The Caucasian Factor in Eurasian Integration
No. 1 2014 January/March
Sergey M. Markedonov

PhD in History
MGIMO University, Moscow, Russia
Institute for International Studies
Leading Research Fellow;
Journal of International Analytics


ORCID ID: 0000-0003-2298-9684

When Two Allies Have Problems Finding a Third One

Eurasian integration is one of Russia’s key foreign policy priorities at present, viewed as an instrument to bolster its influence in the international arena. As President Vladimir Putin said, “We propose a model of a powerful, supranational union, capable of becoming one of the poles of the modern world and playing an effective role in linking Europe to the thriving Asia-Pacific region.”

Prospects for a major reconfiguration of the post-Soviet space emerged after the Customs Union agreement became effective in July 2010. It was followed by three-and-half-years efforts by Russia and its closest partners Belarus and Kazakhstan to institutionalize the Eurasian integration project, which opened the possibility of other former Soviet republics joining the core “union of three.”

In the recent months, the problems and prospects for Eurasian integration have been largely discussed against the backdrop of unrest in Ukraine. Kyiv backed out of the initialed Association Agreement with the European Union on the eve of the EU and Eastern Partnership members’ summit in Vilnius, provoking a major domestic political crisis. However, there were other causes behind it not necessarily related to international problems. The crisis again highlighted the standoff between Russia and the West, with the former viewing the post-Soviet space as a region of its special and privileged interests and the latter aiming to promote its “geopolitical and energy pluralism” there, naturally at the expense of minimizing Russia’s leading and sometimes exclusive role.


Discussions about possibilities and constraints of the Eurasian integration project cannot be limited to Ukrainian events no matter how significant they look. In 2013, developments in Russian-Armenian relations showed that the South Caucasus (Transcaucasia) had no less importance in reconfiguring the post-Soviet space. Whereas possible ethno-political conflicts and Ukraine’s hypothetical breakup are just topics for discussion, the Caucasus even now can be viewed as the most dangerous and unpredictable hotbed in the former Soviet Union. The Caucasus accounts for six of eight armed conflicts, and none of them can be considered settled. Furthermore, there are different interpretations of what the settlement of an ethno-political conflict is. For Russia, the recognition of the independence of Abkhazia and South Ossetia is a way out of the conflict, but Georgia sees this solution as occupation. For Armenia, the self-determination of the Armenian community in Nagorno-Karabakh is the only way to resolve the standoff with Azerbaijan, which, for its part, assumes that the only opportunity is to reintegrate the breakaway area.

Three of the four existing de-facto states are located in the region. It was the Caucasus that created the first precedent of recognition of former autonomous areas as independent states. Although the process of their international legitimization has slowed down, even vehement opponents of official recognition of Abkhazia and South Ossetia acknowledge their significance for settling conflicts and for the stabilization (or de-stabilization) of the Caucasus. This is evidenced in participation of Abkhazia’s and South Ossetia’s representatives in Geneva security talks launched in 2008, as part of the accords between the Russian and French presidents that ended the Georgian-Russian “five-day war.”

It is only in this part of the former USSR that neighboring states have no diplomatic relations with each other. These states are Armenia and Azerbaijan, Russia and Georgia, and Armenia and Turkey. Armenia’s borders with Turkey and Azerbaijan are closed. The inauguration in 2015 of the regional Baku-Tbilisi-Kars railway, currently under construction, will increase Armenia’s isolation. At the same time, Nakhichevan remains Azerbaijan’s exclave, with which it only has an air link.

The South Caucasus has a particular significance for Russia, which itself is a “Caucasian” country – the aggregate territory of its North Caucasian republics is larger than that of all independent states in Transcaucasia. The ethno-political conflicts in Abkhazia, South Ossetia and Nagorno-Karabakh, as well as the spread of radical Islamist views, have direct bearing on Russia’s internal security. The problem of ethnic enclaves and exclaves, a most sensitive issue in relations between Moscow and Baku, impacts the situation in Russia’s North Caucasus.


The implementation of any project, be it European or Eurasian, acquires special peculiarities in the Caucasian conditions, simply because any change in the post-Soviet configuration affects the status-quo existing in this most turbulent post-Soviet region.

In 2013, three Caucasian countries selected three different options concerning the choice between Europe and Eurasia. Whereas Georgia initialed the Association Agreement with the European Union and confirmed the course towards normalizing relations with Russia despite the successive replacements of government and president, Armenia stated that it would join the Customs Union. Georgia’s two former autonomous regions, Abkhazia and South Ossetia, whose independence was recognized by Moscow, reiterated the Eurasian vector as their key priority.

