Amina Abdullayeva Eastern Europe and Russia Uncategorized

Eurasian Stakes Raised as Frozen Conflict Heats Up

From Ice to Fire

Nagorno-Karabakh, a de facto, but unrecognized state fought over by Armenia and Azerbaijan, may not appear on any map, but recent events warrant increased attention on this part of the globe. Several developments in Azerbaijan, including increased military spending, an arms deal with Israel, and the talks with Russia over the Gabala Radar Station, have been covered separately by the media. When tied together, they weave an interesting, if potentially worrisome story, especially considering that Armenia has also recently increased its defence budget.

[captionpix align=”left” theme=”elegant” width=”320″ imgsrc=”” captiontext=” A military parade in Azerbaijan; increased defence spending has neighbours worried.”]

In 2011, Azerbaijan had a military budget of 2.5-billion Manats—approximately $ 3.12-billion USD. It was the highest among the Commonwealth of Independent States (CIS) members as a percentage of GDP at 6.2%, and second only to Russia in absolute terms. The increase continued into 2012, with the new draft budget allocating $1.77-billion to defence, which is 1.2% more than last year.

This has been met with great concern by Armenia, which remains at war (currently an unstable cease-fire) with Azerbaijan over Nagorno-Karabakh. Azerbaijan’s defence budget was not only eight times larger than that of Armenia, but was larger still than Yerevan’s total state budget. In response, Armenia has been increasing its own military spending. On November 1, 2011, the Armenian parliament approved a 5.6% increase in the defence budget, which grew from $378 million in 2011 to $400 million in 2012—the most Armenia has ever allocated to defence. True, it is still a much smaller sum than that of Azerbaijan, but at a time when countries around the world are introducing major cuts to their military budgets, two hostile parties buffing up their armies raises suspicion. Despite scepticism regarding the way the allocated money will be spent—with reports of inefficiency in Azerbaijan and corruption in Armenia—perceptions alone can be damaging under these circumstances.

Adding suspense to the situation is Azerbaijan’s recent $1.6-billion arms deal secured from Israel. In the media, this deal has been primarily viewed through the lens of Azerbaijani-Iranian relations and their wider implication for the rising tension between Washington, Tel Aviv, and Tehran. Observers have concluded however, that it is not in Azerbaijan’s interests to threaten Iran in any way. It is true that their relations have been tense recently due to a number of minor incidents. It is also true that Iran reacted publicly by issuing official summons to the Azerbaijani ambassador in Tehran to come to the Defence Ministry, but that was just good housekeeping. The real issue—the regional impact of all these expenditures and Russia’s role in it—received undeservedly little attention.

The Russian Role

Moscow has several reasons to be worried about any escalation of hostilities in Nagorno-Karabakh. The regional status quo allows Russia to continue projecting power in its traditional sphere of influence, which in turn strengthens its international standing as a major power. The resumption of Azeri-Armenian conflict threatens to unravel all of this.

[captionpix align=”right” theme=”elegant” width=”400″ imgsrc=”” captiontext=” The disputed territory of Nagorno-Karabakh is at a strategic crossroad between Turkey, Russia, Iran and the oil rich Caspian Sea.”]

The Karabakh conflict is a complicated mess in which Moscow (starting with Imperial Russia, through the Soviet Union and all the way to the modern-day Russian Federation) played the midwife. Russia supplied weapons to both sides during the Nagorno-Karabakh War and was accused of seeking to weaken the newly independent states of Armenia and Azerbaijan so that they would remain within Moscow’s orbit of influence. Today the solution to this conflict is the prerogative of the Minsk Group chaired by Russia, France, and the US, giving Moscow direct control over any developments in the situation. Since Azerbaijan and Armenia are states of the former USSR, Russia regards them as part of its near abroad, which it considers as its exclusive sphere of influence. Therefore, changes in status quo have to be approved by Moscow. When they are not—as is the case with Azerbaijan’s military spending—the Kremlin gets nervous.

The signals Moscow has been receiving from Baku indicate that Azerbaijan has some interests of its own, which it will pursue even if they contradict Russian preferences. The clearest example is the case of the Gabala Radar Station, an early warning radar system built by the USSR in the Azeri town of Gabala in 1985. The range of its surveillance covers the entire Middle East and reaches as far as the Indian Ocean. Azerbaijan gained control over the facility after the collapse of the USSR, but Russia has been renting it since 2002. As the lease is set to expire in 2012, the two parties started negotiations last year to renew it. Azerbaijan has surprised, if not shocked, Russian negotiators by demanding an increase in the annual rent from $7-million to $300-million.

[captionpix align=”right” theme=”elegant” width=”330″ imgsrc=”” captiontext=” Renegotiating the Gabala Radar Station lease has soured Azeri-Russian relations.”]

Russia is very keen on prolonging its control of the station. Although the equipment is old and Russia has much better facilities on its own territory, the Gabala station has strategic value. It is a foothold in a country where Turkey, Iran, and the United States are competing for influence. Azerbaijan plays an important role in Russia’s energy policy vis-à-vis Europe, whereby Russia buys Azeri gas to sell it to Europe via the state-owned Gazprom corporation. Although it would be cheaper if Gazprom bought Russian gas—as there is enough to cover the current demand—Russia buys Azeri gas in order to prevent Europe from buying it and diversifying its energy sources. It is thus important for Russia to maintain some military presence in Azerbaijan.

Moscow has also extended influence in its near abroad for the past two years by signing various deals with Armenia, Ukraine, and some Central Asian states, and further plans to consolidate its economic influence through the envisioned Eurasian Union. The fact that negotiations with Azerbaijan have run into difficulties signals a change of attitude toward Russia, where it cannot easily get what it wants from its smaller neighbours by pressuring them anymore.

This change—still subtle, but discernible—indicates shifts in the geo-politics of the region, which may have a profound impact on the future of Nagorno-Karabakh. Russia saw unusual dissent in the wake of parliamentary and presidential elections, which for the first time in the last ten years made the government feel weak and internally challenged. Whether this new Russian uncertainty will last or not remains to be seen, but this is the lynchpin tying together all the developments listed above: sensing certain shifts within Russia, Azerbaijan is embarking on more independent policies, which are starting to crowd out Russian interests. Iran, Turkey, and the US may see their interests affected, but no one has as much to lose as Russia if the increased military spending spills into conflict on the ground. It will erode the Minsk Process, which, though failing to deliver a permanent resolution, is nonetheless the correct path to take: Nagorno-Karabakh can only be resolved through negotiations, not a war. Rather than thawing tensions, potential Russian weakness coupled with Azeri boldness may serve to re-ignite hostilities.

By: Amina Abdullayeva


Amina Abdullayeva
Amina Abdullayeva is a Research Analyst at the NATO Association of Canada, with a focus on the European Union, Russia and the former USSR. She holds a Master’s degree from the University of Toronto – Centre for European, Russian, Eurasian Studies. Having studied security issues and international affairs extensively, Amina has attended the NATO Summit in Chicago, as well as the 2012 G8 Summit. She was lead editor for the G8 Research Group, evaluating the G8 member states’ compliance with the commitments pledged at the previous Summit. Amina is multilingual and has extensive international experience, having spent one summer in Germany as an intern with the UN, and another in Peru as a project manager with Students for International Development. Contact: