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3
‘Quo Vadis, Armenia?
The South Caucasus and Great Power Politics
Lilia A. Arakelyan
Introduction
Throughout its history, Armenia, which emerged as an organized state by the middle of the second
millennium BC, and was situated at the ancient crossroads of orient and occident on the highland located
between the Mediterranean, the Black, and the Caspian seas, has come under the attack of rival empires:
Assyrian, Mede, Achaemenian, Parthian, Sasanian, Arab, Seljuk and Mongol from the south and east; and
Seleucid, Roman, Byzantine and Crusader from the west, who sought to absorb the land and its people
into their dominions (Hovannisian, 1997, p. vii). For instance, present-day Armenia lies in the area which
came under Persian rule after 428, it again became a battleground between the Ottomans and Persia until,
in 1639, the two powers agreed that Western Armenia would be controlled by Turkey and eastern
Armenia by Persia (Holding, 2011, pp. 16–17). Persian rule ended in eastern Armenia in 1724, when most
Persian territory was divided between the Ottomans and Russia. The latter eventually established its
hegemony in the South Caucasus by the early 19th century, when Tsarist Russia sought to strengthen its
presence on the Black Sea coast in order to have a gateway to the Mediterranean (Trenin, 1996).
According to Trenin (1996), Russian expansion in the Caucasus coincided with the decline of the
Ottoman Empire and the fading power of Persia. Nevertheless, the Russians also had to overcome
resistance from the three South Caucasian nations, which they did by implementing a ‘divide and rule’
policy. This was a well calculated strategy that in Trenin’s words was ‘the preferred tactic to ensure
imperial peace’, and cemented hostility among the local players, who, instead of rebelling against the
Russians, sank even further into the mire of regional rivalry (Trenin, 1996, pp. 92–93).
One can argue that most small powers in the international system share the fate of the
Transcaucasian states, since all weak states ‘suffer what they must’ while ‘the strong states do what they
can’ (Thucydides, 2010). Hence, according to John Mearsheimer, the states with the potential to dominate
their regions will seek hegemony due to uncertainty about other states’ intentions (Mearsheimer, 2001, p.
43). The power of a state in international relations is often measured using quantitative criteria, such as
population and territorial size, gross domestic product and military capacity (Thorhallsson, 2012, p. 135).
In this regard, while Russia remains one of the super powers, not only in Eurasia but also in the global
arena, the three South Caucasian states are considered to be weak states, which are politically,
economically and strategically vulnerable and incapable of exercising their influence around the globe
(Thorhallsson, 2012, p. 135). Consequently, as weak states, Armenia, Azerbaijan and Georgia do not have
many options other than to bandwagon with the strong.
Historically, the Caucasus served as a buffer zone among the three major powers bordering it:
Russia, Turkey and Iran (Goodrich & Zeihan, 2011, p. 7). Recently, the United States and the EU joined
the-major-powers-interested-in-the-Caucasus club. In this regard, one must wonder whether it really
matters which side will choose each of the three countries in the South Caucasus in the revived ‘Great
Game’? And can the security dilemma ever be escaped in the South Caucasus, if Armenia, Azerbaijan and
Georgia continue opting for three different directions in their foreign policy choices?
In this chapter I address those questions as they pertain to Russia’s foreign policy in the South
Caucasus. Neoclassical realism, which draws upon the theoretical insights of the structural realism of
Kenneth N. Waltz, Robert Gilpin, Joseph Greico, and others, assumes that politics is a constant struggle
among different states over material power and security in an anarchic world characterized by competition
for scarce resources (Lobell, Ripsman & Taliaferro, 2009). This chapter echoes their argument,
suggesting that Russia’s foreign policy in the South Caucasus was and still is nothing other than the
attempt to centralize power within Russia and the near abroad, using territorial expansion (the creation of
the Eurasian Union in 2015) in order to enhance the country’s material power.
This chapter consists of three sections: the first, utilizing a neoclassical realist model of the
resource-extractive state and expansionist ideology framework, discusses Russia’s foreign policy in the
South Caucasus after the end of the Cold War, arguing that the unipolar international system of the early
1990s and late 2000s, as well as the distribution of revisionist and status quo interests among Russia, the
United States and the European Union, facilitated Vladimir Putin’s expansionist grand strategy in the
near-abroad.
The second section makes the case that Armenia’s last minute decision to join the Customs Union
i at the expense of much closer ties with the European Union will only aggravate the security dilemma
further in the South Caucasus, increasing tensions not only among the three Transcaucasian states, but
also among the key players in the region – Russia, Turkey, Iran, the European Union and the United
States.
The final section addresses the implications of my argument for Eurasian integration literature
and for the operation of the balance of power in the 21st century.
Russia is more than the West can handle
Luigi Villari (1876–1959), an Italian historian, traveler and diplomat, described the history of Russia as a
series of expansions to the west, the south and the east, toward the open sea. Since Russia was not
separated from her colonies by the sea, the process of absorption was much easier, as well as the line of
demarcation between the mother country and her protectorates less definite, than in the case of other
imperial powers, for instance Britain and France (Villari, 1906, p. 15). Furthermore, since Imperial Russia
had been governed despotically, the question about the type of government to be adopted in the colonies
was not as important as in constitutionally governed states. The main goal of the colonial regime was to
assimilate the conquered nations as far as possible – from Poland to the Pacific Ocean and from the Arctic
Ocean to Mountain Ararat. Villari claims that of all Russia’s borderlands, none exceeds in interest that of
the Caucasus, which is a broad isthmus between the Black Sea and the Caspian extended by a great chain
of mountains rising to a height of 18,000 feet (Villari, 1906, p. 15).
