Observer Research Foundation: Azerbaijan strengthening positions in region's new geopolitical conditions

As Russia"s influence declines, the South Caucasus is shifting toward multipolarity, with Baku and Yerevan seeking new alignments beyond Moscow, according to an article by experts of the Strategic Studies Programme at the Observer Research Foundation.

Report informs that, according to the article, despite Russia"s ambitions to maintain its influence in the South Caucasus, the region is undergoing significant geopolitical and economic shifts, with new actors emerging increasingly.

"Moscow"s growing geopolitical isolation from the West has heightened Azerbaijan"s strategic importance as it sits between Iran and Russia, significantly increasing its geoeconomic value for both the EU and China. The EU has ramped up its engagement with both the Caucasus and Central Asia through massive investment in connectivity, as well as rare and critical earth minerals," the authors note.

The article further says that "Following the sanctions on Russia, connectivity between the EU and Central Asia has emerged as the highest priority, particularly the Trans-Caspian Transport Corridor (TITR). The TITR connects the EU with Central Asia and China via the Caucasus and received around US$10.6 billion in investments under the EU"s Global Gateway Strategy in 2024. TITR handled 4.5 million tonnes of container traffic in 2024, aiming for 10 million tonnes by 2027. In January 2025, the EU allocated an additional US$3.5 billion for the modernisation of this route."

"Similarly, in 2022, the EU signed a deal to purchase gas from the Caspian Sea region, and by 2024, approximately 7.7 percent of its gas was imported from Azerbaijan. While this volume is not enough to replace Russian supplies, it is considered a strategic move. Both Baku and Brussels have also signed a deal to double natural gas exports to the EU by 2027.

"The conflict in Ukraine has further heightened Türkiye's influence in the Caucasus and Central Asia," the article says adding that at the same time, China"s geoeconomic presence is increasing, as it views Azerbaijan as an important participant in the Belt and Road Initiative. Since Azerbaijan joined the project, trade between the two countries has grown significantly. With China"s support, Azerbaijan is also actively investing in infrastructure.

"Moscow"s growing geopolitical isolation from the West has heightened Azerbaijan"s strategic importance as it sits between Iran and Russia, significantly increasing its geoeconomic value for both the EU and China," the authors say.

They further note that "the peace deal will reduce Russia"s influence in the region and also diminish Moscow"s leverage over the South Caucasus."

"On the other hand, Beijing eagerly awaits the resolution of the conflict between Yerevan and Baku, which is expected to facilitate the opening of a second route to Europe via Azerbaijan, from Southern Armenia to the Nakhchivan enclave, and Türkiye, complementing the existing TITR route via Azerbaijan and Georgia," the authors say.

They note that "recent events between Azerbaijan and Russia underscore the evolving geopolitical landscape in the South Caucasus, where states are seeking to recalibrate their relations."

According to the authors, "Russia"s ongoing conflict in Ukraine diminishes its geopolitical sway, compelling both Baku and Yerevan to pursue balanced diplomatic relations that are congruent with the prevailing geopolitical and economic conditions."