Is an interconnected Caucasus on the horizon?

The new status quo in the aftermath of the second Nagorno-Karabakh war has opened new possibilities for regional cooperation. While the three South Caucasian countries are still trying to come to terms with the new reality, their powerful neighbours dream big of new, highly profitable transport corridors of global significance.

For three decades, the South Caucasus has been divided by barbed wire, trenches, and the other physical manifestations of mutually disputed and unrecognised lines of division and demarcation. And because of this, war has visited the region, again, and again, and again. 

In the aftermath of the Second Nagorno-Karabakh War — the latest and most bloody conflict to erupt in the region in the last quarter-century — new plans are being drawn to rebuild the connections severed during the Soviet collapse. But is this even possible? And who stands to benefit?

After the war

The tripartite peace declaration signed between the leaders of Armenia, Azerbaijan, and Russia on 10 November not only brought an end to the fighting in Nagorno-Karabakh, but also included a special point on the restoration of ‘all transport links in the region’. 

Specifically, the declaration stipulates that the borders between Armenia and Azerbaijan will reopen and that Armenia will guarantee safe movement of people, vehicles, and goods between Nakhchivan and the Azerbaijani mainland through Armenia.

On 10 December, during Azerbaijan’s Victory Parade, Turkish President Recep Tayyip Erdoğan and Azerbaijani President Ilham Aliyev brought up the possibility of integrating three regional cooperation formats — Turkey–Georgia–Azerbaijan, Russia–Azerbaijan–Iran, and Russia–Turkey–Iran — into a single platform.

Erdoğan also mentioned that Armenia could join such a platform and that Turkey would open its border to Armenia, ‘if Yerevan takes positive steps towards Ankara’. 

The Turkish President did not specify what these ‘positive steps’ might be. 

In a joint press conference between Foreign Minister Mevlüt Çavuşoğlu and his Iranian counterpart Javad Zarif on 29 January, Çavuşoğlu stated that Iran and Turkey were ‘planning cooperation on the South Caucasus in a 3+3 format’ — which observers have speculated translates to Armenia, Azerbaijan, and Georgia plus Turkey, Russia, and Iran. He also stated that this project also enjoys the support of Russian President Vladimir Putin.

During the press conference, Zarif did not comment on the proposed multi-country platform. 

‘An ambitious project’ 

Two railway routes between Armenia and Azerbaijan have been proposed, one through Armenia’s southern Syunik province connecting the town of Horadiz with Nakhchivan and another in the north, restoring a Soviet-era railway between Ijevan and Gazakh.

In late December, the Azerbaijani authorities announced that they had already begun developing the former route through the newly reclaimed lands to the Armenian border. Speaking to journalists, Aliyev said the railway would be integrated into the corridor connecting Azerbaijan proper to Nakhichevan.

Vusal Gasimli, the executive director of the Centre for Analysis of Economic Reforms and Communications (CAERC) of Azerbaijan told Interfax that the opening in the South Caucasus will provide the countries of the region with access to the Persian Gulf, the Gulf of Oman, and the Indian Ocean through the Iranian port of Bandar-e Abbas, as well as to the Istanbul–Islamabad railway.

Gubad Ibadoghlu, an Azerbaijani political economist and a visiting scholar at Rutgers University, told OC Media that the reopening of old railway connections and the building of new ones will, in the first place, benefit Russia, Turkey, and Iran as opposed to their smaller South Caucasian counterparts.

For Azerbaijan, he said, ‘the most difficult part would be financing the new railway as Azerbaijan’s [trade] income including the oil and gas industry has decreased six-fold since 2011’.

According to Ibadoghlu, international financial institutions would have to invest in the costly railway construction projects for them to succeed, as investments by Azerbaijan alone, for example, would probably take a century to fully recoup their costs.

Instead of looking towards economic gains, Ibadoghlu said, six-party regional integration must be understood as a programme that has political and security significance.

Promises and prisoners

The prospect of unblocking and the work of the joint Russian-Armenian-Azerbaijani intergovernmental group, which held two meetings in January and February, was met with widespread acrimony in Armenia. 

