Putin's abrupt return to South Caucasus

Russian President Vladimir Putin's visit to Baku on Aug. 18-19 has the potential to remain on the agenda for a long time with its strategic contexts and symbolic emphasis.

The dark clouds rising from the Kursk region, where the Ukrainian army has been deployed, have given way to clear skies in Baku.

Simply put, Putin is sending the message that Russia is not abandoning its role in the South Caucasus, where it has lost ground, even if it is facing a lot of trouble in Ukraine, and that it can move forward in the north-south corridor and break through the geopolitical encirclement as the western door closes.

Despite close relations with the West, Azerbaijani President Ilham Aliyev emphasizes the indispensability of Russia for strategic balances, economic interests, and regional stability.

Aliyev's attentive reception of Putin not only confirms a distanced stance in the face of the new Cold War, but also reflects a quest to balance Turkey, whose influence in the region has been growing since the Karabakh war.

The discomfort in Baku caused by Turkish President Recep Tayyip Erdoğan's remarks “Just like we entered Karabakh...”, reflects an uneasiness in Baku about wars of influence. Azerbaijan, the newspaper of the Azerbaijani National Assembly, replied to Erdoğan and said, “We paid for every bullet we took... The bonds of brotherhood should not be turned into a football match with a single goal... All of Azerbaijan is watching with disappointment the attempts to claim our victory.”

Kamran Hasanov of the Peoples' Friendship University of Russia (RUDN) told Vzglyad newspaper, “Azerbaijan is trying not to be subjugated by Turkey. That is why it is building allied relations with Russia and saying that Moscow will not leave the South Caucasus. The whole point of rapprochement with Russia is to get out from under Ankara's umbrella.”

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So what is the reason to draw these conclusions about the visit?

Both sides displayed a diplomatic finesse that mutually raised the stature of relations. Aliyev and his wife Mehriban Aliyeva hosted Putin at their home in Zaghulba, 40 kilometers from Baku.

Putin visited the Martyrs’ Lane, the so-called 'Black January’ where those who died in the Soviet intervention in 1990 are buried, and laid a wreath at the Eternal Flame. It was an impressive gesture. He honored the memory of his senior KGB colleague by laying a wreath at the grave of Heydar Aliyev and his wife Zarifa Aliyeva on the Alley of Honor. He visited the Holy Myrrhbearers Cathedral and sent a message that the Russian Orthodoxes are safe. At the delegation meeting, both sides of the table were crowded. Both family warmth and state seriousness in Zaghulba.

Azerbaijan is one of the most prominent countries in the post-Soviet space that has not experienced a drift in its relations with Russia. Not like Kiev, which turned Ukraine into an arena for NATO's showdown with Russia. It has not been as reckless as Georgia, which attempted to seize Abkhazia and South Ossetia, or as Armenia, which sought Western patronage in order to get out of Russian influence, but lost Russian support in the face of Azerbaijan's military operations. Russians stayed away from campaigns against Russian and Russian culture. They did not give space to the 'Cancel Culture' that has recurred in the West in parallel with the Ukrainian war. The West's strategy to contain Russia did not pay off.

It is not for nothing that both sides emphasized this during the visit. Aliyev proudly said, “There are 324 Russian-language schools in Azerbaijan. 160,000 students study in these schools. More than 800,000 students are learning Russian as a second language. 26 universities have Russian departments where more than 15,000 students study.” 

“We appreciate your interest in the Russian language, Ilham Heydarovich,” Putin greeted his host. The Russian leader also announced the establishment of the Russian-Azerbaijani University in Baku.

These are factors that reinforce the relationship of trust.

The level of contact is gradually rising from the relationship between the former USSR country and the boss to one of equals. The parties attach great importance to the Declaration on Allied Interaction, signed on the eve of the invasion of Ukraine in 2022.

Economic interests, political orientations, and sensitivities have made Azerbaijan Russia's main partner in the South Caucasus. Armenia, on the other hand, has turned into a former ally that Moscow needs to “straighten out.” Armenian Prime Minister Nikol Pashinyan took office promising a rupture with Russia. Armenia is trying to leave the Collective Security Treaty Organization (CSTO) and develop military ties with the United States and France, on the grounds that they are not coming to its aid in the wars in 2020 and 2022. These steps are gradually dragging Armenia into a showdown with Russia.

On the other hand, the two wars in the Caucasus narrowed the Russian sphere of influence in favor of Turkey. Aliyev, however, quickly turned to a policy of balancing Turkey's and Russia's overlapping or conflicting interests. The visit is the latest indication of this.

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Azerbaijan-Russia relations are characterized by around 170 agreements. During the last visit, three agreements and three memorandums of understanding were signed. While searching for an answer to the question of what came out of Putin's visit, there are a few points that stand out:

- Azerbaijani experts say a mechanism to mix Russian gas with Azerbaijani gas and sell it to European markets is being discussed. Aliyev said they would work in coordination in the energy sector, including oil, gas, and electricity. Of course, the TAP and TANAP gas pipelines to Europe do not have enough capacity deficit to satisfy Russia. On the other hand, there are questions about whether Socar will sell Russian gas directly or act as a Gazprom representative. It is also said that Azerbaijan may buy gas from Russia for domestic consumption and increase its exports. Azerbaijan produced 48.3 billion cubic meters of gas last year and consumed about half of it domestically.

