Introduction

Starting from the Second World War, regionalism defined as “willingness of neighboring countries to strengthen their economies by entering into some form of ‘regional integration'  is on the rise. In fact, establishing and being a part of some regional blocks has become a main feature of world politics.  This is largely because of a widely held belief that regional integration sets a new framework for the development of not only the states involved, but also entire continents. Regional integration dynamics in South CaucasusIt is also known that regional integrationalleviates the possibility of conflicts and boosts stability. Despite of escalating Euroscepticism, the existence of the European Union has provided a successful example giving further impetus for regional integration. However, in the regions where there is a convergence of power blocks and the driving countries utilize a “carrot and stick” model, regional integration is not an easy task to achieve. In the context of the South Caucasus countries, Azerbaijan, Armenia, and Georgia, the issue of collision of regional blocks becomes more obvious. Sandwiched between the two regional blocks, these three countries do not enjoy the sovereignty on determining their stance on regional integration. Incompatibility nature of Eastern Partnership Agreement and Eurasia Economic Union hinders regional integration in the Caucasus. 

Discussing the issue of incompatibility of two regional blocks, the aim of this paper is to analyze the integration dynamics in the South Caucasus and closely examine the steps taken by the states for the integration in the region. Considering incompatibility and mutual exclusiveness of Eastern Partnership Agreement (EaP) and Eurasia Economic Union (EEU), the paper proceeds with elaborating on the cases of Azerbaijan, Armenia, and Georgia. Although there have been several researches conducted on the incompatibility problem within the regional integration dynamics, there exist a need to reconsider the situation and find a solution to boost regional integration in South Caucasus in relation to the recent developments. 

 

Incompatibility of EaP and EEU

The Eastern Partnership Agreement (EaP) and the Eurasia Economic Union (EEU) are two incompatible and mutually exclusive projects. Being a member of one prevents the state from benefiting from another regional block. While EaP is aimed at extending the European Union’s influence on bordering countries and boosting stability in the neighborhood, establishing EEU, Russia tries to keep and enhance its influence on the former Soviet Union countries. Moscow has undertaken “hegemonic region-building policies” for the Eastern neighborhood, particularly, the South Caucasus countries. In fact, as Vladimir Putin stated the establishment of the Eurasia Customs Union (ECU) and the Eurasia Economic Union (EEU) is proceeding at much faster pace than the EU did. It took nearly 40 years to move from European Coal and Steel Community to the European Union. Drawing the lessons from the EU’s development path and emulating its functional divisions have contributed to EEU’s fast pace development. Looking competing, but in reality conflicting two projects hinder regional integration in the Caucasus.

Putting aside political and ideological differences, it is not legally possible for the state to equally cooperate with both regional blocks. While “deep and comprehensive free trade areas” (DCFTA) advocate market liberalization and removal of trade restrictions, the Customs Union backs increasing tariffs. Hence, the states need to determine their stance on regional integration. Even if there had been a common ground for the agreement on tariffs, Russia does not seem respecting the sovereignty of its neighboring in freely choosing their integration dynamics. The Kremlin-led EEU project infringes upon the independence of the neighboring post-Soviet republics. In order to discourage the post-Soviet space from getting closer to the West, Moscow misuses gas prices as a bargaining chip, undertakes military operations, as it did in Ukraine and Georgia, utilizes economic measures by creating obstacles for trade, and “instrumentalizes protracted conflicts” to make signing Association Agreements (AAs) more challenging.

Past experiences of Ukraine, Moldova, and Georgia clearly demonstrate Russia’s hostile reaction towards the sovereign choices of Eastern Partnership countries and “politicization” of the two regional projects.  When Ukraine was on the verge of signing the Association Agreement, Russia took immediate steps and banned the import of confectionary products, later implementing tightened customs regulations to discourage the state to proceed further. After signing the agreement, Ukraine encountered with even more hostile reaction and the occupation of Crimea and Eastern Ukraine, which illustrates Russia’s “carrot and stick” approach. The similar approach has also been utilized for Moldova with the import ban on Moldova’s wines to Russia and increasing customs regulations. Observing the imposition of Russia’s threats into neighboring countries, the European Union classified Russia’s actions as “unacceptable.” The bitter experiences of their neighbors shape the decisions taken by the Caucasus states. It is generally accepted that for the Caucasian states “the road to Brussels has to go via Moscow.” 