Social media users, as well as the country’s political opposition, accused the Pashinyan administration of not doing more to secure the release of over 100 prisoners of war still held by the Azerbaijani government. 

Armenia’s Prime Minister Nikol Pashinyan stated in late March that unblocking ties with neighbours is the most important task for Armenia, with the caveat that ‘this process cannot take place at the expense of Armenia’s vital interests’.

During an 8 April meeting between Putin and Pashinyan, the Russian President praised Pashinyan as having taken ‘bold action to support the intergovernmental group’s activities’. He did not go into further detail. 

There are indications that, as far as POWs are concerned, Armenia’s authorities do not hold positions too different from those of their critics. On 17 February, the secretary of Armenia’s Security Council, Armen Grigoryan, told Azatutyun that ‘it is difficult to discuss any issue [with Azerbaijan] if the issue of prisoners [of war] is not resolved.’

In the case that economic unblocking does go ahead, Economist and Yerevan State University professor Hayk Mnatsakanyan told OC Media that, at a purely economic level, it is impossible to make a judgement on what the impact will be without ‘comprehensive calculations, analysis and at least a preliminary pricing policy’. 

While there is no exact information on what unblocking economic connections would actually look like, the South-Caucasian Railways company, which runs major railways in Armenia, calculated that the initial cost of reconstruction of Armenia-Azerbaijan rail connections would be about $210 million on the Armenian side.

Despite the political controversy, some remain optimistic about the prospect of open borders. 

Armenia can turn into a ‘transit route’ for the region, the head of the Union of Exporters, Raffi Mkhjyan told RFE/RL in early January. ‘We can insure our goods and then send them through Azerbaijan without any fears. Where is the problem? If we organise all this with literate people, with professional people, we can pass this very easily’. 

Restoring economic ties in the region will also likely mean the reopening of the Turkish-Armenian border. 

While some economists speculate that the reopening of the border might help give a modest boost to Armenia’s economic growth, they also worry about what competition with Turkish businesses may do for Armenia’s homegrown industry.

According to Hayk Mnatsakanyan, Armenia can only avoid losing domestic industry to Turkish competition if the state steps in to provide direct aid to help local businesses against their Turkish competitors. 

At present, however, the prospect of opening Armenia’s western border appears a long way off. Since the war, Armenia has banned the import of Turkish goods for a renewable period of six months.

‘A clear no’

While the war between Armenia and Azerbaijan lies at the heart of new plans for the economic integration of the South Caucasus, any plans for a full regional integration necessarily also include Georgia and its own ‘frozen conflicts’. 

Especially since a ‘3+3’ integration platform would pair Georgia with Russia, and as there appears to be renewed interest in restoring the Armenia-Russia railway connection through Abkhazia. This latter point, in particular, has found staunch opposition among Georgian officials.

Zurab Abashidze, Special Representative of the Prime Minister of Georgia for relations with Russia, told OC Media in February that the establishment of a railway connection between Abkhazia and Georgian government-controlled territories could only be discussed within the ‘process of restoration of Georgia’s territorial integrity’.

The sentiment was echoed in a 23 February statement by the Georgian Foreign Ministry, which stated that ‘until concrete steps are taken towards de-occupation, it is difficult to unite with the Russian Federation on any peace platform’. 

The ministry did, however, state that it was open to discussing integration between Georgia, Armenia, Azerbaijan, Turkey and Iran —but only so long as Russia was excluded.

Talking to OC Media in early March, former State Minister for Reconciliation and Civil Equality Paata Zakareishvili underlined that at the initial stage, Abkhazians, ‘who are mostly concerned with the status issues’, would not have a say in any hypothetical negotiations over restoring the railway connection between Georgia and Russia.

‘If anything happens, it would necessitate a bilateral agreement between Georgia and Russia, and maybe then involving Armenia’, he said. ‘Russia has signed a trade corridor agreement with Georgia in 2011 entirely uninvolving the Abkhaz authorities. This is an important precedent considering it happened after 2008 and the format could become relevant again.’

