Armenia, Azerbaijan, and the United States: Power Shift in the Caucasus or Business as Usual?
by Shannon O’Lear

A recent article in The Economist noted that in the current US campaign aimed at fighting terrorism, the potential for turmoil in the Caucasus region should not be overlooked. The article warned that the already tense Caucasus could collapse in conflict if people there misread and take advantage of the world’s focus on terrorism in Afghanistan. The article specifically cited the cases of the Abkhazia region in Georgia and Chechnya in the Russian Caucasus, and I would add that Armenia and Azerbaijan should also be included as we consider the ripple effects of current US efforts in Afghanistan.

Friends and Energy in the Neighborhood
The Caucasus region is named after the backbone of mountains in that area and forms a land bridge between the Black Sea on the west and the Caspian Sea on the east. To the north is Russia, and to the south are Turkey and Iran. The Caucasus countries include Georgia on the Black Sea, Azerbaijan on the Caspian Sea, and Armenia landlocked in the middle. Azerbaijan’s location on the oil-rich Caspian Sea has historically attracted the attention of the Nobels, the Rothschilds, and other oil-barons even in Tsarist times before the Soviet Union was created. Today, Azerbaijan’s oil exports continue to be a vital source of revenue and international reputation for that country. Azerbaijan’s oil wealth even captured Hollywood’s imagination in a recent James Bond film.

These oil supplies, and the international connections that they foster, help shape Azerbaijan’s relationship with Russia. Since Azerbaijan has been successful in establishing oil industry contracts with many international companies, Azerbaijan is more likely to lean away from Russia politically. Although it shares a border with Russia, Azerbaijan does not have any Russian military bases on its territory. Azerbaijan participates in the Partnership for Peace Program sponsored by NATO and aspires, eventually, to join the ranks of NATO.

There has been a recent warming trend in Azerbaijani-Russian relations. The two countries arranged that Russia would pay to rent the Qabala radar station (originally built for the Soviet military) in Azerbaijan, and they have been moving closer to an agreement on the division of the Caspian Sea. Beyond Russia, Azerbaijan has been actively pursuing relations with the west via large oil companies. In 1994, Azerbaijan’s President Aliyev signed the “Contract of the Century” to secure investment and to designate oil production sharing agreements with oil companies from the United States, the United Kingdom, Turkey, Norway, Saudi Arabia (and, ironically, Russia even though Russia’s government at that time did not recognize Azerbaijan’s rights to offshore oil fields at the heart of the agreement). These linkages with major oil companies were strategically pursued as a means of enhancing Azerbaijan’s political clout.

In contrast, Azerbaijan’s neighbor, Armenia, has very limited indigenous energy resources, thus requiring Armenia to depend on its neighbors for the supply and transport of energy resources such as oil and gas. Even Armenia’s nuclear power plant relies on fuel rods imported from Russia. Although also a participant in NATO’s Partnership for Peace Program, Armenia is not interested in becoming a NATO member. Unlike Azerbaijan, Armenia hosts Russian military bases on its territory, engages in military exercises and arms procurement with Russia, and generally seeks a close relationship with Russia even though the two countries do not share a border.

Azerbaijan is about the same size as the state of Maine, and Armenia is about the size of Maryland. In somewhat different forms than they are today, both of these states were independent for a matter of months around 1918 before they were incorporated into the Soviet Union. Once they were brought into the Soviet empire, their borders were revised according to the Soviet approach to territorial management: “Divide and rule.” The idea was to encourage tension among neighbors and to make sure that each side would have to rely on Moscow for military and economic support. This strategy served to distract people with immediate, local tension so that they would not be as able to focus on the fact that their territory had been subsumed into the Soviet empire.

