The European Union and the South Caucasus: Available options and a strategic necessity

The South Caucasus region is important for Europe even if many Europeans do not yet recognize that reality.  It will be a place where many of our strategic goals, especially economic, will either succeed or fail.  And consequently, we in Europe need to develop special expertise on the region, get to know its leaders, and become familiar with their problems and prospects.  It has certainly caught my attention, and I want to share some of my impressions here. Since the collapse of the Soviet Union, the South Caucasus has known neither stability nor balance, and the challenges that many in Eastern Europe experienced during the same decades have been even greater in this region.  Europeans have focused on the Balkans and even committed forces there, but we have been less attentive to the non-Russian countries that emerged out of the USSR. Perhaps nowhere has this relative lack of interest and attention been greater than in the Caucasus, a place to which Europeans have devoted only minimal attention in the form of OSCE resolutions and groupings and resolutions at the UN Security Council.  Abkhazia, an autonomous region of Georgia, is the most obvious case where Europeans should have gotten involved, but the same conclusion applies with equal force to South Ossetia and to Nagorno-Karabakh. 

 

One reason the South Caucasus is so important lies in the two powers that border the region, Turkey and Russia.  On the one hand, Turkey is becoming increasingly important as a real actor for stability in its southern zone whilst taking care directly to inform Moscow at each step. 

And on the other, Russia is again a growing presence in the South Caucasus: the failure of Mr. Saakashvili and the war he sparked in 2008 has given Russia a key ally in Abkhazia and reinforced total control over South Ossetia, while also opening the way to the possibility of reoccupying Georgia in case of trouble.  Russia is so sure of this that she took advantage of the days of conflict to show that its aircraft could also compromise the “transit” of oil and gas from the Caspian Sea, an important sector of the Georgian economy.  Russian jets targeted the main pipeline in Rustavi, south of Tbilisi. 

 

Russian influence on Armenia is overwhelming even though the Russian ambassador there tries to conceal this, but it is clear that no decision is taken by Yerevan that has not been discussed with him.  The last presidential elections, which I observed as part of the OSCE mission, in February 2008, revealed Russia’s strength and its role in denying the least opportunity to the opponent, Levon Ter-Petrosian, whose manifesto mentioned searching for a peaceful solution to Nagorno-Karabakh and reducing Armenia’s military expenditure.  Alone, such a poor country cannot manage the budget expenditure to maintain a force in this area. 

 

But in addition to everything else, the South Caucasus must become a priority for Europe because all future energy options depend on it.  It is crucial for us to know the actors of these three countries.  Investments needed in the near future to allow the flow of gas between Europe and the Caspian Sea are essential.  The UK, geographically at the end of the chain, has guaranteed contracts until 2015 and generally we consider that supplies to Northern Europe are guaranteed until 2020.  In terms of investment, this is not a long time. 

 

Projects have been on the table for several years, but the decision to finance the Nabucco gas pipeline across Turkey, to be fuelled in part by Azerbaijan and in part by Iran, continues to be met at every turn by the direct competition from a Russian pipeline project that could be supplied by Azerbaijan and laid under the Black Sea.  Hesitations in financing this investment are also due to the fact that the profitability of such a pipeline is only guaranteed in the medium-term if it is supplied by Iran, and not just Azerbaijan.  Russia is playing a clever game by offering Azerbaijan a very high price, much higher than that offered by its traditional ally, Turkey. [1] 

 

The Europeans depend on the outcome of a game in which they are only one of the players: Azerbaijan’s President Ilham Aliyev does not want to see the restoration of a Russian monopoly on Caspian gas and is prepared to accept the risk of a loss of earnings on Azeri exports to maintain the possibility of a choice of partners for his country.  The role of France is crucial here: Total is present and hopes to increase its market share in the new gas fields in the Caspian Sea.  Its pragmatic business approach, however, is very open to Russia: if Azerbaijan chooses to privilege Russia, Total will not balk at modernizing the old Russian pipelines that cross Daghestan, thus permitting gas from the Shah Deniz II gas field to go through Russian territory and be resold to Europeans upon payment of a transit price to Russia. 

 

What does this mean for the future?  First, it is imperative that we Europeans understand this region, the motivations of, and the issues faced by, its political, economic and energy leaders.  Azerbaijan, for example, has a real demand for higher education; France can participate in this and prevent an American monopoly in that sector.  Such a monopoly may be tempting for many, but presents the Azerbaijani president with the difficulty of being constantly criticized for the non-democratic nature of his country.  Mr. Aliyev in fact refuses to allow the United States to use the territory of Azerbaijan in various actions to destabilize neighboring Iran.  This firmness surprises American specialists who don’t take into account the role of the Azeri diaspora in Iran and the need to protect it; a function assumed by President Aliyev. 

 

Second, we must assess our dependence on Azerbaijan’s energy decisions, the only real actor in this regard in the South Caucasus, and decide on a policy toward it which goes considerably further than the timid and slow efforts of the Eastern Partnership, of which Commissioner Fulle’s visit to the region in April 2010 raised fears that it would once more be full of empty promises rather than genuine strategic options. 

 

And third, we Europeans must invest in intelligence and support for this area, both at a European and a French level given that Germany does not have the same priorities in this respect and its pro-Russian energy choices should not prevent us from pursuing a much more dynamic policy towards the South Caucasus.

Note

[1] Turkey and Azerbaijan signed a long-awaited memorandum of understanding for the shipment of 11 billion cubic meters of natural gas from Azerbaijan’s Shah Deniz field to Turkey on June 7, 2010.