By Giorgi Gvalia and Ivane Lomidze

Georgia’s foreign policy thinking is undergoing a notable shift. For much of the past two decades, the country’s strategic discourse was framed by democratic alignment and Euro-Atlantic integration. Today, however, the rhetoric of the ruling elite increasingly reflects a geopolitical logic, emphasizing survival, insecurity, and strategic calculation over value-based commitments. This shift is understandable for a small state operating in a highly vulnerable security environment. Yet the emerging approach also reveals an important limitation. While focused on avoiding risks vis-à-vis Russia, Georgia’s leadership gives insufficient attention to the equally important need to preserve and balance relations with Western partners that remain essential to Georgia’s long-term security, prosperity, and independence.

 Photo by Czerep rubaszny, 2020

BACKGROUND:

Georgia’s foreign policy has long been associated with a clear strategic orientation toward Europe and the transatlantic community. For years, the dominant language of Georgian statecraft emphasized democratic reform, integration with Western institutions, and a value-based foreign policy identity. That discourse has not disappeared entirely, but it is no longer the main organizing principle of the ruling elite’s public messaging. Especially since Russia’s full-scale war against Ukraine, senior representatives of ruling Georgian Dream party have described foreign policy in much starker terms: the state must avoid steps that could trigger retaliation from Russia and must calibrate every decision with extreme caution.

This shift is rooted in Georgia’s hard security environment. Russia still occupies Abkhazia and South Ossetia and remains the overwhelmingly dominant military power in the region. The memory of the 2008 war continues to shape official thinking in Tbilisi, especially the lesson that strong Western political backing does not automatically translate into direct security protection. Against that background, the government has argued that Georgia cannot afford symbolic gestures that carry unclear benefits but potentially serious costs.

That logic was most clearly visible in the government’s refusal to impose sanctions on Russia after the full-scale invasion of Ukraine. Georgian officials have maintained that the country has cooperated with international efforts to prevent sanctions circumvention, but they have resisted taking additional unilateral steps that could be interpreted by Moscow as escalation. From the government’s perspective, such caution is not ideological sympathy for Russia but a practical response to Georgia’s exposed position. The argument is simple: a small country with occupied territories, no formal security guarantees, and limited means of self-defense should avoid unnecessary confrontation with a stronger and hostile neighbor.

This position has domestic resonance. Many Georgians remain deeply pro-Western, but there is also broad public sensitivity to the risks of war and instability. The government has used that sentiment to justify a foreign policy of restraint, presenting itself as the actor most capable of keeping Georgia out of the wider regional conflicts. In that sense, Georgian Dream’s message is not only strategic but political: it links restraint abroad to stability at home. The result is a more defensive and geopolitical foreign policy vocabulary than the one that dominated Georgian politics in the previous decades.

IMPLICATIONS:

The problem with Georgia’s current course is not that it recognizes geopolitical reality. Any rational Georgian foreign policy must take account of Russian power and the risks of direct confrontation. The problem, rather, is that the government appears to treat this as its overriding strategic priority, while underestimating the cost of alienating the Western partners that help Georgia offset its structural weakness. For small states, survival cannot be reduced to managing immediate threats alone. It also requires maintaining the external relationships that expand their room for maneuver and reduce the risk of abandonment.

Any viable national strategy must therefore be assessed along two dimensions simultaneously: whether it mitigates immediate threats and whether it preserves the external relationships on which long-term autonomy and resilience depend. In practice, this requires small states to reduce risks while sustaining partnerships that provide economic, political, and – over time – security support. However, recent developments suggest that Georgia’s current strategy has managed only one side of this equation. In other words, the government’s strategy appears to have minimized certain risks while simultaneously generating others. By prioritizing the avoidance of confrontation with Russia, Georgian Dream has struggled to maintain the political trust and strategic confidence of its Western partners.

