Kavkaz Files ISSN 2975-0474 Volume 27 Issue 2
Author: Giuliano Bifolchi
Executive Summary
Azerbaijan’s recent diplomatic engagements, including President Ilham Aliyev’s visit to Italy and his meeting with Russian President Vladimir Putin, reaffirm Baku’s commitment to a diversified and multipolar foreign policy.
Baku strategically balances its relations between the West, mainly Europe, a lucrative market for its oil and natural gas exports, and Russia, with which it has deepened cooperation in trade, transport, and military sectors.
This report investigates the Azerbaijani strategy to differentiate its partnerships, maximise economic opportunities, and maintain strategic autonomy amid shifting geopolitical dynamics characterised by the conflicts in Ukraine and the Middle East and the East-West competition.
Geopolitical Scenario
Foreign policy drivers
Azerbaijan’s strategic location at the intersection of Europe, Central Asia, and the Middle East significantly shapes its foreign policy and geopolitical identity. This position allows the South Caucasus republic to leverage historical ties with diverse blocs, including the Turkic world, Islamic nations, and former Soviet states.
Baku’s close relationship with Turkey, bolstered by Ankara’s military and diplomatic support, allowed Azerbaijan’s victory in the Nagorno-Karabakh conflict and prominence in the South Caucasus. Meanwhile, the growing role of the Organisation of Turkic States, an organisation where Baku is among the members, facilitates deeper connections with Turkic nations in Central Asia. Simultaneously, Azerbaijan utilises its Soviet legacy to strengthen relations with Commonwealth of Independent States (CIS) members, capitalising on shared history to foster cooperation.
Azerbaijan’s Shia Muslim identity aligns it with the broader Muslim world, adding another layer to its strategic foreign policy drivers. Consequently, the Caucasus republic could broaden its foreign policy reach by forging strategic partnerships with not only Central Asian nations but also the Gulf Cooperation Council and the broader Islamic world, taking advantage of its historical and cultural affinities. These relationships are crucial in expanding Azerbaijan’s influence, securing its interests, and enhancing its geopolitical depth across diverse regions.
Energy policy
While the “Contract of the Century” in the 1990s propelled Azerbaijan’s economic ascent through oil revenues, the ongoing Ukraine conflict has positioned the country as a crucial energy partner for the European Union, significantly supporting Brussels’ natural gas imports. Nowadays, by diversifying its energy exports and investing in green energy, Baku strengthens its strategic position in both European and Asian markets. Key initiatives like the Southern Gas Corridor and the expansion of renewable energy underline Azerbaijan’s duty to maintaining economic stability and enhancing its political clout amidst global energy uncertainties.
Despite the government’s longstanding efforts to differentiate the energy sector and reduce dependence on oil and natural gas exports, progress towards achieving this diversification remains limited. While Baku has aimed to expand its green energy initiatives, the country’s economy still heavily relies on traditional hydrocarbons as the primary drivers of growth. Thus, Azerbaijan remains vulnerable to fluctuations in global energy markets, as evidenced by the severe impact of the 2014 oil crisis on its domestic economy. Any future downturn in oil and gas prices could pose significant challenges to Azerbaijan’s economic stability, underscoring the urgent need for accelerated diversification efforts.
Transports and logistics
Azerbaijan’s focus on the transportation sector highlights its ambition to become a crucial transit hub between Europe and Asia. Investments in infrastructure projects like the North-South and East-West corridors position Baku as a crucial player in global supply chains, thereby enhancing its geopolitical influence.
Baku’s participation in Moscow’s International North-South Transport Corridor (INSTC) further underscores this role, aiming to connect Saint Petersburg with Indian ports via the Caspian region. However, this alignment with the Russian interests could create friction with Brussels, which sees Azerbaijan as a gateway to Asian markets. Additionally, Baku’s support for Beijing’s Belt and Road Initiative (BRI) underscores its broader strategy to link Europe and Asia. While these corridors are not mutually exclusive, the geopolitical implications demand careful navigation by Azerbaijan to balance competing interests effectively.
Domestic politics
The need to balance its complex geopolitical identity with domestic stability shapes Azerbaijan’s internal landscape. The government prioritises national unity to safeguard against external influences that could exploit internal divisions, recognising that a cohesive domestic front is crucial for effective foreign policy execution.
President Ilham Aliyev’s recent military successes, including the 2020 Nagorno-Karabakh Conflict and the full conquest of Nagorno-Karabakh/Artsakh in September 2023, have bolstered his domestic support, albeit within a context of continued repression of opposition voices and independent media. As Azerbaijan consolidates control over Nagorno-Karabakh, the government faces the critical challenge of demonstrating its capacity to improve the region’s socioeconomic conditions, attracting investments and affirming its governance to both domestic and international audiences. This endeavour will be pivotal in showcasing Azerbaijan’s ability to integrate the contested territory and solidify national unity under its administration.
Azerbaijan’s approach to human rights, free speech, and the future of the Armenian population and cultural heritage in Nagorno-Karabakh has drawn significant scrutiny from Western institutions and NGOs. Western concerns about Baku’s willingness and capability to protect Armenian cultural sites and safeguard the rights of the remaining Armenians in the region have intensified amid Azerbaijan’s closer alignment with Russia and China, particularly since the onset of the Ukraine conflict.
This strategic reorientation raises alarms for the European Union and the United States, which view the growing influence of Moscow, Ankara, and Beijing in the South Caucasus as a threat to Western interests. In response, the United States has increased its involvement in Armenian domestic affairs and is bolstering Yerevan’s military capabilities as a countermeasure to prevent a complete geopolitical shift that could marginalise Western actors in the region.
Conclusion and Recommendations
Azerbaijan’s conquest of Nagorno-Karabakh marks a turning point in its foreign policy, followed by a strategic pivot towards Russia, China, and an increased close cooperation with Turkey. Despite decades of Western investments and diplomatic engagement, Baku’s alignment with Eastern powers threatens to sideline European and U.S. influence in the South Caucasus. To counter this trend, Western powers must rethink their approach, offering economic and strategic incentives aligned with Azerbaijan’s interests while addressing concerns over governance and human rights.
Energy remains a critical leverage point. The EU’s reliance on Azerbaijani hydrocarbons can deepen cooperation beyond trade, supporting Baku’s diversification into renewable and technological development. This approach would strengthen economic ties and reduce the South Caucasus republic’s dependence on Eastern markets, aligning Azerbaijan’s energy strategy with Western goals and fostering long-term partnerships.
Addressing the Azerbaijani growing involvement in Eastern transport corridors like the INSTC and BRI is equally important. The West should present alternative initiatives, possibly through the EU’s Global Gateway, to provide Baku with strategic options that balance Russian and Chinese influence. Enhanced dialogue on trade, security, and regional cooperation would further cement Western ties, countering Eastern dominance.
Recalibrating Western engagement on human rights and democratic reforms could potentially improve relations with Baku. However, the United States and the European Union cannot overlook violations of these principles, as they are central to their strategies. Instead of tolerating or ignoring such issues, Western countries should intensify their involvement in Azerbaijani domestic affairs. By leveraging economic and trade tools, they can apply pressure on Baku. While Azerbaijan is crucial for European energy imports, the European market is equally vital for Baku. Frozen relations with Brussels could jeopardise Azerbaijan’s ambitions to become a key logistical hub between the West and the East.
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