Following the September 2023 campaign by Azerbaijan to re-establish its sovereignty over all Karabakh region, the question now turns to the chance for a stable peace in the South Caucasus. Yet, to answer this question, one needs to examine the many dimensions of the conflict, including internal and geopolitical, to identify the main obstacles to peace. Only then can a strategy for such a process be developed.

In the shadows of the war in Ukraine, another regional development, interconnected to some extent with that conflict, also has the potential to shape the future of Eastern Europe and the former Soviet sphere. This is the Armenia-Azerbaijani peace process and the changing power balance in the South Caucasus. The geopolitical players shaping Ukraine's war and peace landscape also keep the Armenia-Azerbaijani peace process in focus. Nevertheless, there are distinctive features in both cases worth exploring.

On September 19th and 20th 2023, Azerbaijan took the Nagorno-Karabakh region by military means and forced the local authorities to dissolve their institutions. As a result, nearly the entire population of local Armenians fled their homes to Armenia. It is still difficult to try to make sense of how this unfolded so swiftly.

After many years of negotiations under the co-chairmanship of the OSCE Minsk Group, in September 2020, Azerbaijan decided to resolve the Nagorno-Karabakh (in this article many of the interlocutors refer to the region as “Artsakh”, which is its name in the Armenian context – editor’s note) conflict via military means and attacked the region. As a guarantor of the security of the Armenians living there, Armenia supported the local population.

The past week marked the worst period for Nagorno-Karabakh, bringing a tragic end to the 30 years of existence of the breakaway state that proclaimed independence in 1991. While not recognised by any other country, Nagorno-Karabakh was backed by Armenia until the government under Nikol Pashinyan recognised it as a part of Azerbaijan after the 2020 war, paving the way for Baku to proceed with its coercive policy of “integration”.

Azerbaijan refers to the 24-hour blitzkrieg as a triumph, which was done quickly and professionally. Having already become crippled and dysfunctional after the 2020 war, the “Nagorno-Karabakh Republic”, which had lost land connection with its long-term patron, Armenia, realised that it had no chance to resist the Azerbaijani advancement and accepted all of Baku’s conditions of surrender.

An interview with Thomas de Waal, a senior fellow at Carnegie Europe. Interviewers: Adam Reichardt and Agnieszka Widłaszewska

Events over the past few weeks have seen relations between Baku and Yerevan once again hit a low point. Now focused on recent military clashes, both sides continue to hold very different perspectives on the Karabakh conflict and its future.

The conflict over Nagorno-Karabakh has shown the world the anachronistic nature of the problems faced by the politicians, armies and citizens of Armenia and Azerbaijan. Nevertheless, this real and grim conflict that continues to cause tension in the region contrasts greatly with the hopes of many for peace and well-being. The prospects for development, prosperity and peaceful coexistence between the peoples of the Caucasus are still overshadowed by territorial and ethnic conflict. Despite this, they do not match the aspirations and dreams of the societies present in this region.

The South Caucasus has serious potential to become a full-fledged logistics hub of regional significance. While opposition to developing a new corridor remains, the potential benefits for all countries in the South Caucasus and beyond will outweigh any costs or perceived risks.

The region of the South Caucasus is located at the intersection of logistics routes leading from north to south and east to west. Of course, the countries of the region are interested in increasing their logistical attractiveness. In this regard, significant funds have been invested in the development of logistics infrastructure over the past ten years. In particular, the Alat port in Azerbaijan was recently built and is now operational. In order to ensure the smooth functioning of the International North-South Transport Corridor, Baku allocated a soft loan to Iran of 500 million US dollars to finance the construction of the Astara-Rasht railway line. The investment was also used for the creation of logistics-related infrastructure to service this line. Azerbaijan took on a long-term lease of the Iranian section of the railway, as well as a railway station and a cargo terminal located there.

The trilateral co-operation format – Armenia, Azerbaijan and Georgia – has inexhaustible potential. Of course, not all external players claiming special interests in the region will be happy about this development. However, the time has come to encourage a radical increase in the culture of co-operation and pursue more ambitious goals. This will ultimately lead to the formation of a common vision of regional development as a space belonging to all three of these countries.

Despite the fact that the South Caucasus is undoubtedly a region with clearly delineated natural borders, it can hardly be called a full-fledged region. For almost 30 years after the restoration of independence, the states of the South Caucasus have not used the opportunity to create an integrated space of stability and security. Nor have they been able to provide their populations with decent levels of prosperity and opportunities for economic growth. Today, we instead face a reality marked by dividing lines and alienation.

The agreement that ended the 2020 Karabakh War called for transportation links to be put on the geopolitical agenda of the South Caucasus. According to the statement, Armenia should guarantee the security of transport connections between the western regions of the Republic of Azerbaijan and the Nakhchivan Autonomous Republic. However, recent tensions in the Syunik region will likely impact the success of these developments.

The 2020 Karabakh War has caused a significant shift in the geopolitics of the South Caucasus. Azerbaijan naturally strengthened its position, while Armenia was plunged into an acute political crisis without any clear solutions. Even the victory of Nikol Pashinyan’s “Civic Contract” party in the June 2021 early Parliamentary elections did not put an end to the domestic instability. Russia and Turkey have also increased their influence in the region. Moscow achieved its crucial goal of deploying troops in Karabakh, while Ankara has sent a clear message that it is now a leading regional powerbroker.

Georgia has great interest in advancing peaceful and neighbourly relations with the other countries of the South Caucasus. Now, there is an opportunity to strengthen ties among the three countries. However, a realistic approach towards these relations is needed to achieve modest success in the short and medium-terms.

The main aim of Georgian policy in the South Caucasus is to sustain peace and stability while ensuring neighbourly relations with both Armenia and Azerbaijan. Tbilisi adhered to this approach during the so-called Second Nagorno-Karabakh War last year. In particular, the statement of the National Security Council of Georgia published on October 3rd 2020 serves as a proof of such a commitment. This statement stresses that the active armed conflict should come to an end as soon as possible.

The recent outbreak of fighting over the small mountainous region of Nagorno-Karabakh has a different context than previous clashes or the war in the early 1990s. Nevertheless, regardless of whether or not the current fighting will result in a long-lasting and all-out war, the conflict is poised to remain unsolvable for the foreseeable future.