Over the past years, Georgia’s relations with the West have deteriorated significantly. This trend has become increasingly visible in tensions surrounding Georgia’s EU candidacy process, the controversy over the “foreign agents” law, and growing Western criticism of the country’s political trajectory. Government officials have largely attributed this deterioration to Western pressure – particularly from the EU – for Georgia to adopt a harder line against Russia, including the imposition of unilateral sanctions following the invasion of Ukraine. However, that explanation is incomplete. Disagreements over sanctions policy alone do not account for the depth of mistrust that has emerged. Even where Tbilisi may have had legitimate reasons to resist certain Western demands, such differences could likely have been managed more effectively through sustained political engagement and clearer strategic communication. So far, Georgian Dream has not convincingly demonstrated that it has invested sufficient diplomatic effort in explaining Georgia’s security concerns to its Western partners while maintaining their confidence in the country’s broader strategic direction.

This matters because, for Georgia, relations with the West are not just symbolic. The EU remains central to Georgia’s trade, institutional modernization, and broader economic orientation. The U.S. has played a major role in strengthening Georgia’s state institutions and defense capacity. These links are not simply a matter of identity or values; they are practical assets that increase Georgia’s room for maneuver in a difficult neighborhood. If those relationships weaken, Georgia does not become more secure or more autonomous. It becomes more exposed.

The costs could rise further as the regional environment changes. Georgian policymakers have sought to position the country as a key corridor between Europe and Asia, especially through transit and connectivity projects crossing the South Caucasus. But Georgia’s geographic importance should not be taken for granted. Progress in the Armenia-Azerbaijan peace process and the discussion of alternative transport routes could gradually reduce Georgia’s comparative advantage as a regional connector. If Georgia’s strategic value becomes less automatic, the quality of its political ties with Western actors will matter even more.

For Georgia, geopolitical thinking remains unavoidable. Geography and power asymmetries ensure that any responsible foreign policy must account for the risks posed by Russia. The real challenge, however, is how to apply that thinking in a way that manages immediate security threats while preserving the partnerships that remain essential for Georgia’s long-term prosperity and independence. For a small state caught between powerful neighbors and strategic partners, the art of survival lies precisely in maintaining that balance.

CONCLUSIONS:

Georgia’s foreign policy is entering a new phase defined less by idealistic rhetoric and more by the language of risk, constraint, and survival. That adjustment is understandable. Russia’s military presence on Georgian territory and the wider regional security climate leave little room for carelessness. But this approach, if applied too narrowly, can ultimately undermine its own objectives.

It is sensible to avoid policies that would impose immediate and disproportionate costs on the state. However, such caution is insufficient if it rests on the assumption that prudence vis-à-vis Russia alone can secure Georgia’s future. Over the longer term, the country’s sovereignty and prosperity remain closely tied to the preservation of robust relations with the West. If Tbilisi cannot preserve those ties while managing Russian pressure, it will trade one form of vulnerability for another. For Georgia, the central challenge of statecraft lies not merely in avoiding conflict in the present, but in doing so without eroding the external partnerships upon which its future security and development depend.

AUTHOR’S BIO: 

Giorgi Gvalia is Professor of International Relations and Jean Monnet Chair at Ilia State University in Tbilisi, specializing in small-state foreign policy, Realist IR theory, and South Caucasus geopolitics. Ivane Lomidze is Associate Professor of Sociology at Ilia State University, whose work focuses on the normative and theoretical foundations of political realism.

By Giorgi Tsikolia

In 2025, Georgia’s information technology sector generated $1.15 billion in export revenue—a 67 percent increase year-on-year and more than a thirteen-fold rise from the sector’s 2017 baseline.[1] This paper traces the policy, diplomatic, and private-sector decisions that produced that outcome. It then examines three constraints—labor market restrictions on foreign workers, the absence of government as a technology customer, and Georgia’s exclusion from U.S.-led AI infrastructure investment—that directly affect whether the sector’s growth continues.