When Armenia’s and Azerbaijan’s borders were revised by the Soviets, a region of Azerbaijan known as Nakhchevan was separated from the rest of Azerbaijan by Armenian territory. In addition, a significant population of Armenians came to be located within Azerbaijan’s borders. Joseph Stalin was known to move entire groups of people to completely different regions as it suited his political or industrial plans. Armenians were concentrated in the Nagorno-Karabakh region of Azerbaijan.
The United States has often been described as a great melting pot of culture. Not so for the Caucasus where cultural identity and distinction is a point of pride, particularly following seventy years of Soviet occupation and the domination of Russian language. Ethnic and national identities are especially important for many people who are seeking to leave behind an imposed, Soviet identity and return to pre-Soviet language and cultural roots. Azerbaijan is a predominantly Muslim country, and Armenia claims to be the first Christian state. Their alphabets and languages are completely different.

So, there are intertwined territories and populations of two—if not more—cultural groups. Each country has a different relationship to Russia, the former colonizer. Whereas Azerbaijan is utilizing its advantageous access to Caspian Sea oil to enhance its economic independence and to distance itself from Russia, Armenia is pursuing closer ties to Russia. In 1997, the Armenian parliament ratified the “Treaty on Friendship, Cooperation, and Mutual Assistance Between the Russian Federation and the Republic of Armenia” (also known as the Russo-Armenian Friendship Treaty). This treaty arranged for the establishment of four Russian military bases within Armenia as well as several military protocols including arms transfer. What is more, Russian-supported troops continue to patrol Armenia’s borders with Turkey and Iran, and Russian and Armenian troops have recently conducted joint maneuvers in Armenia.

In the Middle: Nagorno-Karabakh
During the Soviet era, Nagorno-Karabakh had been granted special status as a population enclave. As Azerbaijan and Armenia emerged from the Soviet collapse and pursued post-Soviet national identities, the concentrated group of Armenians living in the Nagorno-Karabakh region of Azerbaijan made moves to claim the region as their own territory. They also fought to control a corridor of access to Armenia, known as the Lachin corridor. The tension over this territorial claim erupted into violence, thousands of Armenians and Azerbaijanis were killed, and thousands more fled the area to become internally displaced persons and refugees in both countries. Nagorno-Karabakh claims to have its own president, but the international community does not recognize Nagorno-Karabakh as an independent state.

A cease-fire has been in place since 1994, but the issue has not been resolved. When Robert Kocharian came to power in 1998 as Armenia’s elected president, he made his stance on Nagorno-Karabakh clear when he announced that, in the interest of national self-determination, Armenians should gain international recognition for Karabakh and aim for the development of permanent geographical connection of Karabakh with Armenia. Yet Azerbaijan’s president, Heidar Aliyev, continues to invoke the international principle of territorial integrity as the basis for claiming Nagorno-Karabakh as part of Azerbaijan’s sovereign territory.

At the height of the armed conflict between Armenia and Azerbaijan in the 1990s, Azerbaijan and Turkey, who share a strong cultural bond, imposed a blockade on Armenia as punishment for Armenian aggression and claims to the Nagorno-Karabakh region of Azerbaijan. Borders with Turkey, to the west of Armenia, and with Azerbaijan, to the east, make up the majority of Armenia’s borders. Georgia and Iran share much smaller borders with Armenia, and those were the only international borders that were officially open for several years during the 1990s.

Although limited exchange took place on the fringes, the blockade on Armenia imposed severe energy shortages as well as constraints on supplies of food and other consumer goods. There were several winters during which the people of Armenia lived with very little heat or light. Electricity during those years was so rare that young children did not understand the purpose of light switches on the wall. The severity of the blockade was compounded by an earlier decision to close down Medzamor, Armenia’s nuclear power plant, in part due to pressure from environmental activist groups. A collective memory and shared history of the blockade years so soon after independence is a point of cohesion around which Armenians have developed a strong sense of Armenian nationalism. The blockade on Armenia was particularly severe since Armenia still had not recovered from a devastating earthquake in 1988 and in addition was, like most other former Soviet republics, struggling to create a viable economy on its own.

