ORF: Azerbaijan’s strategic importance grows amid shifting power dynamics in S. Caucasus

As Russia’s influence declines in the South Caucasus, Azerbaijan’s strategic and economic significance is increasing, according to an article by experts from the Strategic Studies Programme at the Observer Research Foundation (ORF). 

The report highlights that despite Moscow’s efforts to maintain its traditional dominance in the region, “the region is undergoing significant geopolitical and economic shifts, with new actors emerging increasingly,” Caliber.Az reports per local media. 

According to the authors, “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 article emphasises that following Western sanctions on Russia, connectivity between the European Union and Central Asia has become a top priority — particularly through 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,” the article notes.

Energy cooperation is another key factor driving regional realignment. “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 authors write.

The conflict in Ukraine has further accelerated Türkiye’s growing influence in both the Caucasus and Central Asia. 

“The conflict in Ukraine has further heightened Türkiye's influence in the Caucasus and Central Asia,” the article states, 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.”

The authors further observe 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 article continues.

The report notes that “recent events between Azerbaijan and Russia underscore the evolving geopolitical landscape in the South Caucasus, where states are seeking to recalibrate their relations.”

Ultimately, the authors conclude that “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.”