It is important to stress here one core element of Russia’s foreign policy over the course of time:
the continuity in the behaviour of governments headed by tsars, commissars and presidents. In this regard,
the call of the Bolsheviks in 1917 ‘to smash the old world and build a new one’ never materialized in the
foreign policy of the Soviet state during the course of its seven decades or beyond in the Russian
Federation after the collapse of the Soviet Union in 1991. Caroline Kennedy-Pipe (1998) argues that the
foreign policy of the Soviet state had inherited many of its characteristics from the Tsarist Russian
Empire: the tradition of autocracy, a suspicion of the West, and the tendency of the elite to view Russia’s
‘natural’ role of territorial expansion (Kennedy-Pipe, 1998, p. 207). One of the reasons for this kind of
adherence to the imperial attitude in Russian foreign policy over the centuries is the fact that the different
regimes had changed the political system of the Russian government, but not its geographic position
which was situated from the heart of the European continent to the shores of the Pacific (Kennedy-Pipe,
1998, p. 207). Many scholars (Kennedy-Pipe, 1996; Trenin, 1996; Petro & Rubinstein, 1997; Donaldson
& Nogee, 2009; and others) have argued that insecurity because of geographic location was not only a
defining characteristic of both Russia and the Soviet Union, but also contributed to the hostile relations
between Moscow and other states.
In fact, Russia has always feared that its domestic and international weakness would provide the
opportunity for its rivals in what recently has been called the near abroad. As a result, Moscow was
constantly looking for ways to strengthen its grip on the territorial periphery, including the South
Caucasus. Consequently, Trenin concludes, geopolitical and strategic interests rather than trade and
ideology drove Russia’s expansion into the Caucasus starting in the mid-16th century (Trenin, 1996, p.
92).
Neoclassical realists argue that only certain great powers could call for regional hegemony in the
late 19th and early 20th centuries. In this respect, Randall Schweller (2009) in Neoclassical Realism and
State Mobilisation presents a neoclassical theory to explain the puzzle of under-expansion and under-
aggression, contending that ‘expansion requires a unified state composed of 1) elites that agree on an
ambitious grand strategy, 2) a stable and effective political regime with broad authority to pursue
uncertain and risky foreign policies, and 3) a compliant mass public that unreservedly supports the state’s
expansionist policies and is willing to make the necessary sacrifices asked of it to implement the strategy’
(Schweller, 2009, p. 247). Moreover, he argues that, in order to unify elites and the masses, the state must
possess an ideology capable of transforming passion into a nationalist sentiment (Schweller, 2009, p.
247).
While Schweller concludes that fascism proved to be such an ideology, one that ‘created a
hysterical, mass-based hyper-nationalism by means of racist ideology and propaganda that worked to
energize the disillusioned masses of post-World War I Europe’, I argue that that the unipolar international
system of the early 1990s and late 2000s and the distribution of revisionist and status quo interests among
Russia, the United States and the European Union, facilitated Vladimir Putin’s adoption of authoritarian
and centralized domestic institutions and led to an aggressive foreign policy in the near abroad, including
revisionist claims. In other words, the arrangement of domestic institutions in Russia reflected particular
bargains that have been reached between the state and societal actors. Hence, as Schweller notes,
‘territorial expansion usually advances through a deliberate and collective will to imperial power, through
single-mindedness for expansion shared by both rulers and ruled’ (Schweller, 2009, p. 233).
Obviously, in order to pursue expansionist aims leaders should have strong and unified polities,
which is one of the preconditions for sustaining a state’s attempts to conduct a grand strategy, along with
the politico–military institutions of the state and a hysterical, mass-based hyper-nationalismii that would
support the state’s drive for power and revenge over its enemies. As we will see later in the chapter,
Putin’s regime fulfilled all the criteria required for a neoclassical realist model of the resource-extractive
state (see Note 3) and expansionist framework. Moreover, the main argument of neoclassical realists, that
systemic forces shape domestic processes within states, which in turn constrain states’ ability to respond
to systemic imperatives, can be applied to Russia’s foreign policy since the 2000s.
As soon as Mr. Putin was able to centralize the state, he attempted to pursue foreign and security
policies based on his assessment and calculations of relative power and the Western states’ intentions.
Russia, from a neoclassical realist point of view, became an exemplary state for the resource-extractive
model and expansionist approach: since the 2000s it has not suffered from various types of international
fragmentation (for example, elite fragmentation), nor did it lack social or ethno-nationalist cohesion (to be
analysed later in the chapter) as well as regime vulnerability. As a result, systemic pressure filtered
through a unit-level intervening variable – state power – which we, after Taliaferro, operationalized as
politico–military institutions, ideology and state-sponsored nationalism. Accordingly, Putin and his team
raised the level of state power to the extent that the government was able to facilitate the state’s reaction
to shifts in the external environment, which affected the grand strategic adjustments of Russia, and
aggravated its foreign policy in the near abroad.
Such a farthest and nearest South Caucasus
Historically the Caucasus, from a geopolitical perspective, was an insecure frontier that had been
considered dangerous to Russians as well as providing opportunities to weaken Iran and Turkey (Suny,
2009, p. 11). Lately, the region attracted Russians as a colony that could play an essential role in the trade
with the Middle East, then as a source of oil and gas. After the disintegration of the Soviet Union, the
South Caucasus became a region with various strategic concerns for Moscow: as a defence for the North
Caucasus, and as a bridge between Russia and Iran, Turkey and the Arab world (Suny, 2009, p. 11).
The collapse of the Soviet Union laid the foundation of the new Russia’s foreign policy at the end
of the 20th century. Nygren (2010) argues that, after the breakup of the USSR, all 15 states, comprising
the Former Soviet Union (FSU), adopted Western-like constitutions and hailed democracy and a free-
market economy as the standard model, although the former communist leaders continued to rule newly-
independent countries (Nygren, 2010, p. 13). Boris Yeltsin even encouraged taking a Western orientation
for the FSU, thus, Nygren considers these years as happy years for the West, which started to supply
finances and technological knowledge to the post-Soviet region in anticipation of the final victory of
democracy and free market reforms. After all, the United States already had the experience in creating the
Bretton Wood system in Western Europe with the apparent triumph of the neo-liberal globalized world.