Azerbaijan opted for the “middle road.” It stated that it was not prepared for associated relations with the European Union; yet Azerbaijani representatives attended the summit in Vilnius and signed an agreement with the EU on simplified visa regime. Azerbaijan showed no interest in joining the Customs Union, but last year halted the negative trends that had been developing between Moscow and Baku (largely because of the failure to come to terms on the Russia-operated Gabala radar station). Vladimir Putin’s visit to Azerbaijan became a symbol of improved bilateral relations on a broad range of issues, including military cooperation.

Consequently, of three Caucasian states (aside from de-facto independent states), only Armenia has chosen Eurasian integration. However, this decision can hardly be viewed as a clear and consistent choice by the country’s leadership. In April 2012, Armenian Prime Minister Tigran Sargsyan said his country’s joining the Customs Union was “economically inexpedient,” and that it was looking for “forms of cooperation without the Customs Union.”

In the summer of 2013 (shortly before Armenian President Serzh Sargsyan’s visit to Moscow where the idea of Armenia’s joining the Customs Union was announced) Armenian Deputy Foreign Minister Shavarsh Kocharyan stated that “there is no precedent of a country becoming a member of a customs union without having common borders with other member-states.” Nevertheless, Yerevan has chosen Eurasian integration, refusing to initial an Association Agreement with the EU last November. Moscow’s role in Armenia’s decision cannot be doubted. Putin’s visit to Gyumri and Yerevan in December 2013 came as a symbolic demonstration of Russia’s potential on the Armenian vector.

This raises a number of important questions. Why does Moscow prefer Yerevan to Baku in developing its Eurasian integration projects? Armenia and Russia have no common border, whereas Azerbaijan borders on Russia on the strategically important Dagestani stretch, and both Russia and Azerbaijan have the Caspian Sea to share. Does Armenia’s joining the Customs Union herald the beginning of a “triumphant advance” of the Eurasian integration project across Transcaucasia? Will its decision spell the death of the European, or, broadly speaking, Western vector of the Armenian foreign policy? Are Tbilisi and Baku going to follow suit?

To what extent can Armenia’s joining the Customs Union impact the evolution of the Nagorno-Karabakh conflict? Will it be correct to say that Azerbaijan will be at a disadvantage because of strengthened Russian-Armenian cooperation (which will be inevitable, if Armenia continues to participate in other Eurasian projects)? Does Sargsyan’s September decision mean that not only Armenia has made its choice, but also Russia and Azerbaijan? Do we now have to assume that Baku has no other alternatives but rapprochement with the EU and NATO? How will the growing Russian-Armenian cooperation impact the normalization of Russian-Georgian relations?

To answer these questions (and to better understand the position of the Caucasian states), it is necessary to overview (at least in brief) the specifics of Russia’s present-day integration agenda, otherwise the motivation of the key regional players will not be clear. In the West, many politicians and experts view the Customs Union and the proposed Eurasian Union as attempts to restore the USSR or Russia’s imperial influence. Former U.S. Secretary of State Hillary Clinton even used the term “re-Sovietization” in her comment on Russia’s policy in the post-Soviet space. “It’s going to be called Customs Union, it will be called Eurasian Union and all of that,” she said. «But let’s make no mistake about it. We know what the goal is and we are trying to figure out effective ways to slow down or prevent it.

In actual fact, such evaluation is as far from reality as can possibly be. “Re-Sovietization” requires a relevant ideology whereas the Customs Union and other Eurasian projects, though not fully focused on the economy, are intended to protect national interests, not values of some kind. In his keynote article titled “New Integration Project for Eurasia: the Future in the Making” Vladimir Putin stated clearly and unambiguously that the post-Soviet period had come to an end. The “divorce” (a term he repeatedly used to refer to the breakup of the Soviet Union) was completed. Moscow seeks to form a new agenda amid the diversification of the post-Soviet space and the emergence of new non-regional players in Eurasia, to replace former priorities such as the Commonwealth of Independent States (CIS). In place of the association built on historical memories, Russia wants to create an effective functional union (whether it will succeed or not is another matter) which would comprise those whom the Kremlin trusts and whom it regards as its allies, not casual travel companions. This can be described as a “Near CIS”, a compact framework where the parties would not have to spend much time to settle or smooth over different-vectored or conflicting interests (like, for example, those of Armenia and Azerbaijan) or to take into account “special opinions” of no easy partners, such as Ukraine, Moldova or Turkmenistan.