Read Georgia’s Technology Export Sector

By Tomáš Baranec and Giorgi Khishtovani

Long-term rapid GDP growth is one of the pillars on which the Georgian government builds its legitimacy amid social and political instability following the October 2024 parliamentary elections. The numbers seemingly confirm the government’s argument. Georgia's GDP growth was 7.8 percent in 2023 and 9.7 percent in 2024. In 2025, overall growth is expected at 7.5 percent and International financial institutionsexpect GDP growth at 5-5.5 percent for 2026. The growth of recent years, however, was driven by several temporary and random factors rather than structural reforms. Numerous indicators suggest that growth in 2025 was artificially inflated and that the Georgian economy is in fact entering a turbulent phase.

BACKGROUND:

Georgia’s high GDP growth after 2020 was driven by three primary and two secondary factors. The first, most short-term, primary factor was natural growth after a sharp decline during the first year of the COVID-19 pandemic. After a contraction caused by the pandemic in 2020, when GDP fell by 6.3 percent, GDP grew by 10.6 percent the following year. The economy grew rapidly, primarily due to the fading of the initial shock from the pandemic and adaptation of the labour market and supply chains to the new pandemic reality.

While the effect of adaptation to the pandemic gradually faded, two other strong primary factors of GDP growth emerged, both associated with the Russian invasion of Ukraine in the spring of 2022. These were the mass arrival of Russian citizens and the opening of a transport corridor for sanctioned goods to Russia via Georgia. Following 2022, more than 80,000 Russian citizens settled in Georgia, mostly IT professionals, small businesspeople, and other members of higher-income groups. Their arrival stimulated overall demand, particularly growth in housing prices and development of the construction and IT sectors. In addition, Russian capital in the form of deposits from Russian citizens began flowing into Georgian banks in large quantities in 2022.

After 2022, Georgia became one of several transport corridors for the (re)export of sanctioned goods to Russia. Official statistics indicate Georgia’s role as an export corridor for passenger cars. In 2025, Kyrgyzstan (export from Georgia US$ 1.49 billion) and Kazakhstan (export from Georgia US$ 909 million) became Georgia’s main trading partners, and the main official export destinations for passenger cars from Georgia. The export value of this commodity reached US$ 2.81 billion. Passenger cars were also the largest import item to Georgia with a total value of US$ 3.87 billion. It should be noted that the “Georgian corridor” is partly absent from Kyrgyz and Kazakh statistics. While there is an immense increase of Georgian exports to Asia, the corresponding imports from Georgia are missing in the statistics of these countries. For instance, Kyrgyzstan’s official imports from Georgia are at least ten times lower than exports from Georgia to Kyrgyzstan.

The war in Ukraine also became the impetus for the emergence of two secondary factors of GDP growth in Georgia: foreign students and Russian tourists. Before the war, universities in eastern Ukraine were the main competitors of Georgian universities for international students, especially from India. After the war broke out, large numbers of students instead came to Georgia, increasing by an average of 20 percent year-on-year. In the 2024-2025 academic year, 37,100 international students studied in Georgia, more than double the 17,500 foreign students in Georgian universities in 2021-2022. This factor is an often overlooked yet significant secondary driver of Georgia’s GDP growth over the past few years.

Moreover, unlike many Western countries, Georgia has not banned flights to Russia, thereby stimulating growth in tourism. Russians represented 23.32 percent of total visits to the country in 2025.

Increased state revenues are an additional element that have contributed to strong growth figures and increased government spending in the years 2021-2025. Central government tax revenues rose from US$ 3.5 billion in 2021 to US$ 8.0 billion in 2025, reflecting a 128 percent increase, while state budget appropriations increased from US$ 6.19 billion to 10.3 billion, a 66.3 percent rise.  

