South Caucasus of the 21st Century

The South Caucasus region is located in a strategic area that serves as a bridge between Europe and Asia. Azerbaijan, Armenia, and Georgia are the main states of this region, covering important transportation corridors between the Black Sea and the Caspian Sea. Positioned at the crossroads of East–West and North–South transport routes, the region holds global interest in terms of trade, energy, and logistics. Additionally, the South Caucasus is rich in various natural resources, especially energy reserves. Its geographical position has turned it into a space where regional and international powers' interests intersect. As a result, stability and security in the region are of not only local but also global significance.

In 2016, Azerbaijan declared the year as the “Year of Multiculturalism” to promote values of tolerance and coexistence. This initiative was important not only in domestic policy but also in shaping a positive image on the international stage. Within the framework of multiculturalism policies, mutual respect and cooperation among representatives of different religions and ethnic groups were strengthened. The Baku-based Multiculturalism Center and international forums held in this area confirm Azerbaijan’s leadership in this field. Georgia and Armenia also have experience in coexistence with various ethnic groups within their territories. Preserving multiculturalism in the region is a crucial factor for stability and sustainable development.

Azerbaijan holds a leading position in oil production in the South Caucasus. Rich oil fields located in the Caspian Sea, particularly the “Azeri–Chirag–Gunashli” complex, play a significant role in the international energy market. The activities of BP and other transnational companies in the region have led to economic revitalization. Azerbaijani oil is transported to the world market via the Baku–Tbilisi–Ceyhan (BTC) oil pipeline, increasing the region’s geopolitical importance. The oil sector contributes not only to energy exports but also to the financing of social and infrastructure projects. Armenia and Georgia benefit economically from energy transit and cooperation. However, oil production has also increased ecological risks and the potential for conflicts.

The strategic location and natural resources of the region attract the economic and political interests of many countries. Global powers such as the U.S., the European Union, and China have invested in energy and infrastructure projects in the South Caucasus. Turkey and Russia also pay special attention to the region both economically and in military-political terms. European countries like the United Kingdom and Italy invest in major energy projects in cooperation with Azerbaijan. Within the framework of the “Belt and Road” initiative, China aims to reach Europe through Georgia and Azerbaijan. The World Bank and the Asian Development Bank have provided significant financial support for infrastructure, social, and energy projects, contributing to the region’s development.

After the 2020 Patriotic War, Azerbaijan launched large-scale reconstruction efforts in the liberated territories. International airports were built and commissioned in Fuzuli, Zangilan, and Lachin. Major infrastructure projects such as the Victory Road, the Fuzuli–Shusha, and the Horadiz–Zangilan–Aghband highways, and the Horadiz–Aghband railway are underway. The “smart village” concept was implemented in Aghali village of Zangilan, and the return of IDPs was ensured. According to ANAMA, hundreds of thousands of mines and explosive devices were neutralized between 2020 and 2024. Additionally, projects for the restoration of historical and cultural monuments in Shusha and Aghdam, as well as the protection of Karabakh horses, are being carried out.

Karabakh horses are among the symbols of Azerbaijani culture and historical heritage. Known for their agility, endurance, and aesthetic appearance, these horses played a significant role in the military and agricultural life of the region for centuries. Representing Azerbaijan in local and international exhibitions, Karabakh horses have become an element of cultural diplomacy. After the liberation of Karabakh, special projects for the preservation and restoration of these horse breeds have been implemented. Measures are being taken at the state level to ensure their breeding and reproduction. The display of Karabakh horses during the “Kharibulbul” festival held in Shusha highlights Azerbaijan’s cultural and tourism potential.

Following the 2020 Karabakh war, Russia deployed peacekeeping forces in the region in an attempt to increase its influence. Its military-political alliance with Armenia, presence in some separatist areas of Georgia, and cooperation with Azerbaijan in the energy sector reflect Moscow’s leverage. Russia’s interests in the South Caucasus focus on energy logistics, military-strategic control, and preventing NATO–EU rapprochement. However, the war in Ukraine has somewhat weakened Russia’s influence in the region. Nevertheless, Moscow continues to closely monitor and actively participate in regional processes.