The 2011 deal involved Swiss company SGS as a third, neutral party to monitor cross-border cargo traffic crossing the border.

‘Georgia can truly see both geopolitical and economic benefits from restored railway connection, and obviously, Armenia could be more interested in transport connection through a friendly state’, he said. As far as the ‘3 + 3’ format is concerned, however, Georgia’s response is ‘a clear no’ as it ‘would strengthen Russia’s positions in the region’. 

Dreams of the past

While Georgian officials have looked at proposals of regional integration with deep scepticism, in Abkhazia a constituency has emerged that sees regional integration as the solution to questions of both economy and security. 

On 11 February, a delegation of Abkhazian MPs travelled to Moscow to discuss the reopening of the railway link connecting Russia to Georgia, Armenia, and Turkey through Abkhazia. The MPs have appealed to the Russian State Duma, the Abkhaz diaspora in Turkey, as well as the Armenian diaspora in Abkhazia, to help lobby for their cause. 

Astamur Logua, an MP in the Abkhazian parliament and the initiator of the appeal told Abaza TV that the Abkhazian railway would have advantages over the proposed route from Russia’s Daghestan to Turkey via Azerbaijan and Armenia.

He said Abkhazia’s proximity to Turkey played in favour of Abkhazia and Georgia, as their section of the railway would be much shorter for Russian–Turkish trade.

‘The ports in Krasnodar Krai are overloaded’, he said, pointing out the huge volume of goods turnover between Turkey and Russia.

Meanwhile, according to Sergey Shamba — a former prime minister who now serves as secretary of the Security Council of Abkhazia and chair of the United Abkhazia party — regional integration is a crucial chance to establish lasting peace in the region. 

‘In order for the peace process to encompass the entire Caucasus, and to beckon in the beginning of new relations that will make conflicts and hate a thing of the past, all sides must participate in common economic, trade, cultural, and any other joint initiatives’, Shamba told OC Media.

While the reaction of the Abkhazian political establishment has, in general, been positive about the prospect of an Abkhazian transit corridor there are also nuances that make some politicians uncomfortable.

Members of the opposition Amtsakhara party say they are confident that if Abkhazian terminology is respected, such transit would have a positive effect on the economy and such an opportunity should not be missed. Avtandil Surmanidze, a member of the political council of Amtsakhara told local media that if the railway was called ‘the Abkhazian railway’ instead of a ‘section of the Georgian railway’, the party saw no other problems.

The Communist Party of Abkhazia has also supported the MPs’ initiative. The chair of the party, Bakur Bebiya, says he wants Abkhazia to be an ‘open country’ and transit is a means to this end.

‘The main political achievement of the people of Abkhazia is freedom and it will always remain inviolable. The world is different today and Abkhazia has the opportunity to become an open country. It’s essential to strengthen trade, economic, and humanitarian links [to Abkhazia’s benefit]’, Bebiya said.

The leader of the Forum of People’s Unity of Abkhazia party, Aslan Bartsits, was less optimistic. He told local media that there were too many unresolved problems in Abkhazia, especially energy security to attempt such an expensive project.

‘We have barely enough electricity for ourselves. Just imagine what a huge and energy-consuming project a railway is’, Bartsits said.

[Read about Abkhazia’s electricity problems on OC Media: Abkhazia moves to shut down cryptomining as blackouts escalate]

Another problem that has been raised by some is the Abkhazian railway infrastructure itself. In 2010, Russia loaned the Abkhazian government ₽2 billion ($27 million) to repair sections of the railway — a loan they are still repaying.

Meanwhile, the railway tracks require repairs once again, and without major investment, transporting heavy loads over rusty rails would be impossible.

With additional reporting by Ani Avetisyan, Marianna Kotova, and Shota Kincha.

 For ease of reading, we choose not to use qualifiers such as ‘de facto’, ‘unrecognised’, or ‘partially recognised’ when discussing institutions or political positions within Abkhazia, Nagorno-Karabakh, and South Ossetia. This does not imply a position on their status.