IMPLICATIONS:

Several trends indicate that the main drivers of Georgia’s growth have already peaked and are beginning to fade. The economic growth in 2025 was likely inflated mainly by the International Company Status Act adopted in 2020. The Act grants certain types of companies in the IT and maritime sectors the opportunity to qualify for significant tax breaks. The changes adopted in 2020 allow foreign IT companies to register in Georgia, having to pay only a 5 percent corporate tax and 5 percent on employee wages. The ultimate catalyst for growth under the legislation was the arrival of Russian and Belarusian IT experts in 2022. In parallel with this law, the government also introduced simplified permanent residence for employees in the Information and Communication Technology (ICT) sector in 2025.

In the third quarter of 2025, the ICT sector grew by 21.1 percent; in the second quarter of 2025, by 37.1 percent; and in the first quarter of 2025, by 28.6 percent. In the third quarter of 2025, the sector reached 7.4 percent of the country’s GDP, from only 3 percent in 2020. While the state’s revenues from this scheme are rather insignificant, it does contribute to inflating growth statistics.

At the same time, almost all sectors relevant to the real economy and the state budget recorded a decrease in growth or a decline in the third quarter of 2025: energy (-3.3 percent), agriculture (-5.4 percent), construction (0.2 percent), trade (+3 percent) and manufacturing (+2,5 percent).

Other trends also contribute to the slowdown of the real Georgian economy. The number of people employed in the Georgian economy has decreased (most probably due to emigration) in the third quarter of 2025. Meanwhile, growth rates of imports are decreasing as compared to 2024. 

While state budget revenues increased by approximately 25 percent in 2024, they increased by only 10 percent in 2025, with 4 percent offset by current inflation. These trends contradict the estimated 2025 GDP growth rate.

The Georgian economy’s growth was not only an important PR tool for the Georgian government but also a practical means for maintaining its public support in the critical years of 2024 and 2025.

During its time in power, Georgian Dream has created a self-dependent layer of civil servants and citizens receiving various social benefits. Over the past two years, the ruling party has further strengthened their loyalty by increasing salaries and benefits. This was permitted by strong economic figures in 2022-2024. After 2025, Georgian Dream is starting to run short of resources to continue buying the support of these groups.

Most probably, the Georgian government is aware of the real slowdown in economic growth and the threats it poses to its legitimacy. It is currently taking several steps to address this threat. In the summer of 2025, the National Bank of Georgia managed to restore its dollar reserves to the same level as in 2024, before it started to sharply sell US$. 

Keeping a stable currency is one of Georgian Dream’s main priorities. The government has also become more careful in spending budgetary funds in comparison to previous years, and is actively building a financial reserve to limit the impact of slowing economic growth.

Georgian Dream’s ability to prepare for a period of economic turbulence will depend on several factors. These factors cannot currently be estimated accurately, however, the duration of Western sanctions against Russia stands out among the most relevant. Maintaining Georgia’s relevance as a transport corridor to Russia would significantly help Tbilisi weather the upcoming economic turbulence. On the other hand, a quick resolution of the conflict in Ukraine and the restoration of trade relations between Moscow and the West could, indirectly but significantly, weaken Georgian Dream’s position.

CONCLUSIONS:

The slowdown in the Georgian economy’s real growth will likely be the next big challenge for the ruling Georgian Dream party in the coming years, following the protest year of 2025. Unlike the mass protests, a significant deterioration in the population’s socio-economic situation could undermine support for the ruling party, even among its core electorate. Several current government actions indicate that Georgia’s de facto leader, Bidzina Ivanishvili, is aware of this threat and is taking steps to maintain the government’s capacity to support the existing social system. However, several key factors in this direction are shaped by other actors and trends and depend only marginally on the actions of the Georgian government. Of these, an end to the war in Ukraine could have the most severe negative impact. Moreover, the data accounted for here precedes the recent outbreak of war in Iran. The fallout from the conflict adds uncertainty to an already precarious economic situation in Georgia.

