ARMENIA, AZERBAIJAN: A CONFLICT OF CONVENIENCE FOR MOSCOW AND WASHINGTON
Stratfor
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July 3 2007
Expectations of a renewed fight between Armenia and Azerbaijan over
the Nagorno-Karabakh region are rising, since Azerbaijan has started
using the huge windfall of cash from its new pipeline to quintuple
its defense budget. This time, the conflict could serve as a spark
for the larger struggle between the United States and Russia.
Analysis
The conflict between Armenia and its neighbor Azerbaijan over the
disputed Nagorno-Karabakh region has crescendoed in recent months,
since Azerbaijan has started seeing the enormous cash windfall from its
new pipeline and Armenia has scrambled to secure a protective Russian
presence within its borders. But the conflict between Azerbaijan
and Armenia is about more than the two states and their disputed
territory; the United States and Russia are using that conflict as a
foothold to strengthen their positions in the region as they try to
expel each other.
Armenia and Azerbaijan have long been deadlocked over the small
sliver of land between the two states, though the conflict has
been relatively dormant since the 1994 cease-fire. Technically,
Nagorno-Karabakh is within Azeri territory, though it is controlled by
Armenia. International pressure, lack of support from every nation but
Russia and Iran, and fear of Azeri retaliation have kept Armenia from
annexing the territory. Azerbaijan has been held back from retaking the
land due to international pressure and the Azeri military’s relative
weakness. Russia has maintained a shaky and controversial balance by
supporting both sides.
However, Azerbaijan began to see the possibility of change in 2006
with the completion of its Baku-Tbilisi-Ceyhan (BTC) oil pipeline,
which Western companies developed to feed oil to Europe. Azerbaijan
not only became increasingly pro-Western, but it also saw tremendous
new income. Azerbaijan’s president has already decided how he
wants to spend his country’s newfound wealth: on defense. In 2004,
Azerbaijan’s defense spending was approximately $175 million, but by
the beginning of 2008, the country will begin spending at least $1
billion on defense. Armenia recently increased its defense spending
by 20 percent — from $125 million to $150 million, which obviously
pales in comparison to Azerbaijan’s increase. Azerbaijan’s spending
will go mostly toward air offensive capabilities, with Armenia’s
going to air defense, though both now are looking to expand their
ground capabilities.
Armenia simply lacks the influx of energy income that Azerbaijan has.
The enormous Armenian diaspora inside the United States has ensured
that Armenia is one of the largest recipients of U.S. foreign aid,
but Armenia’s neighbors — Azerbaijan, Georgia and Turkey — have
shunned it economically and politically, leaving it with little
opportunity for trade or expansion. The one neighbor Armenia has an
open relationship with is Iran. In March, Iran and Armenia opened
the Iran-Armenia natural gas pipeline; Iran ships natural gas north
and Armenia converts the natural gas to electricity to export back
south to Iran. The pipeline itself is owned by Russia, as is much of
Armenia’s energy infrastructure, so Yerevan is seeing little money
from the project.
The Armenian-Iranian project is another step in the Armenian-Azeri
power struggle and the impetus for Washington to take sides in the
power shift in the Caucasus. In March, U.S. President George W. Bush
requested a substantial aid cut — nearly 50 percent of economic aid
and 30 percent of military aid — for Armenia, provoking an outcry
from the Armenian-American lobby. Around the same time, the United
States announced plans to increase aid to Azerbaijan by about the
same amount. The U.S. State Department has cited Armenia’s ties with
Iran as the reason for the cut, though a larger battle is brewing in
the Caucasus.
Russia has watched as Azerbaijan and Georgia — two of the three
former Soviet states in the Caucasus — grew more pro-Western and
caused Russia’s strategic set of military bases to slip away. After
the 2004 Rose Revolution in Georgia, Tbilisi ordered Russia to begin
removing its vast military and equipment from its territory.
Officially, Russia said the last of its equipment left Georgia on June
28. Much of the hardware from the Georgian bases was shipped back to
Russia, though quite a bit of it was relocated to Russia’s large base
in Gyumri, Armenia. There is also uncertainty about the relocation
of 40 armored vehicles and 20 tanks; Russia says they are back home,
and Azerbaijan suspects they are in Armenia.
Baku has formally expressed its outrage over Russia’s military ramp-up
in Armenia, though Moscow vows it is not supporting Armenia more
than Azerbaijan. But Baku is also making larger and more serious
threats against the Kremlin. Russia has a strategic and important
anti-ballistic missile (ABM) base, Gabala, in Azerbaijan, for which it
holds a lease through 2016. This is the same base Russia has offered
to the United States for the location of a joint ABM facility. Since
Russia began moving further into Armenia, Azerbaijan has been
"reconsidering" Russia’s lease.
Though this seems devastating to Russia, the Kremlin does not appear
to be caught off guard. In 2005 — around the time Azerbaijan grew
more pro-Western and the BTC was in its final stages — Russia began
construction on an ABM radar base in Armavir, in southern Russia. The
base, similar in scope to Gabala, will be completed in December. It is
as if Russia realized it would eventually be evicted from Azerbaijan.
Washington could have a unique advantage in the Armenian-Azeri-Russian
spat. Though the United States does not want a joint base with
the Russians at Gabala, it would not pass up taking the base for
itself. U.S. Defense Secretary Robert Gates will travel to Baku on
July 9 to discuss this idea, along with the possibility of lily pad
bases in the country.
An eviction from Azerbaijan does not mean Russia will lose its hold in
the Caucasus. Russia is expanding its bases in Armenia and has made
plans to expand the small country’s energy infrastructure through a
series of refineries and deals with Iran. Moreover, Russia knows that
a conflict within the Nagorno-Karabakh region will not only cause
Azerbaijan to spend a good deal of its money on a war, but also will
throw most of the region into chaos — leaving it vulnerable and ripe
for Russia to move in and provide "stability."
Nagorno-Karabakh has been a fight waiting to happen between Azerbaijan
and Armenia, though now it seems the United States and Russia are
behind much of the pressure on these countries.
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