Publication: Eurasia Daily Monitor Volume: 5 Issue: 189

The Georgian-Russian conflict in early August brought negative economic and humanitarian consequences for the South Caucasus. Carefully built East-West transport and energy corridors have come under question. Recognition of Abkhazia and South Ossetia by Russia presents another diplomatic difficulty for the countries of the region.

Yet, in the aftermath of the conflict, Azerbaijan, Georgia’s neighbor and closest ally, finds itself in a unique position for an opportunity to advance relations with Russia. The ultimate prize would be the Kremlin’s support in the Karabakh conflict. There is no doubt in Baku, among both the public and politicians, that the key to the resolution of the Armenia-Azerbaijan conflict lies in Moscow, as Russia was and remains Armenia’s closest military, political, and economic ally. Despite Azerbaijan’s persistent efforts to please Moscow and secure the return of the occupied territories, no success has been achieved yet.

The current situation, however, presents a rare moment of opportunity for Baku to make Russia an offer it cannot refuse. The ingredients for the grand bargain have been piling up steadily over the past year. Early in the summer, Russian President Medvedev, during a trip to Baku, offered to buy all of Azerbaijan’s gas at the world market price. The Kremlin is obviously not interested in having an alternative gas exporter in its borders. The purchase of Azerbaijani gas would not only enable Moscow to remain the main energy provider to EU but would also help Gazprom fulfill its contractual obligations.

On the other hand, the negative image that Russia created during the Georgian war is prompting Kremlin strategists to seek more cordial and friendly relations with another South Caucasus country, Azerbaijan, in order to demonstrate to the rest of the world that Russia is not a threat and aggressor to the former Soviet republics and does not intend to restore the Soviet Empire. Thus, Azerbaijan, with its pro-Western integration plans, presents the only chance for Russia to do this. Armenia is already heavily dependant on Russia, and Moscow does not consider it necessary to “win over” Yerevan.

Gentler and more pragmatic relations with Azerbaijan would not only help Russia repair its image abroad but would also derail Azerbaijan’s pro-NATO and pro-EU course. It is no coincidence that President Medvedev called his Azerbaijani counterpart Ilham Aliyev a few weeks ago to discuss bilateral relations. The latter also traveled to Moscow to meet both Medvedev and Prime Minister Putin to advance the interests of both countries in the region.

Finally, speculation has arisen in Baku that Moscow is pushing Azerbaijan’s political leadership to open a transit corridor through its territory to Armenia. The Kremlin’s sole remaining partner in the South Caucasus is significantly suffering from the war in Georgia, as transport from Russia to Armenia remains clogged in the closed borders. Armenia also has closed borders with Azerbaijan and Turkey, thus putting its economy under a real threat. Under the grand bargain, Azerbaijan could play a transit role, allowing Russia to ship cargo through its territory to Armenia.

It seems that not only Russia understands the increased value of Azerbaijan. Geopolitical rivalry over this country has heated up in recent weeks, with U.S. Vice President Dick Cheney visiting Baku and making statements about the United States’ intention to remain an active player in the region. A look at the map of the South Caucasus shows that with Georgia falling out of the Russian orbit, Azerbaijan remains the last battlefield between the West and Russia.

The situation for the grand bargain seems ripe, especially considering the new dialogue between Turkey and Armenia and the general willingness among Armenian leaders to normalize relations with its neighbors. The traditional belief that Russia should do its best to preserve the conflict between Azerbaijan and Armenia in order to keep its influence over them is not working any more. Russia will always be able to exert pressure and influence over these countries, long after the conflict is resolved. The resolution of the conflict, however, will bring a number of dividends to Russia, including a safer periphery and effective prevention of Radical Islam emerging in the region.

Compromises on the issue of Karabakh and the restoration of the territorial integrity of Azerbaijan would pave the way for a much firmer and more solid partnership between Moscow and Baku. Moscow can and should push Armenia for more compromises on this issue in order to achieve a long-lasting peace. Otherwise, Azerbaijan, losing its hope to gain support from Kremlin, will continue to drift away toward the West.