But, according to Nygren, there were quite a few obstacles to the next victory of capitalism in the East:
the geographical structure of the USSR with its politically rather than ethnically-based borders, then the
former members of the nomenklatura of Soviet times who used free market reforms to enrich themselves,
and finally, the outbreak of ethnic conflicts in many FSU states (including in Nagorno-Karabakh,
Abkhazia, and South Ossetia in the South Caucasus). Gradually, the Russian economy and society
deviated from the Western course into its own history to find its own place under the sun.
On the other hand, Fedor Lukyanov (2014) claims that, after the collapse of the Soviet Union,
Russia initially operated from the position of weakness due to an economic crisis and dependence on
foreign help. The first steps of the new Russia’s government in 1993–1999 were the attempts to join the
‘civilised world’ by various means, Lukyanov asserts, and under changing circumstances. For example, in
the beginning of his presidency in the 2000s, Putin offered Europe and the United States a ‘new model of
mutually advantageous coexistence’, but the West, according to Lukyanov, refused to recognize Russia as
a major global power. As a result of this rejection, Putin’s main goal now becomes the reinstatement of
Russia as a global superpower using the economic, political and military leverage available to it
(Lukyanov, 2014).
When faced with external threats, the resource-extraction model in neoclassical realism suggests,
states have a choice between three broad categories of internal balancing strategies: politico-military
strategies and technological practices; emulation, or innovation iii (Taliaferro, p. 200). Consequently, I
argue that Putin’s regime, in the quest to establish competitive advantage, was able, first, to create
politico–military institutions in Russia in order to extract or mobilize resources from domestic society. As
Taliaferro observes, a state can directly control economic activity and reallocate resources through the
nationalization of key industries or can indirectly intervene in the economy to facilitate the accumulation
of societal wealth and thereby the tax revenues available to the state. We should keep in mind that neither
strategy is cost-free, since the state must make certain political and economic investments either through
direct mobilization (in the form of expenditures on a large administrative apparatus) or indirect
mobilization (in the form of subsidies and concession to non-state actors as an inducement to expand
production). In other words, in resource extraction, the state transforms wealth into military power
through taxation, requisition and expropriation. It is important to note that centralized and insulated states,
such as Russia, for example, can extract societal wealth better than decentralized and constrained states
(Mastanduno, Lake & Ikenberry, 1989, p. 467).
Russia as a centralized and insulated state
Lilia Shevtsova assessed Russia’s politics as ‘first and foremost the history of personalized power – of the
concentration of all the levers of power and resources in the hands of a leader standing above society, of a
succession of leaders and their regimes’ (Shevtsova, 2007, p. 1). Her evaluation of Russia’s politics as
‘personalised power’ coincides with neoclassical realists’ claim that the individual decision maker is at
the heart of the foreign policy decision-making process (Breuning, 2007). It is important to note that,
according to Shevtsova, in Russia the interests of the state always prevailed over those of the individual,
and centralization of power was achieved by territorial expansion. King (2004) also maintains that
Russia’s foreign politics were based on the Byzantine concept of autocracy that could be achieved by
annexing new lands and nations. Thus, after the collapse of the Soviet Union, Mikhail Gorbachev and
Boris Yeltsin tried to break the cycle of centralized power in Russia, but without much success. As
Shevtsova explains, the tradition of a centralized and arbitrarily governed state was embedded in the
minds of Russia’s elites because Russia missed its opportunity to build a liberal state based on the rule of
law throughout its history. While Europe, before even democratizing its society, first adopted the
Rechtsstaat in the 19th century with its doctrine of the rule of law, which entails that the state itself must
be subject to the law, Russian state was always built on a strict centralization of authority and repression
of the individual. Even after the disintegration of the Soviet Union, the Russian democrats ‘preferred to
be guided by political expediency rather than by rules and preferred to rely upon a leader’ (Shevtsova,
2007, pp. 6–7).
Thus, Gorbachev and Yeltsin’s attempts to pluralize Russian society as well as to ‘join the
civilised world’ failed due to the country’s historical legacy, the institutional obstacles to the
transformation process, and the role of the leaders and the elites (Shevtsova, 2007, p. 6). Arguably,
Vladimir Putin became the president that Russia needed and was accustomed to: an authoritarian leader,
who holds enormous power, and sees his citizens ‘as a means to his ends, a means for achievement and
retention of personal power’ (Politkovskaya, 2005, p. 243). For instance, according to VTsIOM
(Vserossiiski Centr Izucheniia Obshchestvennogo Mneniia) Putin’s decision to invade Crimea in March
of 2014 has actually been popular among Russians since his approval is now higher than it has been since
2012 (Ray & Esipova, 2014). Shevtsova describes Putin’s regime as a system of government under which
power is concentrated in the hands of a leader who relies on bureaucracy, security forces and big
business, what some authors refer to as a ‘network state’ – a mode of government and private networks
that controls the economic and political system (Shevtsova, 2007, p. 41; Kononenko & Moshes, 2011).
Putin, in Shevtsova’s opinion, undertook the recentralization of power secured by the immense support of
the Russian population, which was desperate for new leadership after Boris Yeltsin’s controversial
presidency. Moreover, the new Russian leader also provided the long-anticipated economic stability in
post-Soviet Russia thanks to high oil prices. Shevtsova argues that it was evident that at least in the
beginning of his term, Vladimir Vladimirovich had a sense of mission: in 2000–2001 he introduced a
package of new measures that included land reform, the introduction of a 13% income tax, deregulation
of the economy, and administrative reform (Shevtsova, 2007, p. 45).