Some European countries have offered Baku to increase the capacity of its pipelines, but are unwilling to make the necessary investments. Aliyev is also avoiding additional costs without long-term contracts for fuel purchases. Russian Deputy Prime Minister Alexander Novak has also said that they are working on a new project in the Caspian basin.

- The second issue is the north-south transportation corridor. “This corridor will allow us to reach the shores of the Indian Ocean,” Putin said. The corridor starts from India, goes through Iranian ports to the Caucasus, and then to Russia via the Azerbaijan-Caspian connection. It is an old plan, but it was accelerated after the Ukraine war. Iran is also very interested in it.

According to Aliyev, both railway and automobile segments have been implemented on the Azerbaijani side. Modernization work is underway on the railway. 120 million dollars are allocated for this in 2024. “We are talking about the possibility of transporting from 15 million tons to 30 million tons of cargo per year,” Aliyev said.

Gazprom CEO Alexey Miller said that partnership talks with Socar on the north-south project were ongoing and that a comprehensive technical cooperation program would be released in September.

- The third issue is joint tanker production. “Modern tankers to carry oil and natural gas will be used both in the Caspian and on the Azov and Black Sea routes,” Putin said. The tankers to be built by the Baku Shipyard, in which Socar is a partner, and the Russian United Shipbuilding Corporation will replace the Soviet Union-era fleet. The Volga-Don Canal, which will be used as a route for these tankers, connects the Caspian Sea to the Black Sea via the Sea of Azov. The canal was opened in 1952.

- Bilateral trade is another issue. Azerbaijan is one of the leading countries in overcoming the sanctions against Russia. Russia is Azerbaijan's third largest trading partner after Italy and Turkey. Last year, bilateral trade volume increased by 17.8 percent to $4.3 billion. The upward trend continues. The figure exceeded $2.5 billion in the first half of this year. In 2023, Russia accounted for $1.2 billion of Azerbaijan's $3.3 billion in non-oil exports.

Putin reminded that 1270 Russian companies operate in Azerbaijan, including such giants as Lukoil, KamAZ, Sollers, and UAZ. He said Transmashholding will produce wagons for the Baku metro.

The volume of Russian investments in banking, petrochemicals, truck production, winemaking, and food industry exceeds $8.7 billion. Azerbaijani investments in Russia are around 1.2 billion.

Moreover, the share of national currencies in trade is growing. According to Russian Deputy Prime Minister Alexey Overchuk, it reached 57 percent last year and 73 percent in the first five months of this year.

Russia also welcomes Azerbaijan's efforts to diversify its relations. In this context, Putin has expressed support for Azerbaijan's goal of increasing its status in the Shanghai Cooperation Organization and membership in BRICS.

- Another issue is the stalled peace talks between Azerbaijan and Armenia after Karabakh came under Azerbaijani control. Putin emphasized that they want to make every possible contribution to this.

Two critical issues await resolution here: the demarcation of borders and the opening of transportation routes.

Some time ago, the article on the Zangezur corridor was removed from the draft peace treaty. This issue was left for the next stage. In other words, the corridor, which is Erdoğan's dream, has lost its significance, if not completely off the agenda. Pashinyan did not back down on the protection of sovereign rights on the corridor. He also does not like the fact that the corridor is under the control of Russian border guards. Russian Foreign Minister Sergey Lavrov openly accused Pashinyan of sabotaging the deal. Yerevan returned the accusation in kind.

On the other side, Iran threatens that it will not allow the borders and geopolitical situation to change. Tehran has also warned Yerevan against the deployment of American-French forces in the region. Pashinyan's love affair with the West has allowed Iran to turn the page on tensions with Baku. With Zangezur remaining locked, Baku shook hands with Tehran on the development of the Iranian route between Nakhchivan and Azerbaijan. In October 2023, they agreed to build a railway parallel to the highway on the Aras route. Iran and Azerbaijan also agreed to advance the north-south corridor. These issues were discussed during Russian Security Council Secretary Sergei Shoigu's visits to Tehran and Baku in early August.

Bilateral talks on the demarcation of the Armenia-Azerbaijan border are ongoing. Of course, Armenia hopes that the OSCE Minsk Group will step in, while Azerbaijan favors its disbandment. The two chairs of the group, the US and France, are in an indirect war with the third co-chair, Russia. Russia and Azerbaijan agree on the dissolution of the Minsk Group. Putin's preference is to patronize the talks in the Moscow-Baku-Erivan format established in 2020. Putin said he would share the results of his Baku visit with Pashinyan. But Putin is not the person Pashinyan wants to see at the table as a mediator or facilitator.

In short, Putin wants to reclaim the Russian role in the South Caucasus, where the West is trying to get its hands on. He is winning Azerbaijan with a neutral position. He also thinks that Armenia is not going anywhere. And his visit to Baku confirms that Russia will not be easily dismissed in the South Caucasus.