Sanctions and Conflict
Also in the early 1990s, the United States Congress was developing the “Freedom for Russia and Emerging Eurasian Democracies and Open Markets Support Act,” known in shorthand as the FREEDOM Support Act. The objective of this act was to help promote and stabilize democratic forms of government and to foster economic growth in the suddenly independent former Soviet republics. Armenian Americans acted swiftly to convince Congress that Azerbaijan should be punished for aggression against Armenians in the Nagorno-Karabakh region. In 1992, even the American government did not have established, diplomatic connections in the Caucasus region, or a balanced view of the complex history of the region, and Congress agreed to exclude Azerbaijan from the FREEDOM Support Act. The document omitting Azerbaijan from US aid to the newly independent government was known as Section 907. The document stated that Azerbaijan was utilizing offensive force against both Armenia and Nagorno-Karabakh.

For nearly a decade, these sanctions have excluded the Azerbaijani government from several forms of aid from the United States, although corporate investment flows and nongovernmental organization aid have been unimpeded. These sanctions symbolize a serious blow to Azerbaijan’s sovereignty since they fail to recognize that nearly 20 percent of Azerbaijan’s territory is occupied by Armenians. Attempts to repeal Section 907 have been made by international nongovernmental organizations, business interests, and Azerbaijani sympathizers.

Meanwhile, Azerbaijani and Armenian leaders have met more than seventeen times to discuss the Nagorno-Karabakh region. The issue remains a contentious one for both of these countries and for the geopolitical stability of the Caucasus region as a whole. Recent talks were held in Key West, Florida in early April 2001. That round of talks was initiated by French, American and Russian Co-Chairs of the Organization for Security and Cooperation in Europe Minsk Group, known as the OSCE Minsk Group. This group was created to find a solution to the thirteen-year conflict. Building on previous talks hosted by French President Chirac in Paris in January and March of 2001, the Key West talks were actively mediated by the OSCE Co-Chairs, were visited by US Secretary of State Colin Powell, and generated a flurry of news headlines.

Despite reported commitment to resolving the issue through mutual compromise, and despite advances in the involvement of mediators, no clear progress was made. Azerbaijan offered a high-level of autonomy to the Armenian-populated enclave within its borders, but Armenia insists on full independence for the Karabakh region. Further complicating the situation, the self-proclaimed president of Nagorno-Karabakh, whom the international community does not recognize, insists that officials representing Nagorno-Karabakh should be included in peace talks. Additional talks were scheduled to take place in Geneva in June 2001, but these talks were postponed indefinitely.

The events of 11 September changed many things about the world, including relations among Armenia, Azerbaijan, and the United States. Azerbaijan’s government quickly condemned the attacks on the United States and voiced its support for the effort in Afghanistan. Azerbaijan’s support for the United States is not merely a diplomatic gesture: Azerbaijan’s Defense Minister confirmed that US Air Force Hercules transport planes involved in the operation in Afghanistan were using Azerbaijani air space since Azerbaijan indicated its support for the anti-terrorist alliance, and US military aircraft were seen refueling at the airport in Azerbaijan’s capital. Additionally, the United States reportedly received information on missile launches and warplane activity via the Qabala radar station in Azerbaijan.

This effort on Azerbaijan’s part has not gone unnoticed. On 16 October 2001, the US Secretary of State Colin Powell urged the Senate to lift the sanctions of Section 907 in recognition of Azerbaijan’s support of the US military effort in Afghanistan. On 25 January 2002, President Bush signed a waiver of Section 907 and by doing so temporarily lifted sanctions on Azerbaijan. For Azerbaijan, lifting the sanctions will allow an inflow of aid into areas of much needed legal reform, clarification of property laws and criminality, the development of a transparent legal framework, and enhancement of institutional stability. Other former Soviet republics have already received US support in these areas.