Putin’s government also started the reform of the armed forces, the pension system, Gazprom, the
railway, the Unified Energy System of Russia and local governments. But, according to Shevtsova, his
main goal was not only to make Russia a competitive state, respected by the rest of the world, but also to
restore governability, which in Putin’s mind meant control. But having gained control of the country,
Putin, in Shevtsova’s words, began to doubt the wisdom of reforming it, since reform undermines control.
Thus, an iron law of autocracy began to operate in Russia, which led to the centralization of all resources
(Shevtsova, 2007, pp. 44–45). Consequently, as a centralized and, therefore, a strong state with a higher
degree of cohesion in central institutions (especially the civil bureaucracy and the military), a higher
degree of autonomy from society and the ability to generate revenue as well as a higher level of
government responsibilities, the Kremlin adopted ambitious foreign policies due to the fact that the
government had greater access to economic resources.
In the same vein, Ambrosio writes that the initial foreign policy strategy of Andrei Kozyrev, the
first Foreign Minister of Russia under President Boris Yeltsin, the so-called Kozyrev doctrine, sought an
extremely close relationship with the West, especially, the United States. But, when Russia and the
United States found themselves at odds over strategic international issues (the war in Bosnia, expansion
of NATO and America’s desire for a unilateral use of force), the close partnership offered in 1992 was off
the tables as ‘the bandwagoner slid into the role of an emerging balancer’ (Ambrosio, 2005, p. 2). Thus,
from the late 1990s to 2001, Ambrosio continues, Russia began to discuss openly the need to form a
coalition to balance the United States. Ambrosio relates this shift (balancing versus bandwagoning) in
Russia’s foreign policy to two contradictory aspects of the post-Soviet Russian state: Russian national
identity that had been inherently connected to its great power status and the notion that it should play a
critical role in shaping the international system, and Russia’s persistent weakness relative to the United
States (Ambrosio, 2005, pp. 4–5). Little wonder that Vladimir Putin became the leader who not only
followed balance of power logic in the modern age, but also ‘awakened’ the hearts and minds of average
people across the post-Soviet space.
It is believed that foreign policy choices are made by leaders, whose perception of relative power
matters, as well as their ability to extract and direct natural resources as they wish. According to Reznik,
Bierman and Meyer’s (2014) latest article in Bloomberg, Putin used Rosneft to reinstate Russian oil to
state control. In fact, the government owns 69.5% of the company that controls about 40% of country’s
crude output. Putin also re-established Russia’s state-controlled natural gas-exporting company,
Gazprom. In other words, under Putin’s rule, Russian government monopolized the key branches of the
economy, which is, according to Anders Åslund, a dangerous path that had already destroyed the Soviet
Union with its command economy (Reznik, Bierman, & Meyer, 2014).
Despite the fact that some Russian analysts (Tsygankov, 2013; Lukyanov, 2014) considered 2013
as a year of ‘stunning foreign policy achievements’, because of Russia’s successful involvement in the
Syrian and Iranian crises, the coerced membership of Armenia in the Customs Union, and Ukraine’s
decision to defer the signing of the Association agreement with the EU, Russia’s resurgence is limited by
a corrupt, state-owned economy that seems to be headed toward stagnation (The Economist, 1 February
2014).iv In this regard, the main objective of the Putin doctrine: the recovery of economic, political and
geostrategic assets lost by the Soviet Union in 1991, might never be achieved. As Mastanduno, Lake, and
Ikenberry have pointed out: ‘the state is likely to redouble its efforts at mobilisation, but the effectiveness
of the latter may decline because 1) the sum of investable wealth is now lower and 2) incentives for future
wealth creation are undermined by discouraging investment and introducing inefficiencies in the
economy’ (Mastanduno, Lake & Ikenberry, 2014, p. 463). However, there is a very clear connection in
the long run between Russia’s economic rise and fall and its growth as an important world empire.
According to Gilpin, this pattern can be explained by a wealthier and more powerful state’s temptation to
increase its control over the environment (Gilpin, 1981, 22–23, 94–95).
Accordingly, this chapter supports the argument that the Primakov doctrine with its emphasis on
the CIS as the key to Russian security interests was furthered during the presidencies of Vladimir Putin
and Dimitry Medvedev, and culminated in the idea of the creation of the Eurasian Union as the main tool
not only to secure Russia’s hegemonic role in the post-Soviet space, but also to challenge the presence of
key players in the region – the United States, the EU, Turkey, Iran and China. For instance, Russia’s
current Minister of Foreign Affairs, Sergey Lavrov, explains in an exclusive interview to Foreign Policy
magazine his state’s new vision of the international system as one where Moscow is viewed as a key
player, given the country’s geographical size, unique geopolitical position, its centuries-old historical
traditions and national identity (Glasser, 2013). Lavrov maintains that Russia’s new great-power ambition
is a result of domestic changes, economic development and a higher social standard of living; Moscow is
trying to balance NATO because of its eastern expansion; and Russia is a realist state, which is trying to
unite countries, not to create ideological dividing lines as the EU is endeavouring to do.
State-sponsored nationalism and ideology
The shift in Russia’s grand strategy since the 2000s can be attributed to the shift in state power, which led
to the capacity of the state to extract resources from society, as well as Mr Putin’s ability to raise and
maintain support for his national security strategies. Hence, if in liberal democracies leaders experience
difficulties in convincing the public to make significant sacrifices for national security, in authoritarian or
totalitarian regimes state-sponsored nationalismv helps to increase social cohesion and the inclination of
its citizens to identify with the state. The latter, in turn, facilitates leaders’ attempts to extract and
mobilize resources from the public for national security goals (Taliaferro, 2009, pp. 218–219). It is
important to mention that Taliaferro distinguishes between state-sponsored nationalism and nationalism in
its general understandingvi since the former assumes that leaders deliberately instil nationalism as a means
to achieve societal cohesion against external adversaries. As a result, the state-sponsored nationalism
excludes ethnic, secessionist, and vernacular nationalisms that might threaten the state internally
(Taliaferro, 2009, p. 219). In this regard, while some scholars and analystsvii consider the rise of Russian
nationalism in the 2000s as a reaction to the Western involvement in post-Soviet space, I would argue that
Putin deliberately inculcated nationalism as a means to increase the state power of the Russian state and,
thus, its capacity to engage in military actions in Eurasia and Eastern Europe in order to implement his
grand strategy.