This largely explains why Moscow has preferred Armenia over Azerbaijan for its Customs Union partner despite having a common border only with the latter. In July 2012, Russian parliament speaker Sergei Naryshkin said that the issue of Azerbaijan’s joining the Customs Union was not on the agenda. However, this issue does not solely depend on the Kremlin’s wish. Baku is very cautious about Russia-dominated bodies such as the Customs Union, and it clearly stated its position about this organization several times. On July 16, 2013, the head of Azerbaijan’s State Customs Committee (GTK), Aidyn Aliyev, said his country was not joining the Customs Union. This position was also voiced at a session of the Customs Cooperation Council and the Global Excise Summit held at the headquarters of the World Customs Organization in Brussels.

The reason behind this skepticism is not hard to see. Today, Azerbaijan’s foreign and domestic policy priority is to restore its territorial integrity. Baku is outspoken about its readiness to resort to military force. But politics is the art of the possible, as they say, so the Azerbaijani leadership is not trying to make rhetoric and practice identical. National integrity is the objective behind all foreign policy moves by this Caspian state. Azerbaijan’s participation in the Collective Security Treaty Organization and the Shanghai Cooperation Organization or other Eurasian integration projects is not bringing it closer to the much desired objective. The CSTO is a security body and participation in it together with its geopolitical opponent is unlikely to bring tangible dividends. The SCO activity is primarily focused on Central Asia problems. As for the Customs Union, Baku is not keen to terminate its strategic contacts with the West in the energy field for the sake of potential, but not guaranteed economic prospects.

September 20, 2014, will mark the 20th anniversary of Azerbaijan’s signing the so-called “Contract of the Century” with 12 oil majors. The agreement envisions joint development of three oil fields. As one of the largest business contracts in the past two decades, it remains the foundation of Azerbaijan’s foreign economic activity and foreign policy. Baku has adjusted its strategy to the U.S and the EU’s energy phobias about Russia as an “energy empire” seeking to use its “oil and gas weapon” to rebuild the USSR. Azerbaijan’s positive image in the West as “an energy alternative” to Russia was further strengthened by the Baku-Tbilisi-Ceyhan and Baku-Tbilisi-Erzerum projects. Baku will never give them up, at least not at its own initiative. Incidentally, this factor (Azerbaijan and Europe’s strategic energy partnership which would have continued if Yerevan had initialed the Association Agreement with the EU in Vilnius) played a large role in Serzh Sargsyan’s decision to join the Customs Union.

Furthermore, participation in associations together with Armenia is strengthening the existing status quo concerning Nagorno-Karabakh, an unwelcome setup for Baku. Moscow therefore has no opportunities to turn Azerbaijan into a strategic ally. Advantageous cooperation with the neighbor is another matter. Russia cooperates with Azerbaijan to the best of its ability and opportunities, with due account for interests of that Caspian state. This was evidenced by Vladimir Putin’s visit to Baku last year. The parties assured each other of mutual support and the importance of building up partnership, but made it clear that any strategic alliance was not on the agenda.

Theoretically, such plans could materialize if Moscow gave up its allied relations with Armenia and if the latter expressed the will to waive the existing status quo of Nagorno-Karabakh. But, firstly, this would not stop Baku’s advantageous energy partnership with Turkey, the European Union and the U.S., and, secondly, it would result in Russia’s losing Armenia the way it had once lost Georgia. Also, there is no full guarantee that it will be able to bring Azerbaijan to the fold.

The Kremlin is well aware of these reasons, hence its separate policy lines in building relations with Armenia and Azerbaijan. For the former, which depends on Russia economically (as of late 2013, Russia accounted for 40 percent of all direct investment in the Armenian economy) and politically (Armenia accommodates Russia’s 102nd military base in Gyumri), Russia offers Eurasian integration. It is conceived as a logical follow-up and complement to existing frameworks such as the CSTO. For Azerbaijan, Russia offers partnership in selected areas, with the understanding that the partners might have different positions, which manifests itself, for example, in competition in energy projects. Moscow also acknowledges Baku’s diversified foreign policy.

Russia has pursued this policy for several years, and the 2013 events strengthened this trend. This largely explains Baku’s reserved reaction to Serzh Sargsyan’s statement on joining the Customs Union. Azerbaijan is aware that the Customs Union statement is just one of the ways to strength the status quo around Nagorno-Karabakh, because the EU, despite all its declarations, has no clear alternative to settle this old conflict. Does it mean that Baku will now make a decisive turn to NATO and the EU?