AUTHOR’S BIO: 

Tomáš Baranec is a Research Fellow and Head of the Caucasus Program of the Slovak think tank Strategic Analysis. He currently works as a field researcher on the Georgian-Ossetian ABL. Tomas studied Balkan, Central European and Eurasian Studies at Charles University in Prague. Giorgi Khishtovani is a Full Professor and Head of the Department of Finance at Ilia State University (Georgia). He holds a PhD in Economics from the University of Bremen (Germany), an MSc in Business Administration, and an LLM in Law from the University of Trier (Germany). His research focuses on political economy, governance, economic and fiscal policy.

By Irakli Laitadze

On February 4, 2026, the Georgian Parliament adopted amendments to the Law of Georgia On Higher Education. The controversial reform triggered mass protests from the academic community and broader society, which are still ongoing. The government argues that the reform will modernize the education system, concentrate limited financial resources, and increase the competitiveness of universities. A central element of the reform is the principle “One City–One Faculty,” under which multidisciplinary universities will be reorganized into specialized institutions aligned with regional and market demands. Critics argue that the reform will reduce institutional autonomy, weaken interdisciplinary research, and hinder integration with the European higher education system.

BACKGROUND: Over the past twenty years, Georgia has implemented EU standards in the field of higher education. The country participates in the Bologna Process and meets the criteria of the European Higher Education Area (EHEA). The aim of this process and the EHEA standards is to improve the quality of education, promote student mobility, and ensure the international recognition of Georgian academic degrees.

Despite significant progress, several persistent problems remain: weak research infrastructure, insufficient links between universities and the labor market, and the excessive concentration of higher education institutions in the capital, Tbilisi. Of the sixty-one higher education institutions in Georgia, forty-six are located in Tbilisi.

In early February, the Government of Georgia initiated a reform of the higher education system; however, it significantly deviates from the actual needs of universities. The reform has provoked protests among professors, students, and the broader public. According to the government, the proposed changes will improve the quality of higher education and make it more responsive to labor market demands.

One of the declared goals of the reform is to support regional universities. The government argues that improving the quality of teaching may reduce the migration of young people to the capital and strengthen social and economic development outside Tbilisi. In addition, such support is expected to enhance the stability of regional universities and enable them to respond more effectively to local challenges.

The government argues that budget centralization and the redistribution of academic resources will enable more efficient use of funding for competitive salaries, equipment, and infrastructure. According to this view, restructuring will create better conditions for academic research.

One of the key elements of the government’s reform is the principle of “One City – One Faculty.” This approach implies the abandonment of classical multidisciplinary universities and the creation of institutions focused on only a few disciplines. Critics argue that such a model will ultimately weaken academia. According to the government, however, this mechanism will eliminate the duplication of academic programs across universities and align education more closely with labor market demands. The reform will also allow the state to control the distribution of quotas and admission rates. The number of students receiving state-funded scholarships, as well as their allocation across higher education institutions, will be determined directly by state priorities.

A significant share of Georgia’s academic community fiercely opposes the reform. Particularly active in the protests are professors and students at Ilia State University, an institution known for its strong criticism of the government. The university has become a main target of the authorities, most probably for this reason. Since February 4, protests have been held daily by several thousand campaigners, taking the form of marches and open-air lectures in front of the university.

IMPLICATIONS: The concentration of administrative and financial management reduces the role of universities in academic decision-making. Without control over financial resources, universities lack the capacity to strengthen specific disciplines. Decisions on how to allocate funds should remain the responsibility of the universities themselves. External bureaucratic structures are not well positioned to accurately identify or assess the specific needs of individual institutions.

The dismantling of multidisciplinary higher education institutions will reduce opportunities for interdisciplinary research and may hinder innovation. Excessive specialization risks making education overly dependent on current economic conditions and short-term market demands. Such institutions tend to be less adaptable to changes in the labor market and may limit graduates’ career prospects. If only one specialized institution operates in a region, local students will face limited educational choices, which may further increase migration to Tbilisi. Although specialization may appear beneficial, since concentrated funding could strengthen specific subdisciplines, in practice this effect is likely to be limited.