For instance, the protection of Russian citizens was the central point of Vladimir Putin’s speech,
when he announced the annexation of Crimea on 18 March 2014, addressing State Duma deputies,
Federation Council members, and heads of Russian regions in the Kremlin. Putin’s speech not only
evoked tears in the audience but also fears in the near abroad since he made it clear that ‘millions of
Russians and Russian-speaking people live in Ukraine and will continue to do so. Russia will always
defend their interests using political, diplomatic and legal means’ (Putin, 2014). There are large ethnic
Russian populations in Central Asia (living in Kazakhstan alone there are 3.5 million Russians), Belarus,
in the Baltic republics, and other regions of the former Soviet Union (Coalson, 2014). Little wonder that
those countries are also afraid to fall to Putin’s ravenous geopolitical appetite (see Figure 2). For instance,
the president of Russia openly announced that Moscow could not tolerate Ukraine’s entry into NATO:
Let me note, too, that we have already heard declarations from Kiev about Ukraine soon joining
NATO. What would this have meant for Crimea and Sevastopol in the future? It would have
meant that NATO’s navy would be right there in this city of Russia’s military glory, and this
would create not an illusory but a perfectly real threat to the whole of southern Russia. These are
things that could have become reality were it not for the choice the Crimean people made, and I
want to say thank you to them for this (Putin, 2014).
Another important concept that we should briefly discuss is ideology, which is closely related to
nationalism. As Taliaferro notes, ideology is used by leaders to instil widely held beliefs and assertions
about the proper tie of the state to domestic society and the role of the state in the international system
across a range of issues: political, economic, social and military (Taliaferro, 2009, p. 221). Leaders use
ideology in order to extract and mobilize resources from society for their grand strategies. It is an open
secret that many scholars and analysts are already using the term ‘Putinism’ (Zakaria, 2014) in order to
describe the crucial elements of the new Russian system of government under Vladimir Putin, which
include ideology, nationalism, religion, social conservatism, state capitalism and government domination
of the media. It is interesting to see how Putin’s supporters glorify his ideology. For instance, when
Russian political scientist, Igor Panarin, in his article, ‘Putin’s New Ideology: Developing Russian
Civilisation’, argues that Vladimir Putin is ‘an emotional and future-oriented leader’, who along with his
associates ‘had to save Russia’s statehood’, one might wonder from whom Putin and his team had to save
Russia (Panarin, 2014)? As far as security is concerned, Moscow annexed Crimea and is supporting pro-
Russian separatists in Eastern Ukraine, not the other way around. Panarin’s explanation that Putin and his
team are ‘saving Russia’ from the colour revolutions (like the Orange revolution in Ukraine in 2004), by
using the idea of Eurasian integration that he calls Putin’s new ideology, is quite controversial as well,
since it is clear from Armenia’s coerced entry into the Eurasian Union, as well as from the events in
Ukraine, that Eurasian integration is not happening by the will of the former Soviet countries. On the
contrary, it is happening against their will for the sake of Russia, in Panarin’s words, ‘to play an active
role in developing the principles of a new world order’ to ‘secure a decent place in the world appropriate
for Russian civilisation’ (Panarin, 2014).
Armenia joins ‘an Authoritarian Club’
The European Union was taken by surprise, when on 3 September 2013, Armenian president, Serzh
Sargsian, after talks with his Russian counterpart, Vladimir Putin, announced that Armenia will join the
Russian-led Customs Union.viii European diplomats were stunned and frustrated by Sargisian’s decision,
since Yerevan actively participated in the EU’s Eastern Partnership programme and had been expected to
initial an association agreement with Brussels at a summit in Vilnius in November of 2013. In fact, the
year of 2013 was supposed to be a special one for the European Union’s Eastern Partnership programme
(EaP), since it was expecting to bear fruit after launching its ambitious programme for six former Soviet
Union states: Ukraine, Belarus, Moldova, Armenia, Azerbaijan and Georgia in 2009 (Wisniewski, 2013,
p. 3). As soon as Armenia headed to initialling the Association Agreement with the European Union,
Moscow delivered up to US$1 billion worth of military equipment to Baku, including tanks, artillery
systems, and infantry-fighting vehicles (RIA-NOVOSTI, 2013). Arguably, fearing an outbreak of a new
war, Armenia signed a treaty to join the Eurasian Union in 2015. There are quite a few explanations
behind Armenia’s decision to join the Russian-led integration project. Firstly, Moscow’s challenge to the
enlargement of Euro–Atlantic institutions – NATO and the EU – into post-Soviet space after the end of
the Cold War. Secondly, the degree of Armenia’s dependence on Russia represented by the predominance
of Russian capital in strategic sectors of the country’s economy (the energy,ix transport and
telecommunication sectors), Yerevan’s dependence on Russian loans, a large remittance inflow from
Russia,x as well as the country’s traditional reliance on the political and military alliance with the Kremlin
(Ananicz, 2014). Thirdly, the civil society representatives in Armenia believe that the country’s decision
to join the Eurasian Union was made in order to retain certain advantages for government officials –
issues related to monopolization, corruption and violation of human rights (Mkrtchyan, 2013). In other
words, for Armenian officials, it was more convenient to continue to maintain a well-known corrupt and
authoritarian post-Soviet system of governance than to try to create a new European free market
democracy.
