A handshake shakes a region

Turkey's warming with Armenia stirs up ethnic and energy issues in the strategic Caucasus.

Rich Clabaugh/Staff

Make one move in the unstable Caucasus region, and a host of difficult and far-reaching issues get tripped over – ethnic tensions, Russian dominance, and competition over oil and gas.

So the world discovered when Russia's military clashed with tiny Georgia's last August. And so it's discovering again under far more welcome circumstances: a long-awaited warming between Turkey and its Caucasus neighbor, Armenia.

Yes, even such rapprochement can stir up this region, sandwiched between the Black and Caspian seas and bordered by Russia to the north and Turkey and Iran to the south.

Over the past few weeks, energy-rich Azerbaijan has turned up the flame under this geographic cauldron. It was furious with Turkey for agreeing in April to a "road map" to normal relations with Armenia, which backs a separatist Armenian enclave within Azerbaijan called Nagorno-Karabakh. The area was the site of a bloody war in the early 1990s after the Soviet empire broke up, and has since become the oldest "frozen conflict" in the south Caucasus. Armenia-supported separatists hold additional Azeri territory outside the enclave.

So Azerbaijan has used the only leverage it has – oil and gas – to influence Turkey. It's an influence that extends even to European energy goals.

Situated on the western coast of the Caspian Sea, Azerbaijan serves as a gateway to the sea region's fossil fuels. It funnels oil to Western countries via a pipeline that avoids Russia and winds through Georgia to the Turkish Mediterranean coast. It also exports gas via a pipeline that ends in Turkey.

Azerbaijan expects to significantly increase gas exports in another five to seven years and has been counting on extending gas pipeline delivery to Western European markets. Similarly, Europe has been looking forward to an extended pipeline – particularly a planned one from Turkey to Austria – to give it more energy independence from Russia. But that east-west line – called Nabucco – has a history of delays.

Unless the Turks make resolving Nagorno-Karabakh part of normalizing ties with Armenia (and Armenia objects to this), the longer gas pipeline will end as a pipe dream – or so the Azeris hinted. They threatened to withdraw Turkey's status as "most favored customer" and as the main Azeri export route for oil and gas. There's Russia as an alternative, the Azeris warned.

Azerbaijan has a self-interest in a diversified export energy market, but its overture to Russia is more than bluff. The Azeris and Russians recently signed a memo of understanding about gas sales. The concern is that this could go further and that Azerbaijan, fed up with delays over a gas pipeline to Europe, would make Russia its gas patron. Because supplies are not enough to support two gas pipelines, European governments are now pushing to realize their dream of a gas line that reaches them.

If Russia eventually gets the gas deal, it not only locks in energy supplies, it also solidifies its leverage over the Caucasus – already enhanced by its occupation of Georgia's two breakaway republics.

Multiple fears are at work in the Caucasus: at the local level about the preservation of ethnic culture, at the national level about territorial integrity, and at the international level about regional influence and access to energy markets.

This calls for a sophisticated approach that seeks to build trust in all these areas. Earlier this month, international mediators for Nagorno-Karabakh quietly brought the presidents of Armenia and Azerbaijan together to talk on the sidelines of a conference in Prague. In June, the two presidents are expected to meet again in Russia. These are positive steps.

Last week, Turkey's Prime Minister Recep Tayyip Erdogan visited Azerbaijan and Russia to try to reduce the simmering ethnic and energy tensions in the region. He made progress with Russian Prime Minister Vladimir Putin on a new north-south Russian-Turkish gas pipeline that would supply Israel and other countries. That, plus renewing a contract for Russian gas supplies to Turkey, should help reassure Moscow of its continued energy influence.

But when Mr. Erdogan, on his visit to Azerbaijan, gave in to the demand that Turkey not reopen its borders with Armenia until Nagorno-Karabakh is resolved, he reignited flames in Armenia. Some speculate that the normalization process is now at risk.

This region is too small, the stakes too high, to separate politics from energy. Both will have to be handled at the same time, if perhaps on different tracks.

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