However, this conclusion would be an oversimplification. Forging closer ties with the EU and NATO has two serious limitations. The first is Azerbaijan’s political system. Indeed, Baku is rarely criticized by the U.S. and the EU for digression from democratic norms, unlike Georgia and Armenia. But this does not mean that the problem has been struck off the agenda. It comes into the limelight now and then, causing Baku’s negative reaction. The second limitation is the Iran issue and its possible negative implications. Azerbaijan hates being involved in any kind of intervention against its southern neighbor, being well aware of the costs and danger of this scenario. Baku’s position concerning a possible military strike against Syria, compared with that of another U.S. partner – Georgia, has been highly reserved. Hence the Azerbaijani leadership’s interest in contacts with Russia. It needs the Russian factor as a balance.

Consequently, Armenia’s joining the Customs Union should not be overestimated or dramatized. It fits in the logic of previous geopolitical trends (if we look into the essence of problems, not at their form). Russia is continuing its strategic alliance with Yerevan while keeping partnership with Baku. For its part, Baku remains committed to its energy union with large Western corporations and states, while maintaining a certain balance in bilateral relations with Russia.


Armenia’s Eurasian choice should not be viewed as complete renouncement of the European vector. Yerevan-based analyst Sergei Minasyan has said that “Armenia will continue the European integration process” but, he added, it would do so “without any commitments to the EU on the one hand, and without any political or financial support by the EU on the other.”

There are at least three reasons for Yerevan to continue to pursue this line. Firstly, it does not want Azerbaijan’s monopolizing the Western vector and reformatting the Nagorno-Karabakh conflict into “mediation war” between the West and Russia. Secondly, Armenia might use the leverage of influential diasporas in the U.S. and France to neutralize Baku and Ankara’s efforts. Thirdly, Yerevan needs some foreign policy backup as it fears a new escalation of conflict between Georgia and Russia (Georgia links Armenia with Russia geographically).

The ongoing modernization of the Armenian-Georgian state border under the EU program is a clear sign that the course towards cooperation with the West is continuing. The 62-million-euro program envisions the installation of a rail car automatic control system at the Airum station, and re-equipment of a checkpoint on the Bagratashen-Bavra-Gagavan stretch. Under the plans, the EU will help modernize the borders with Turkey and Iran. (The project’s feasibility study cost around half a million euros.)

As for Armenia’s Eurasian prospects, we should note certain contradictions between the Customs Union member-states. They were highlighted during the Supreme Eurasian Economic Council’s session in December 2013, at which Armenia signed the Customs Union membership roadmap. In particular, President Nursultan Nazarbayev of Kazakhstan, Russia’s another strategic ally, underlined that Armenia’s joining the Customs Union was pushing the issue of the Nagorno-Karabakh conflict to the foreground.

The self-proclaimed Nagorno-Karabakh Republic (NKR) de-facto has a common border with Armenia, as well as joint defense, security and economic systems. Armenia’s entrance into the Customs Union de facto (not de jure) implies that the NKR is joining the integration body as well. In this connection, Nazarbayev expressed his dissenting opinion at the Supreme Eurasian Council’s meetings in Moscow and previously in the Belarusian capital Minsk.

There are at least two arguments in defense of Kazakhstan’s position. It regards its cooperation with Baku as an important aspect of its Eurasian policy. Kazakhstan’s Caucasian priorities have been largely determined by home policy considerations. The new state with a fledgling political identity is very cautious of separatism. Whenever Nazarbayev speaks of international law and world politics, he emphasizes that separatist projects enhance instability and unpredictability.

These considerations explain Astana’s “special opinion” which differs from Moscow’s approach to Georgia’s problems. Unsurprisingly, the cautious Nazarbayev, in reference to Armenia’s membership in the Customs Union, prefers not to support the possible institutionalization of the status quo around Nagorno-Karabakh. In December 2013, the Kazakh president did not insist on his country’s “special opinion,” but he made it public. Nazarbayev will hardly forget his stance and may reiterate it later.


Georgia today is the farthest from Eurasian integration and the closest to European one. At the Eastern Partnership summit in the Lithuanian capital, Georgia was the only Caucasian country to initial an Association Agreement with the EU, following three years of talks which ended in July 2013. On November 22, 2010, Georgia and the EU signed a readmission agreement, which eased the visa regime for citizens of that Transcaucasian state, securing lower visa prices and tighter timeframe for reviewing visa applications.