After sorting out some of the reasonsxi behind Armenia’s entry into the Customs Union, this
chapter analyses the consequences of this step, not only for the local players (such as Azerbaijan,
Georgia, Turkey and Iran) but also for the global actors (such as the United States and the EU).
First of all, it is safe to suggest that the fiasco at an Eastern Partnership summit in Vilnius in
2013, when only two partner states, Georgia and Moldova, initialled the Association Agreement with the
EU, has been mainly blamed on Moscow’s pressure. However, the Eastern Partnership Programme has
also been criticized for its one-size-fits-all approach, which has faced significant setbacks in the attempt to
bring the partner countries into the Western orbit. Michael Leigh, one of the architects of the European
Neighbourhood Policy (ENP) and a senior adviser to the German Marshall Fund, believes that Brussels
set too high requirements for the involved states to adopt EU standards of business regulation, governance
and human rights in return for too small financial and political rewards (Taylor, 2013). For instance, both
Ukrainexii and Armenia pulled back from initialling an association agreement with the EU because of
Russia’s trade and energy threats to the countries. Leigh maintains that the European Neighbourhood
Policy was misconceived from the outset, since it was modelled after the enlargement process, but
without the incentive of membership. In the same vein, the ENP encouraged partner states to adopt large
amounts of the EU’s rulebook and establish democratic, transparent government structures with technical
help and limited financial incentives from Brussels. Leigh contends that the EU had to offer to Ukraine
lighter trade pacts on less intrusive conditions (Taylor, 2013).
Georgia and Armenia – two neighbours in two different economic unions
The Armenian-Georgian border might become a watershed between the European and Eurasian Unions
after Tbilisi signed the Association Agreement with the EU in July 2014 and Yerevan signed the
agreement to join the Eurasian Union in January 2015. While both sides agreed to maintain a free trade
zone, and Georgia continues to provide preferential transit to Armenian goods going to Yerevan from
Moscow and vice versa, it is unknown what the Customs Union will require from Armenia in respect to
Georgia in the near future (Hayrumyan, 2014). Still, Yerevan will face economic challenges in joining the
Russian-led bloc because the country’s entry into the Customs Union may lead to a two- to three-fold
increase in customs duties. Another focal point to consider is the fact that Georgia is a transit country for
the Russian natural gas supply to Armenia. Thus, any tensions between Moscow and Tbilisi could
immediately affect Yerevan’s natural gas supply, as has already occurred in the past. Then, the restoration
of the railway communication between Armenia and Russia through Abkhazia, which is meant to provide
the transit of Russian goods to Armenia, is a bargaining chip that Georgia is using to contain Russia in the
region.
There is another important issue to factor in when analysing the variance in the economic systems
of Armenia and Georgia. The two neighbouring states not only have chosen different economic zones, but
also different foreign policy courses. The Armenian government already has limited room for manoeuvre
on the local political scene, and the replacement of the country’s Prime Minister, Tigran Sargsyan, who
supported Yerevan’s close ties with the West, by Hovik Abrahamyan, an influential oligarch, who
declared the state’s accession to the Customs Union among his first priorities, can be considered as an
anticipated bow toward the Kremlin (Ananicz, 2014). At the international level, Armenia was among the
few states (such as Russia, Cuba, North Korea and Venezuela, just to name a few) that had to support
Russia’s annexation of Crimea, and voted ‘no’ to the United Nations General Assembly’s resolution
affirming Ukraine’s territorial integrity and denouncing the Crimean referendum, whereas Georgia and
Azerbaijan were among the 111 members of the UN that considered the referendum invalid. Even
Kazakhstan, Moscow’s closest ally, has abstained from voting on the UN General Assembly resolution
against the secession referendum in Crimea, which can be considered as Astana’s concern about
repetition of a Ukraine-style experience in a state with 3.5 million of Russian population (see Figure 2).
There is little doubt that Russia’s victory in bringing Armenia back into its orbit, pressure on
Azerbaijan to join the Eurasian Union and the possible incorporation of Abkhazia, entangles an already
complicated geopolitical setup in the region. Tbilisi’s attempts to join NATO and the European Union
without upsetting Moscow also seems to be close to the edge, taking into account the recent political
developments in Georgia when pro-Western defence minister, Irakly Alasania was dismissed by Prime
Minister Irakly Garibashvili (Antidze, 2014). Soon after Georgia’s Foreign Minister Maya Panjikidze,
and the minister for integration with the EU and NATO Aleksy Petriashvili, also left their posts. As a
result, Alasania’s party, the Free Democrats (FD), has left the ruling Georgian Dream coalition, depriving
the latter of a secure majority in the parliament. Thus, in the persons of Alasania, Panjikidze and
Petriashvili the West has lost its important partners in Tbilisi, and the Georgian President, Georgy
Margvelashvili, expressed concern that the internal political crisis posed a threat to Georgia’s quest for
Euro-Atlantic integration (Matusiak, 2014; Antidze, 2014).