 

South Caucasus: Azerbaijan, Georgia, and Armenia

Located on a strategic crossroad between Europe and Asia, South Caucasus is one of the fragmented at the same time unstable regions in the world. All three de-jure independent states, Azerbaijan, Georgia, and Armenia have contested borders with one another, which hinders economic development and integration in the region. The 2008 Russian-Georgian conflict over Abkhazia and South Ossetia clearly validated the fragility of the existing territorial conflicts and status quo. The greatest danger in the Caucasus could probably be related to escalation of the ongoing conflict between Azerbaijan and Armenia over Nagorno-Karabakh. Due to the disputed territories, there is currently no cooperation between the two republics. Azerbaijan along with Turkey has closed the borders with Armenia and halted all kinds of mutual diplomatic relations. Gunay Ayhan rightly argues that regional cooperation in the South Caucasus is the myth unless the conflicts are resolved. 

The region is also a junction point for the interests of main external powers, such as Russia, Turkey, Iran, and increasingly the EU. In order to trigger economic development and boost the stability, regional cooperation in the Caucasus has to be maintained. The ongoing conflicts along with the existing fragmentation in the South Caucasus pose challenges for policymakers in Brussels, Washington, and Moscow. On the eve of uncertainties and complexities, each of the states in the region has chosen, for varying reasons, to integrate into different and opposing integrations.

 

Case of Georgia

Among the CIS states, Georgia is most probably the only country that successfully exercised the sovereignty on determining its integration toward the EU. Especially after the rose revolution, Saakashvili’s government clearly set Western-oriented foreign policy priorities and smoothly moved toward the West. Apparently, the actions taken by the Georgian government have ensued increasing tensions with Russia. In fact, this strategy played a decisive role in the breakdown of the 5 days’ war, the failure of NATO to appropriately react to the conflict did not keep Georgia away from the “Western-oriented integration policy.” As a result of determined strategies, in 2014 Georgia signed the AA/DCFTA agreement with the EU and took a huge leap forward Europeanisation process. As a result of close cooperation with the EU, Georgian citizens were granted with free travel rights to the Schengen zone from 28th of March 2017. The Georgian government believes that membership to the EU and NATO is the only solution for the country to guarantee the security and absolute independence from Russia. However, the existence of the conflicts in the country challenges its membership to NATO. 

Perhaps the only junction point for the Georgian right and left parties is their widespread support for the EU membership. However, with the recent economic hardships, coupled with currency depreciations, and painful economic reforms, it would be difficult to maintain public support for the Europeanization process. Although the government undertakes economic reforms in the framework of DCFTA, the state has not received any kind of meaningful financial support from the European Union. Furthermore, Russian-backed NGOs in the country are actively engaged in propaganda activities with the intention to deter the integration process. More importantly, it is uncertain whether Georgia will one day become an EU member, since the EU’s “the door is neither closed nor open approach” will likely be extended for the long term period. Whilst the Georgian government has also taken several steps to normalize its relationships with Russia, the current EU trajectory would deter further developments in this direction. After Georgia’s DCFTA agreement, Russia signed the “Treaty on Alliance and Strategic Partnership”  with Abkhazia and later with South Ossetia that further integrated the entities militarily and economically to Russia. The fact that the EaP does not address Georgia’s security concerns, depending on the EU-Georgia relations, we may expect changes in the integration policies in the future. 

 

Case of Armenia

Unlike Georgia, Armenia is known for its Russian-oriented foreign policy priorities. The country is also recognized for its considerable economic, security, and energy dependence on Russia. Although the Armenian government for four years had been in the negotiation process on implementing 79 plans to sign Association Agreement with the EU, President of Armenia Serzh Sargsyan made a U-turn in 2013 and abandoned DCFTA plans further followed by joining the Eurasian Economic Union. The membership to the EEU clearly threatens the country’s sovereignty and is not well supported by a large majority of the youth. However, Yerevan would never trade off security for hypothetical future membership to the European Union. 