Therefore, the Georgian political class demonstrated political succession. The association agreement talks began during President Mikheil Saakashvili’s tenure, when United National Movement was the ruling party. The initialing process (technical and information preparations) and the visit to Vilnius took place after the Georgian Dream coalition came to power. The issue was handled by Bidzina Ivanishvili’s Cabinet ahead of the Vilnius meeting, while the summit was attended by representatives of the government led by Ivanishvili’s protégé, former Georgian Interior Minister Irakly Garibashvili.

Since Georgia views EU and NATO integration as the country’s strategic choice, Georgian officials made haste to hail the association agreement with the EU as a historic event, though the move did not imply automatic signing of the document, not mentioning EU membership. EU and Georgian officials repeatedly stated that stepping up cooperation between Georgia and Europe should lead to a higher level of transparency and democracy. The text was only placed on the EU website after the parties initialed the agreement on December 3, 2013.

There is a curious episode on Georgia’s integration record. Moscow had been more than passive with respect to EU-Georgia association. The Kremlin realizes that since it cannot offer mechanisms to restore Georgia’s territorial integrity, it cannot hope to exert its influence on Georgia whose leadership is insisting on “de-occupation”.

Keeping Georgia would require extraordinary means which the Russian authorities do not contemplate at present, being satisfied with the recognition of Abkhazia’s and South Ossetia’s independence and normalization of relations with Georgia (from opening markets to Georgian mineral water and wines to the scaling down of military rhetoric). Russian officials, at least verbally, do not close the doors to the Customs Union or the Eurasian Union for Georgia. In August 2013, Russian Prime Minister Dmitry Medvedev told Georgia’s Rustavi-2 television that Georgia, as Russia’s neighbor, might consider the Customs Union as a possible alternative.

As of today, the normalization of Russian-Georgian relations that began in the autumn of 2012 has yielded certain positive results and helped launch a pragmatic dialogue between Moscow and Tbilisi. However, the first phase of the process, which essentially toned down the rhetoric, is nearly exhausted. The initial progress, which was obvious after the de-facto freeze on relations, is over. The two countries need a second phase of normalization, where they would focus on practical institutional moves and more or less tangible benefits.

Delaying the transition to the second stage would stall the normalization process and eventually scale it down. It will certainly impact Russian-Armenian relations and Eurasian integration in the Caucasus. In case negative scenarios materialize, Yerevan’s interest in cooperation with the West will increase (a lack of a common border between Russia and Armenia poses extra risks). Conversely, positive solutions (such as unblocking of the Abkhazian stretch of the railway) might decrease Armenia’s regional isolation.

A broader context of relations between Russia and the West cannot be ruled out, either. In case of mounting tensions between Moscow and Tbilisi, the odds are that Moscow might come under all kinds of pressure while a positive scenario delivers opportunities to continue pragmatic policy, strengthening Russia’s economic and humanitarian presence in Georgia. Although this would not reverse Georgia’s foreign policy priorities, it would ease contradictions between the Eurasian and European vectors.

* * *

As of today, Moscow has made the largest progress in Eurasian integration with Armenia. It has had no integration plans (given numerous constraints) with regard to Azerbaijan or Georgia. Yet Russia’s victory cannot be regarded complete or unequivocal.

The EU, while appealing to democratic European values, was unable to offer Armenia security guarantees and mechanisms that Russia has given it, together with economic advantages of cooperation within the Customs Union. Oddly, this has contributed to stronger criticism of Yerevan’s pro-Russian policy. Political scientist Alexander Iskandaryan has generalized the character of these skeptics: “A new generation has arisen, for whom Russia is no longer part of their personal biography. These young people want their country to choose the European vector for its development. They would take to the street, but these actions do not gather more than a few thousand people. Hence, not all Armenians think the same way. A large part of the population has a little understanding of what is happening.”

Today, this critical discourse (identifying domestic problems and government with the country’s geopolitical choice in favor of Russia) is marginal. Yet it should not be ignored. In the run-up to the next election cycle in 2017-2018, Moscow should make sure that Serzh Sargsyan’s successor continues to follow a pro-Russian foreign policy.

The problem is not limited to the format of relations between Russia, the EU and Yerevan. For example, Armenian-Kazakh collisions again raise the issue of how viable long-term integration bodies in the post-Soviet space can be. In this case, their vector towards Russia or the West is not that significant. The common Soviet past is losing its effect, while political interests of erstwhile “brotherly republics” are drifting farther apart. Even two allies have problems finding a third one.