Azerbaijan – energy in return to democracy
Azerbaijan’s foreign policy has taken a unique course since Baku was able to adopt a Russian-style
authoritarian model of government, while portraying itself as a Western ‘strategic partner’ on energy
issues and security, using the country’s energy wealth (de Waal, 2014a). Playing off both sides against
each other allowed Azerbaijan to preserve its oligarchic political system, simultaneously increasing the
country’s wealth and military power, which in turn enabled the Aliev government to take a hard-core line
on the protracted conflict with Armenia over the Nagorno Karabakh region (de Waal, 2014a). Baku’s
defence spending is reported to be set at some US$3.7 billion in 2013, surpassing both Armenia (US$447
million) and Georgia (US$400 million), thus making a Caucasian petro state a regional leader in military
strength and defence spending (Frolov, 2014). Despite the fact that the EU, the United States, Russia and
other key players in the region expressed concerns over the latest ceasefire violations between Armenia
and Azerbaijan, arms supplies are still arriving into the South Caucasus, mainly from Russia, Israel,
Ukraine and Turkey, as well as from the CIS and Eastern European countries (Frolov, 2014). For
instance, Baku used a Russian made portable anti-aircraft missile to shoot down and destroy an Armenian
military helicopter on 12 November 2014 that, according to Azeri officials, ‘tried to attack’ Baku’s
positions in the Agdam District,xiii which is east of the disputed Nagorno Karabakh region (Agayev,
2014). To add insult to injury, Azerbaijani President, Ilham Aliyev, ‘praised his army for the November
12 downing of an Armenian helicopter that killed three crew members in the worst military incident
between the two countries in 20 years’, and ‘promised more armed responses to Armenian “provocations”
in future’ (Frolov, 2014). Thomas de Waal emphasized that Azerbaijan is pouring hundreds of millions of
dollars of oil and gas revenues into buying heavy weapons and the recent violence is a reminder that the
two states are only one step away from another war (de Waal, 2014b).
I argue that Azerbaijan is experiencing the ‘natural resource curse’, which occurs when countries
heavily dependent on revenues from oil and gas score lower on the UN Human Development Index, show
greater corruption, devote a large chunk of government spending to military spending, and are more
authoritarian because income from these resources is misused by corrupt leaders and officials instead of
being directed to growth and development (Palley, 2003). Not only has Azerbaijan fallen under the spell
of the ‘natural resources curse’, but the West has, as well. Starting in 1994, when Baku signed ‘the
contract of the century’ – a US$7.4 billion deal with a consortium of Western oil giants, including BP,
Unocal, Pennzoil, to develop and market Baku’s Caspian oil reserves – Washington and Brussels made
the Azeri petro dictatorship an American darling. President Clinton, for instance, declared the Caspian
Sea region an area of US strategic interest, while his successors continued to coddle the Azeri
dictatorship, heavily investing in energy, military and security sectors, and evoking a feeling of déjà vu
since they had already gone through the same path with the Middle Eastern petro dictators. As soon as
Baku felt strong enough to brush away the Western criticism of the Azerbaijani government, it did so.
Azerbaijan joined the non-Aligned Movement in 2011, undertook successful economic expansion in
Georgia and Turkey, revived its relations with Russia (some analysts argue in order not to follow the
Ukrainian example), and made it clear to the West that Baku has its own vision of the country’s
development, and it does not need foreign advice on economic issuesxiv or the Nagorno Karabakh dispute
(Jarosiewicz, 2014). There is speculation that Baku’s boldness came out of Putin’s offer to return some
part of Karabakh to Azerbaijan if the country joins the Eurasian Union (Jarosiewicz, 2014). The recent
escalation of the conflict between Yerevan and Baku is beneficial for Moscow since it will definitely
impede the current cooperation between the West and Azerbaijan in the energy sector and will highlight
Russia’s role as a peacemaker and a guarantor of the stability in the South Caucasus.
Ankara and Tehran – in play in the New Great Game
Turkey also seems to be changing its mind regarding Russia’s expansionist tendencies in the near abroad:
first, because Moscow has become Ankara’s major trading partner and key energy supplier; and secondly,
the ongoing tensions between Russia and the EU over Ukraine may create attractive opportunities for
Turkey as a substitute for European suppliers. The Western sanctions push Moscow to seek alternative
trading partners and Ankara, Tehran and Beijing are topping the list (Dermitas, 2014). Furthermore, the
Russian ambassador to Turkey, Andrey Karlov, recently told the Hurriyet Daily News that Turkish
companies could play a crucial role in Moscow’s plans to reconstruct Crimea and invest in the fields of
agriculture and tourism (Frolov, 2014). Karlov also mentioned in his interview to the Hurriyet Daily
News that the life conditions of Crimean Tatars that ‘deteriorated’ under Ukrainian rule, will improve
under Russian. While it is too early to make any assumptions about Turkey’s involvement in the
‘reconstruction’ of Crimea, it is important to note that Ankara voted against the annexation of the region
by Moscow and criticized Russia’s treatment of its kin, the Crimean Tatars, who make up nearly 15% of
the population (Frolov, 2014).
Meanwhile, there are similarities between the Putin and Erdogan administrations, with both
presidents consolidated powers in their states, thus, it is not surprising that Ankara is looking to team up
with the ‘friendly’ authoritarian regime, while the relationship with Washington becomes more uneasy
amidst the claims that Turkey refuses to allow the United States to use its bases for airstrikes against the
Islamic State’s forces in Iraq and Syria (Arango, 2014).
In regards to Turkey’s position vis-à-vis the South Caucasian states, despite the declaration of a
policy of rapprochement with the three countries in the early 1990s, Turkey closed its borders with
Armenia in 1993 and since then it has supported Azerbaijan in the Nagorno-Karabakh conflict (Balla,
2013, p. 1). Cornell (2005) maintains that, for Turkey’s economic expansion into the South Caucasus, the
importance of Georgia as a market but also as a transit to Azerbaijan cannot be overlooked (Cornell,
2005, p. 299). In fact, Ankara quickly became Tbilisi’s main trading partner and developed a strategic
partnership with Georgia and Azerbaijan in order to counterbalance the Iranian–Armenian–Russian
alliance in the region (Cornell, 2005, p. 299).