Since 2020, Armenia has experienced complex political and economic developments. In the snap parliamentary elections of 2021, the “Civil Contract” party led by Nikol Pashinyan won. Economically, according to the World Bank's 2023 report, Armenia’s economy grew by 12.6% in 2022, mainly due to the mass migration and capital inflow from Russia. In terms of regional relations, negotiations continue on the opening of communication lines based on the trilateral statement signed by Azerbaijan, Armenia, and Russia on November 10, 2020. With Turkey, a normalization process has begun after many years, though it has yet to yield full results.

The Shusha Declaration, signed in 2021, marked a historic document affirming the strategic alliance between Azerbaijan and Turkey. The declaration envisions expanded political, military, economic, and cultural cooperation. Shusha is also considered a symbolic location for the revival and unity of Turkic culture in the South Caucasus. Declared the cultural capital of Azerbaijan, the year 2022 was celebrated as the “Year of Shusha.” The city holds a special place not only in terms of its history and architecture but also in Azerbaijani music and poetry. With the establishment of the Shusha Cultural Center, various international events, festivals, and symposia are held there.

Historically tense, relations between Turkey and Armenia have seen some steps toward normalization in recent years. In 2022, following dialogue, contacts between the two countries intensified, and direct flights were resumed. The reopening of the Margara bridge may contribute to the development of economic and humanitarian ties. This bridge could strengthen regional economic integration and increase trade volume. Improvement in Turkey–Armenia relations, against the backdrop of Turkey’s alliance with Azerbaijan, could positively impact regional stability, although the process remains sensitive.

As a key gas exporter in the South Caucasus, Azerbaijan plays a crucial role in Europe’s energy security. Through the Southern Gas Corridor (SGC), Azerbaijani gas is delivered to Europe via Georgia and Turkey. This corridor includes the Trans-Anatolian (TANAP) and Trans-Adriatic (TAP) pipelines. The European Union considers cooperation with the South Caucasus a priority to meet its need for alternative energy sources. Azerbaijani gas reaches countries such as Italy, Greece, and Bulgaria, enhancing the region’s geoeconomic importance. These export projects not only boost economic development but also attract new investments.

The South Caucasus also has significant green energy potential, especially in Azerbaijan with its solar and wind resources. The construction of solar and hydroelectric power stations in Karabakh and Nakhchivan indicates growing interest in this field. Georgia, with its hydropower capacity, holds a strong position in the regional energy market. Renewable energy projects enhance environmental safety, create new jobs, and support sustainable economic growth. The EU shows interest in cooperating with the region in this area and supports several pilot projects. Green energy was also one of the key themes of COP29.

One of the major events that brought the South Caucasus to the international agenda was COP29. This conference, held in Baku in 2024 within the framework of the UN Framework Convention on Climate Change, provided an important opportunity to showcase the role Azerbaijan and the South Caucasus can play in the global fight against climate change. Through COP29, the region’s green energy potential and sustainable development strategies were presented to the global community. The conference also served as a platform to strengthen regional cooperation in environmental policy. Hosting COP29 not only increased Azerbaijan’s international prestige but also demonstrated its leadership in the process of ecological modernization. COP29 was also significant for attracting investment in green technologies and promoting innovative initiatives.

One of the key projects for the region’s future development is the Zangezur Corridor. This strategic transport route will connect Azerbaijan’s western regions with Nakhchivan, expand regional logistics opportunities, and further strengthen Azerbaijan–Turkey relations. The opening of the corridor could enhance economic integration and cooperation in the South Caucasus. Armenia’s stance on this project remains unclear, and negotiations are ongoing. The Zangezur Corridor could become a vital part of the Middle Corridor project, creating new transit alternatives between Europe and Asia.

The South Caucasus, as a multi-ethnic and multicultural region, is home to various ethnic and religious groups. The historical relations among Azerbaijan, Armenia, and Georgia have gone through various political and cultural phases. Many international cultural events and cooperation programs are held in the region. Georgia’s efforts toward EU integration, Azerbaijan’s cooperation with the Organization of Turkic States, and Armenia’s close relations with Russia reflect different geopolitical orientations in the region. Theater, music, literature, and art play a significant role in cultural relations. However, political conflicts and ethnic tensions negatively impact the continuity of this dialogue.

Thus, the geopolitical balance in the South Caucasus has been reshaped according to new realities since 2020.

Translator operator

Mehdizade Yusif