Armenia’s government, in response to the possibility of suspending sanctions on Azerbaijan, has downplayed the potential benefits of suspending sanctions on Azerbaijan and has warned that a full repeal of the sanctions could disrupt the already delicate balance of power in the region. In addition to opening up the pathway for military and other forms of aid to Azerbaijan with the temporary waiving of Section 907, the United States has also agreed to set aside $4.6 million in military assistance to Armenia—a decision possibly intended to appease the Armenian American lobby in the United States.

The US Perspective
In addition to the fact that the United States is providing aid and support to these newly independent states, why does this tumultuous area in the Caucasus matter to the United States? There are several reasons. First, it is uncertain how long the United States and its allies will be engaged in Afghanistan, and it will be important to maintain air space routes for aircraft involved in military and humanitarian efforts there. The Caucasus region is in a prime location on the route to Central Asian states from which the United States is basing its campaign.

Since the Nagorno-Karabakh conflict is not one that will resolve itself eventually over time, it would be in the interests of the United States to continue to support the peace process there. Although the Nagorno-Karabakh conflict may seem to be a relatively minor issue in comparison with the conflict in Afghanistan, advancing the peace process between Armenia and Azerbaijan would set a powerful precedent by demonstrating that the United States is not waging a war against Islam. It would benefit all sides for the United States to clarify that message to Turkey. Turkey is a member of NATO, but its Muslim majority does not support US actions in Afghanistan. Successfully promoting the peace process between Muslim Azerbaijan and Christian Armenia would be a highly meaningful accomplishment in the Caucasus region.

Another reason why this region matters to the United States has to do with Caspian Sea oil and gas. The region around the Caspian Sea is known to be rich in oil and gas although estimates on the actual potential of oil and gas fields vary. However, considerable investment has been made by US-based and other international corporations to develop these resources and to begin the process of constructing export pipelines to carry oil and gas to other regions. Official US policy on pipelines in the region favors multiple routes, including currently operating pipelines carrying Caspian oil through Russia. The Caucasus land bridge is a strategic route for constructing additional pipelines for exporting Caspian oil and gas. To allow the region to implode in conflict would hardly be good for business nor good for local populations. Increased international involvement in the oil industry will help to ensure that environmental standards are higher than they might otherwise be and that local populations benefit more directly from the industry in the way of employment or public investment. Furthermore, as Azerbaijan looks to expand its role in the world oil market, the location of pipelines to export its product abroad will be important for the entire Caucasus region, but particularly for landlocked Armenia. Armenia hopes to be included in pipeline projects that will carry Caspian oil and gas westward to the Black and Mediterranean Seas.

Another point of interest for the United States is that Armenia has been strengthening its relationship with Iran. For Armenia, there are several positive aspects of closer relations with Iran. Iran can provide Armenia with significant economic ties and energy and act as a political counterweight to Turkey and Turkish influence in the region. Iran shares with Armenia concern over Azeri nationalist claims within Iran and ongoing calls for the reunification of Azeris who are separated by the Azerbaijan-Iran border. There are also approximately two hundred thousand Armenians living in Iran. Iran and Armenia continue to expand cooperation in areas of economic activity, transport and energy despite opposition from both the United States and Russia to increased Iranian influence in the region.

Finally, the United States should pay attention to how its actions in Afghanistan are interpreted in the already tense region of the Caucasus. Since 11 September, both Azerbaijan and Armenia have accused the other of terrorism, and it is clear that tensions are running high between the two countries. Even before Section 907 was waived, Azerbaijan’s President claimed that Armenians occupying the Nagorno-Karabakh region are terrorists. He has warned the OSCE that Azerbaijan is prepared to take military action to regain control of Nagorno-Karabakh unless the OSCE takes a “principled position” on this territorial dispute. It would seem that Azerbaijan is following the lead of the United States by actively pursuing retribution for attacks on its own soil.

Shannon O’Lear is an Assistant Professor in the Geography Department at the University of Illinois. Her research focuses on political and environmental issues of the Caucasus and Caspian Sea regions. She teaches courses on Russia and Eurasia, Geography of International Conflicts, and in the fall she will teach a new course on Environmental Policy.