The Armenians perceive Russia as their most reliable strategic partner and the only security guarantor. Armenia is the only member of Collective Security and Treaty Organization led by Russia. Its security reliance on Russia primarily stems from the permanent state of war with Azerbaijan. Against the backdrop, the ongoing conflict with Azerbaijan over Nagorno-Karabakh and hostile relations with Turkey, there is a considerable need to maintain friendly relations with Moscow. Russia has 3 military bases in the country and recently, the government extended the lease agreement for the Gyumri military base. It is no doubt true that Armenian’s borders with Turkey and Iran are currently patrolled by Russian forces. Although after the April war of 2016 between Azerbaijan and Armenia, the strategic relationship was somehow shaken due to increasing concerns that Russia sells weapons to Azerbaijan, drawing the necessary lessons from Georgia, Armenia is very unlikely to take steps against Russia’s interests and most probably, will remain dependent in the near future. Hence, in this fragmented region, we can hardly expect regional integration without a proper resolution of the conflict between the two countries. 

 

Case of Azerbaijan

Sandwiched between two regional blocks, Azerbaijan tries to maintain its independence along with the sovereignty on decision making via its balanced foreign policy. Baku does not intend to become either in the European Union or Eurasian Economic Union. Instead, the Azerbaijani authorities are keen to preserve friendly relations with Russia and the West. The relationships with the EU are primarily based on energy cooperation; currently, the country is perceived as a key partner for the EU energy diversification policy. The implementation of the Southern Gas Corridor (SGC) project will bring Azerbaijan’s gas from Shahdeniz field to the European market and alleviate the latter’s acute dependence on Russia. 

On the other hand, the EU-Azerbaijan relations are also odd and problematic, since the former heavily criticizes Baku over human rights and democracy issues in the country. One day, the EU officials congratulate and praise Azerbaijani government for being such a reliable partner and the other day-lecture Baku on imprisonment of several human right activists and civil society representatives. Additionally, the failure of the EU at explicitly recognizing the territorial integrity of Azerbaijan in the way it did for Ukraine and Georgia, deters increasing cooperation. Baku accuses the EU of playing double standards on the Nagorno-Karabakh conflict. Considering these facts, along with the sobering experiences of Georgia, Moldova, and recently Ukraine, Azerbaijan will unlikely sign the Association Agreement and move toward the West. 

Russia has always attempted to exert its influence on Azerbaijan and benefit from the disagreements between the EU and Azerbaijan. During the recent period, President Putin has travelled to Baku several times. Moscow would be happy to have Azerbaijan as a member of the Eurasian Union, however, this membership would nullify the country’s long-term attempts to alleviate Russian dependence and become a key energy partner for the EU.  Additionally, a plurality of political elites and the population are not in favor of the Eurasian Union due to the fear that potential membership would equal to yielding independence. The fact that Russia as a member of OSCE, is one of the key mediators on resolving the Nagorno-Karabakh conflict, the significance of having friendly relations become much clear. Hence, Azerbaijan will likely continue its balanced foreign policy in the long run and avoid being a member of any of the regional integration mechanisms.

 

Conclusion

Regional integration in the highly fragmented South Caucasus is a challenging task to achieve. Seeming competing but in fact conflicting two regional integration projects, the EaP and EEU deter integration dynamics in the region. Mutual incompatibility nature of these two projects has brought more fragmentation and destabilization rather than integration and stability to the region. Parallel implementation of these projects has culminated with diverging integration strategies for each country. While Georgia concluded the EU Association Agreement, Armenia joined the Eurasia Economic Union. On the other side, Azerbaijan kept its balanced foreign policy and continued to play a risky political game in the region. The existence of territorial conflicts in the region further aggravates the situation and makes the integration more challenging. In order to counter the adverse impacts of integration policies and boost the stability in the South Caucasus, the EU should be more actively engaged in its neighboring policies to improve conflict dynamics and look for potential strategies to alleviate the incompatibility of EaP and EEU, and resolve destabilizing effects of the EU-Russian competition in the region. Only in that case, the road to Brussels would not pass through Moscow. 

 

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