This is a complex issue that involves the broader context of the entire education system, including secondary education. It cannot be addressed solely through structural changes within universities, as the quality of higher education is directly influenced by the preparedness of school graduates, curriculum standards, teacher training, and assessment models. Without coordinated reform at earlier stages of education, university reforms risk becoming fragmented and ineffective. A systemic approach is therefore essential to ensure coherence, continuity, and long-term sustainability across all levels of education. Consequently, the government’s emphasis on specialized institutions may replace strategic development with short-term objectives. In the long term, such reliance on market signals may undermine the stability of educational institutions.

Nearly 75 percent of Georgia’s population supports further integration with the European Union and there is significant concern that these reforms will jeopardize the country’s participation in the Bologna Process and its ability to meet EHEA criteria. The inadequacy of the reform in addressing existing challenges raises international, as well as domestic, concerns. Moreover, the reform appears to contradict the commitments outlined in Georgia’s Association Agreement with the EU.

From 2026, Georgian state universities will be unable to admit foreign students, or will be allowed to admit only a limited number with prior state approval. Such academic restrictions and increased state control are likely to reduce both the number and the quality of joint research projects, participation in international academic programs, and student exchange programs.

The reform was developed without meaningful involvement of the academic community through open consultations, analytical assessments, or financial evaluations, raising serious concerns about its transparency. The absence of clearly presented criteria, objectives, and implementation mechanisms undermines trust among professors and students and encourages perceptions that the reform serves political rather than strategic goals, including increased control over academic freedom and expression.

Moreover, unclear decision-making procedures heighten the risk of politicization. When the criteria for financing and the reorganization of higher education institutions are not transparent, concerns about political influence and corruption arise. Limited public access to information on decision-making processes, budget allocations, and performance indicators also makes it difficult to evaluate whether the reform’s objectives are being achieved. The lack of clear benchmarks and independent evaluation mechanisms weakens accountability and reduces public trust in the reform process.

CONCLUSIONS: Criticism of the higher education reform by scholars and students highlights significant risks. The reform goes far beyond administrative restructuring and carries important social and political implications. These include the preservation of institutional and academic autonomy, transparent governance, funding for research, admission policies, the social role of universities, continued integration into European education and research frameworks, and the risk of unemployment among the intellectual elite. All of these areas risk becoming adversely affected by the proposed changes.

As of today, the reform applies to all state-owned universities, but there is no guarantee that similar measures will not later be extended to private higher education institutions. The reform contradicts Article 27 of the Constitution of Georgia, which guarantees academic freedom and the autonomy of higher education institutions. A major concern is that the reform may institutionalize political control over universities and significantly reduce their autonomy. Critics argue that an implicit objective of the reform is to marginalize pro-Western academic circles, which have traditionally served as spaces for open debate and free discussion. In the context of the government’s increasingly anti-Western orientation and democratic backsliding, the autonomy and independence of universities remain essential pillars of a free society.

AUTHOR’S BIO: Irakli Laitadze is an Adjunct Professor at Ilia State University (Tbilisi, Georgia) and Senior Fellow of the think-tank EU Awareness Centre (Brussels). He was previously a career diplomat, serving as a senior Counsellor in the Mission of Georgia to the EU and Director of the EU Political Department, Ministry of Foreign Affairs of Georgia. After his diplomatic service, he was the CFO in GMT Hospitality and CEO of Publishing House Artanuji. He holds degrees from Tbilisi State University, the Diplomatic School of Madrid (Diploma), and Cambridge University (MBA), and a Ph.D. (Magna cum laude) from Tbilisi Free University. 

