Nagorno-Karabakh Resolution Will Give Turkey Direct Access To Azerbaijan

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Op/Ed by Chris Devonshire-Ellis

  • Nakhchivan Corridor will eventually compete with the BTK railway
  • Georgia will lose its transit fees monopoly
  • Turkey growing increasingly influential in the South Caucasus

With the Nagorno-Karabakh conflict seemingly settled, the result has long reaching changes in the political and trade dynamics of the Caucasus region. The Caucasus has long been divided along mountainous and religious divides, Georgia and Armenia being Eastern Orthodox Christians, Azerbaijan and Turkey, to the south, both Muslim. The Russian Caucasus contains communities of both.

Azerbaijan to some extent has always been cut off from Turkey, with both mutual trade and precious supplies of Azeri oil and gas having to previously transit through Armenian-controlled Nagorno-Karabakh, a region that has ebbed and flowed between Christians and Muslims for centuries. Following the collapse of the Soviet Union, Moscow’s influence, insisting upon a ‘Soviet brotherhood’ was soon replaced with old divides. Over the past thirty years, that animosity has only increased, until the latest outbreak of violence.

Russia, as it so often has had to in the region’s past, has had to step in as peacebroker. Yet it has not had it all its own way – Turkey is a major power with territorial conflicts of its own, and with consumer eyes on Azeri energy supplies. The upshot of all this is that the Armenians have now ceded parts of the Nagorno-Karabakh region to Azerbaijan, and crucially made concessions to its south.

Turkey is already constructing a railway from Kars to Nahkchivan, the strip of land it possesses to the south of Armenia. To the east of Nakhchivan, and dividing Turkey from Azerbaijan is the southern Armenian Province of Syunik.

Part of the Nagorno-Karabakh settlement is the construction of a transport corridor highway across that territory, to transport goods and people from Turkey through Azerbaijan’s Nakhchivan exclave, across Armenia and into mainland Azerbaijan. It will be policed by Russian armed forces.

It means that bilateral trade between Azerbaijan and Turkey will increase. However it also has repercussions for Georgia, which loses its transit corridor monopoly between Turkey and Azerbaijan.

In the short term, the Nakhchivan Corridor won’t compete with the Baku-Tbilisi-Kars (BTK) railway, but when the Kars-Nakhchivan railway is completed, there will be heavy pressure to upgrade the Nakhchivan Corridor highway to include rail. When that happens, the Georgians will lose their Azerbaijan-Turkey overland trade, transit fee revenues, applicable duties and the service industry that supports it.

With thanks to Simon Appleby for his additional insights for this article.

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Silk Road Briefing is written by Dezan Shira & Associates. The firm has 28 offices throughout Asia, and assists foreign investors into the region. For strategic advisory and business intelligence issues please contact the firm at silkroad@dezshira.com or visit www.dezshira.com

 

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