from Russia to Israel, from China to central Europe.


I also recommend having a map handy before reading further. The geopolitics of Azerbaijan is based on borders, naval ports, airbases and oil pipelines. A layout of the land will help us better understand the niche strategic interests of Azerbaijan’s near and distant admirers.


Azerbaijan is an ex-Soviet Republic bordering Iran to the south, Russia to the north and Armenia to the east. The capital, Baku, sits on the edge of the resource-rich Caspian Sea. The country has a population of less than 10 million and a GDP of US$47 billion (AU$72 billion), ranking 88th in the world. But despite its minnow status, poor human rights record and dictatorial government, Azerbaijan is being courted by several regional and global powers, all of whom see the country as increasingly vital to their strategic interests.


Azerbaijan is key to China’s Belt and Road Initiative. Currently, there is no way for China to transport goods into Europe without going through either Russia or Iran. A trade route through the Caspian Sea connecting China’s central Asian pipelines to the Port of Baku would be Beijing’s gateway into Turkey and onwards into Southern Europe. In April 2019, companies from China and Azerbaijan signed several agreements worth over US$800 million (AU$1.2 billion), advancing Beijing’s influence in the region.


The European Union sees Azerbaijan as the solution to its energy problems too. The completion of the Nord Stream 2 pipeline later this year raises fears Europe is becoming too dependent on Russian gas. In 2017, almost 40 per cent of the EU’s total gas imports were supplied by Russia. The EU has invested US$40 billion (AU$61 billion) on a ‘Southern Gas Corridor,’ a set of pipelines carrying gas from Azerbaijan’s wells in the Caspian Sea, through Turkey and into Southern Europe. Construction has been completed in Greece and Albania, with Italy in its final phases.


However, the EU hopes to expand the pipeline to deliver gas to Bulgaria, Serbia and Romania. Doing so requires Azerbaijan to double its production in the Caspian Sea, something which is unlikely following the economic impact of COVID-19.


As one can imagine, Russia is none too happy seeing an ex-Soviet Republic preference China and the West in energy cooperation. From 1823 to the collapse of the USSR in 1991, Azerbaijan was under strict Russian control. However, since independence, Azerbaijan has refused to join any Russian-led initiatives including the Eurasian Economic Union and the Collective Security Treaty Organisation, despite ongoing pressure from Moscow. This is likely due to Moscow’s role as an instigator in the ongoing Nagorno-Karabakh conflict.


The ethnic conflict in Nagorno-Karabakh on the Azerbaijan-Armenia border has been a source of tension in the region since the collapse of the Soviet Union. Between 1988 and 1994, ethnic Armenians in Nagorno-Karabakh backed by the Armenian government entangled themselves in a conflict with Azerbaijani forces in the mountains of Karabakh in a push for independence. A ceasefire in 1994 saw Nagorno-Karabakh declare itself an independent state and it has since tended to function as a de facto arm of the Armenian government–though the region is internationally recognised as part of Azerbaijan.


Of greatest concern to Azerbaijan are the parallels between Nagorno-Karabakh and Crimea. Like Crimea, Nagorno-Karabakh is an unresolved ethnic conflict in the post-Soviet space and provides an opportunity for Putin to consolidate Russian power and influence. Russia’s annexation of Crimea in 2014 indicates Putin has little regard for the costs of his actions in pursuing Russia’s strategic interests. Alternatively, Putin may seek to indirectly reignite the Nagorno-Karabakh conflict, deterring China and the West from greater investment in an unstable Azerbaijan. With this in mind, Azerbaijani leaders have made attempts to improve diplomatic relations with Moscow, aware of the risks that come from drifting too far from Russia.


Azerbaijan is not immune to the tensions of the Middle East either. Azerbaijan’s fractured relationship with Iran has seen a burgeoning Israel-Azerbaijan relationship develop. Close to 13 million ethnic Azeri’s live in Iran, most of them on the Azerbaijan-Iran border. Calls for greater autonomy by the Azeri’s have often been brutally suppressed by Iranian forces. Hence, in a case of ‘the enemy of my enemy is my friend,’ Israel has become a major player in Azerbaijan’s foreign policy.


In 2012, American intelligence officials concluded that Azerbaijan had provided Israel access to its airbases in the south. Although Azerbaijan denied the allegations, it could not deny the US$1.6 billion (AU$2.5 billion) in purchases of Israeli arms. For Iran, the likelihood of an Israeli presence on its northern border is a huge security risk. Not only will Israeli fighter-jets avoid having to take the long journey back to Israel to refuel during airstrikes, but Azerbaijan itself could become a base for Israeli missiles.


For now, Azerbaijan is of limited concern to regional stability. But with so many economic and strategic interests at play, will this remain the case? Russia’s annexation of Crimea indicates Putin is willing to take drastic steps to keep his adversaries out of Russia’s backyard. Similarly, Iran is not opposed to aggression on grounds of strategic interest, indicated by Tehran’s possible involvement in last years attack on Saudi oil facilities. Any aggression in Azerbaijan would wreak havoc with Chinese, Israeli and European interests.


For Azerbaijan, its overreliance on its energy sector makes it heavily dependent on the price of oil and with COVID-19 hitting the south Caucasus hard, the strategic interests of great powers are at stake. As countries emerge from their COVID coma, states may adopt a more aggressive approach to their interests in the region – aggression which could push little-old Azerbaijan to centre-stage in the world of geopolitics.


Jacob Stokes is the Europe & Eurasia Fellow for Young Australians in International Affairs.

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