Recalibrating Germany's and EU's policy in the South Caucasus

Abstract

"The South Caucasus, and the broader Caspian region, is becoming increasingly more important for European energy, security and economic interests. Europe's Southern energy corridor depends on Europe’s access to the energy resources in the Caspian Sea. Stability in the South Caucasus has a direct impact on security along the EU Black Sea flank, while EU-Russia, EU-US, and EU-Turkey relations are being shaped by and are shaping the trends in the broader Caspian region. The changes in the region are overwhelming, and yet, the EU has not made the necessary adjustments. Part of the problem has been the lack of German focus in this region, which ironically has become increasingly interesting for the German private sector, most notably Azerbaijan, which is the 6th major oil supplier to Germany today, and also the biggest recipient of German FDI that flows into the South Caucasus. Further, Azerbaijan through its balanced foreign policy and steady domestic development has become the regional leader. It not only is the biggest economy in the South Caucasus region, but it has become a major energy supplier to Turkey, Georgia and Southern Europe. It is a connecting point for Europe to Turkmenistan, and a key player in broadening regional security. Azerbaijan has the highest military budget in the region in nominal figures and over 20 percent of its territory is under Armenia's control. The Nagorno-Karabakh frozen conflict is an obstacle that stands in the way of unhindered regional cooperation and integration, and is a security threat to European energy projects in the Caspian and to European investments in this region. For this reason, Germany should increase the political push within the EU to bring a lasting solution to the Nagorno-Karabakh issue. This paper is a timely endeavor, with appropriate key messages for the German and European decision-makers. Not only is this an opportunity to engage in the region more proactively, but Berlin also has an inherent interest in recalibrating its regional policy to fit better the current regional realities. Germany has always had a special relationship with Russia, but as this paper argues, it thus should also take the unique responsibility and shape a value added and independent European policy towards the South Caucasus." (excerpt)