By Stephen Blank

While Central Asian cohesion and regional cooperation grow; the South Caucasus is fragmenting. This process increasingly affects the nature and scope of regional interactions with key international actors. Russian influence has declined precipitously in Armenia, which is turning to the West, and Azerbaijan, which is expanding its circle of partners. However, in Georgia the state increasingly resembles Russia in its autocratic and legal structure and thus its state practices.

BACKGROUND:

Writing in 2024, the Azeri scholar Gulshan Pashayeva observed that a defining feature of the Caucasus was its fragmentation. This fragmentation is deepening and in effect, relationships between the South Caucasus and key external actors have quickly grown and assumed new shapes in 2025. Georgia’s dependence on Russia has grown, whereas Russian influence in Armenia and Azerbaijan has visibly declined as these states are turning to Washington and Europe. 

Georgia is paying the supreme price of colonial status as it over time loses territory to Russia as both South Ossetia and Abkhazia virtually included in the Russian Federation. The Russian-driven borderization whereby Russian or pro-Russian forces either overtly or surreptitiously move border posts demarcating Russian-controlled from Georgian territories to expand Russia’s holdings occurs with impunity.

The mounting discord between the Georgian government and the EU also exemplifies Georgia’s regression. Georgia’s government, possibly at Moscow’s behest, is trampling upon processes necessary for Georgian admission into the EU and frustrating both Brussels’ conditions and the continuing support for EU membership among a majority of the Georgian population. 

Armenia’s government is implementing a program of democratic reform and ultimate membership in the EU while striving to make a conclusive peace with Azerbaijan and normalize ties to Turkey despite staunch resistance by domestic, diasporic elements, the Church and Russian influencers. None of these groups supports peace and many of them, including Russia, fear democratization as signaling a decisive political defeat at home as well as a threat to Russia. It is no surprise that the Church with Russian backing emerged as the leader of an attempted coup in 2025 to replicate Russia’s success in Georgia and reverse Yerevan’s turn to the West.

Azerbaijan’s case is even more striking. Beyond its military-diplomatic success in forging an alliance with Turkey and partnership with Israel to strengthen its military capability, it neutralized Russian support for Armenia while improving ties with key European states and the U.S. The Trump Administration has now built a permanent monument to its military-economic presence in the Caucasus, namely the Trump International Road for Peace and Prosperity (TRIPP). This project brings Washington into the Caucasus as a permanent player and checks Iranian threats to Azerbaijan and links to Armenia, while giving Yerevan a tangible reward for its pro-Western and anti-Russian policies. Meanwhile, Russia’s downing of an Azerbaijani airplane in 2024 and attacks on Azerbaijani residents in Russia have generated enormous resentment in Azerbaijan. 

IMPLICATIONS:

The Caucasus has become a battleground where the great powers and their favored local governments are not only on opposite sides, but where these powers’ rivalry also spills over into trade routes. The TRIPP has duly triggered Georgian apprehension since that project’s inauguration may well push aside Georgia as a preferred partner in the Middle Corridor project that ties together China, Central Asia, and ultimately Europe. But the significance of TRIPP far transcends its potential impact upon Georgia.

This project is only the latest manifestation of the declining Russian influence in the Caucasus and the parallel ensuing fragmentation of the region. While Moscow still holds many levers of influence and has no scruples about using them; they are fewer, less potent than before, and Russia faces a greater and more sustained foreign presence in the Caucasus than at any time since the disintegration of the USSR. Neither is this foreign influence strictly economic as in China’s case and as seen in its sponsorship of the Middle Corridor trade and transportation route through Azerbaijan that bypasses Russia. Türkiye’s alliance with Azerbaijan is of an explicitly military nature that provides an enduring supply of weapons, training, and presumably logistical and intelligence support for Azerbaijan. Türkiye also buttresses this support by providing the primary terminus for Azerbaijan’s increasing energy exports to Europe. Beyond these increasingly deep-rooted connections to Azerbaijan, through the Organization of Turkic States Türkiye now also has an institutional base for enduring outreach to Central Asia and the provision of all manner of military and economic ties to that region. 

Azerbaijan is also increasingly tied to the Middle East through its long-running defense and economic ties to Israel, their mutual collaboration against Iran and its membership in both the Abraham Accords and President Trump’s Board of Peace. Likewise, the EU and Azerbaijan have embarked upon a mutually rewarding series of ties independent of Russian influence and also primarily based on Azerbaijani energy exports in return for EU investment and political support.

Moreover, the advent of the TRIPP has launched what looks like a sustained U.S. presence in the Caucasus. This project is taking physical shape and Vice-President Vance’s visit to Armenia and Azerbaijan demonstrates that sustained interest. Under this project, “American companies could develop railways, roads, and pipelines linking Azerbaijan proper to its Nakhchivan exclave via a corridor through the south of Armenia’s Syunik Province.” Since Azerbaijan is now providing Armenia with energy, a formal peace treaty terminating the state of war over Nagorno-Karabakh under U.S. auspices seems likely. Beyond those signs of U.S. influence, President Trump has just stated that Vance’s tour will, “strengthen our strategic partnership with Azerbaijan, a beautiful Agreement for Peaceful Nuclear Cooperation with Armenia, Deals for our Great Semiconductor Makers, and the sale of Made in the U.S.A. Defense Equipment, such as body armor and boats, and more, to Azerbaijan.” If this lasting multi-domain U.S. presence materializes, it will represent a major blow to Russian ambitions but also codify the fragmentation of the Caucasus and exclude Georgia from the growing and long-term international competition in the region for a long time to come.

CONCLUSIONS:

Russia certainly still has cards to play. It has a long-term military base at Gyumri, Armenia, and well-established connections among the Armenian opposition that is both unreconciled to the loss of Nagorno-Karabakh and to the Pashinyan government’s democratizing reforms and efforts to join the EU. Russia also has substantial economic connections to Georgia and what looks like a secure base of influence in Georgia’s government. 

Nevertheless, it is a declining power economically if not militarily and cannot stop the rising foreign presence in the Caucasus. Indeed, it depends on trade coming from Armenia and Central Assia to circumvent Western sanctions and access vital Western goods. Iran, whose back is to the wall due to combined U.S., Israeli, and European military-economic pressure, cannot bail it out. Nor will China, the primary sponsor of the Middle Corridor, rescue it in the Caucasus. Despite the Russo-Chinese “no-limits” partnership, Beijing has never lifted a finger to allow Russia to become a viable economic competitor across Eurasia or regarding inter-continental trade, transport, and connectivity issues.

Therefore, the fragmentation of the South Caucasus and the heightened presence of competing major international actors is likely to continue. Central Asian states, in contrast, forge ahead with mounting cohesion and collaboration. Indeed, those states, recognizing Azerbaijan’s critical geographic position and rising heft, have now included it in what used to be the 5+1 relationship with Washington, transforming it into a 6+1 formation. This development will also contribute to regional fragmentation. Azerbaijan is increasingly a power whose perspectives must embrace Washington, Europe, the Middle East, and Central Asia, not just the Caucasus.

The ethnopolitical rivalries that made the Caucasus a zone of conflict for a generation after 1991 may, however, be coming to an end as the new ties between Baku and Yerevan and greater foreign connections show. To the extent that Georgia can be helped to resolve its ethnic and other domestic cleavages that Russia continues to exploit, it may become possible for the South Caucasus to emulate the discernible regional cooperation now appearing in Central Asia.

That outcome would be to the benefit of the entire Caucasus as well as to its neighbors and interlocutors. While disappointing to Moscow, its regional clients and those “dead-enders” who wish to rekindle the fires of ethnic conflict, that way has been tried and founds wanting in the balance.

AUTHOR’S BIO: 

Stephen Blank is a Senior Fellow with the Foreign Policy Research Institute (www.fpri.org.)