Tehran, on the other hand, pursues more balanced and less assertive behaviour toward the South
Caucasian states than Moscow or Ankara. As Ramezanzadeh argued in 1996, Iran has to counterbalance
the influence of Turkey, Saudi Arabia and Russia in Central Asia and the Caucasus, which are considered
to be its main rivals in the region, while its rivals on the international arena are the US and Israel
(Ramezanzadeh, 1996, p. 167). Iran’s goals in the South Caucasus can be narrowed down to the following
points: decrease the influence of the outside players, namely the United States; achieve balance-of-power
vis-à-vis other regional players, Russia and Turkey; gain a foothold in the region through economic
expansion; and neutralize the possible threats from the region itself, namely Azerbaijan (Sharashenidze,
2013). While Yerevan is a strategic ally of Tehran in the South Caucasus and the two countries have
taken major steps in widening and deepening their bilateral relations, particularly in the economic sector,
some analysts consider the pro-Armenian position of Iran in the Nagorno Karabakh conflict as a sign of
traditional rivalry between Tehran and Ankara (Sharashenidze, 2013). Nevertheless, it is a mutually
beneficial cooperation, since Armenia’s main southern transit route passes through Iran, as does
Armenian strategic access to Asia and the Middle East, and the two countries have significant interests in
an energy partnership and are currently undertaking several joint projects that provide Yerevan with
alternative sources of energy (International Business Publications Inc., 2013). Finally, the Iranian
relationship with Baku over the Caspian is complicated by the issue of natural resources in the Caspian
Sea and fears of Azerbaijani irredentism, taking into account that there are an estimated two to three times
as many ethnic Azeri in Iran as in Azerbaijan itself, while Georgia has the least developed relationship
with Tehran among all three South Caucasian states (Jenkins, 2012, p. 47).
Conclusion
I utilized in this chapter a neoclassical realist resource-extraction model and expansionist ideology
framework to analyse Russia’s foreign policy in the South Caucasus after the Cold War, arguing that the
unipolar international system of the 1990s and early 2000s, as well as the distribution of revisionist and
status quo interests among Russia, the United States and the European Union, facilitated Vladimir Putin’s
adoption of authoritarian and centralized domestic institutions that led to an aggressive foreign policy in
the near abroad, including revisionist claims. I argued that there is a very clear connection in the long run
between Russia’s economic rise and fall and its growth as an important world empire. This pattern can be
explained by a wealthier and more powerful state’s temptations to increase its control over the
environment. Thus, Russia’s victory in bringing Armenia back into its orbit, pressure on Azerbaijan to
join the Eurasian Union and the possible incorporation of Abkhazia and South Ossetia, entangles an
already complicated geopolitical setup in the region. Moreover, Armenia’s last-minute decision to join the
Eurasian Union at the expense of much closer ties with the EU already aggravated the security dilemma
further in the South Caucasus, and increased tensions among the regional players as well as the EU and
the United States.
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i The Customs Union was transformed into a Eurasian Economic Union in January 2015.
ii J.W. Taliaferro considers the politico–military institutions of the state along with ideology and state-
sponsored nationalism as the three components of the resource-extraction model of the state (see Taliaferro,
2009, pp. 215–219).
iii Taliaferro defines emulation as the purposeful imitation by one state of any institution, technology, or
governing practice of another country. Meanwhile, innovation is a conscious effort by one state to offset the
relative power advantage of another country by creating new institutions, technologies, or governing practices.
Both strategies require the reallocation of resources or increased extraction from society (Taliaferro, p. 201).
iv According to The Economist, Russian economic success was founded almost entirely on oil and gas prices,
which decreased since 1991. As a result, dependence on energy export in modern Russia is even greater than
during Soviet times, 75% of the total in 2013 against 67% in 1980. Furthermore, high labour costs within
Russia and low productivity make much of the country’s industry uncompetitive as well as resulting in low
investment and lost capital and human inputs (The Economist, 1 February 2014.
v Taliaferro defines nationalism ‘as a political movement wherein individuals begin to identify their personal
interests with a group that is too large to meet together; wherein they identify those interests based on a
common “culture”, “ethnicity”, “civic” or “national identity” that the members of the group share to the
exclusion of other groups; and wherein individuals come to believe that the members of the group share a
common history; and to believe that the group requires its own state if it is to survive’ ( Taliaferro, 2009, p.
219).
vi Nationalism, according to Jesse and Williams (2011, p. 5), results from ethnic groups making claims to
jurisdiction, to some degree of self-government in a given territory.
vii See Andrei Tsygankov’s How the West Enabled the Rise of Russian Nationalism, where he argues that
Russian nationalism became an influential force due to the Ukrainian revolution and the Western support for it
(Tsygankov, 2014).
viii The Customs Union will be transformed into the Eurasian Union in January of 2015.
ix Bullied by Moscow, Armenia sold the remaining 20% stake in the local gas distribution company,
ArmRosGasprom to Gazprom; as a result, 100% of ArmRosGazprom shares now belong to Russian GazProm
until 2043. Armenian Energy Minister, Armen Movsisyan acknowledged that, if Armenia had not agreed to
join the Customs Union and had not sold the last 20% of ArmRosGazprom shares to Russia, Yerevan would
have had to pay the debt of US$300 million for natural gas accumulated since 2011 (Hayrumyan, 2013).
x For instance, according to the Central Bank of Armenia, some US$1,869.7 billion or 17.3% GDP were
remitted to Armenia in 2013. About 81% of the total amount of private remittances or US$65.3 million came
from the Russian Federation (Arka News Agency, 2014).
xi It is my understanding that there are other reasons for Armenia to join the Russian-led Customs Union, which
fall beyond the scope of this chapter.
xii Ukraine signed the Association Agreement with the EU in July 2014 after the new president, Petro
Poroshenko, came to power.
xiii The Nagorno Karabakh side said that the helicopter was on a training flight (PanArmenian.Net, 2014).
xiv Jarosiewicz (2014) claims that Azerbaijan, thanks to Western investments, was able to position itself not as a
junior partner of the West but already as a legitimate actor in the region, and the country’s rejection of the
Nabucco pipeline project in favour of its own project, the Trans-Atlantic gas pipeline, means that Baku will be
the main architect, executor, and the largest shareholder of the planned infrastructure.
