Possible Outcomes of War in Ukraine and Impact on South Caucasus

Keghart.org Editorial, 10 March 2022

The outcome of the war in Ukraine might have serious repercussions on South Caucasus, the Republic of Armenia (RoA) and Artsakh (Nagorno-Karabagh) in particular. Armenians need to minimize the possible negative impact and try to maximize the benefits, if any.

The end-results of the war can be summarized in three scenarios, each having a set of effects. It is most unlikely that Russia wins this war decisively during the coming few weeks. This entails it ousts the current government and installs a pro-Russian government in Ukraine, more importantly, the new Ukrainian government declares the country to be a neutral state. Such an outcome will turn victorious Putin into a tougher counterpart against his competitors in South Caucasus and other regions. It is assumed that Putin will be hesitant to entertain more the interests of Azerbaijan and Turkey than what it already has provided. That might allow an advantage to the positions of  RoA and Artsakh (Nagorno-Karabagh). Alternately, though, to further promote its relations with Turkey and Azerbaijan, Russia might be willing to bargain and extend concessions when needed.

Russia losing this war in a classical format is also highly unlikely. It might halt its operations and partially withdraws, maintains its presence in Crimea and Donbas without being able to impose on Ukraine the principal demand of declaring itself neutral. Russia will be considered “defeated” and weakened. Again, Russia might take a tough stand especially in Southern Caucasus since it will not tolerate additional losses in its backyard. Azerbaijan will have to weigh its options whether to pursue further rapprochement with an anemic Russia or not. For decades Azerbaijan has worked to improve its standing in the eyes of the West and will be reluctant to give up the preferential treatments that it gets. Armenians, on the other hand, can benefit from this situation by defending their own interests independent of Russian agenda. This might provide RoA a larger leeway to maneuver and easier cycles of negotiations. It is a historical fact and there is consensus that whenever Russia has been weak or busy away from the Caucasus, people of this region could pursue their interests individually and restructure matters within themselves.

Given the intensity of the hostilities during the past two weeks the third and likely fallout is a prolonged war that may last for months or even years and drain Russia’s economic and human resources. Internal dissent and strives may crop up as well as dangers of secession from the federation might heighten, which jeopardize the existence of the Russian Federation in its current form. The West will welcome this evolution; China does not mind having a weaker neighbour to its north with a vast territory and ample resources to be utilized. Global investors and corporations, which are the most powerful global lobbyists, will hail such a development since new business opportunities will be available, not to mention arms sales and war economy. This could potentially be a worst-case scenario for RoA simply because the balance of power in southern Caucasus, among other regions, will be restructured. Turkey – Azerbaijan alliance have the advantage to fill the vacuum in the absence of any potential power that can outbalance this alliance. Therefore, Armenians should act decisively and seize new opportunities.

Negotiations between Iran and the US held in Vienna are on a positive course. Tangible outcomes might surface within the coming weeks. This will not only open widely the gates of collaboration with Iran but also with the rich Arab Gulf states. RoA diplomacy must not lose time in getting engaged with these potential partners at all levels without waiting for the outcome of the Vienna negotiations.

In the short run, RoA can benefit from the newly created ‘war economy.’ Russia got suspended from the SWIFT system and economic sanctions were imposed by Western powers. Russia needs an outlet to be able to maintain a minimum amount of economic transactions with the West and with countries that abide by these sanctions. RoA may assume the role of a leeway for financial and monetary transactions between Russia and the outside world. This is not a call for the role of a facilitator of illegal activities; rather, RoA can execute this function as per the consent of the west and the needs of Russia. Many economies boomed and witnessed certain prosperity due to similar periods of regional crises. Reliable sources inform that several Russian based companies have already moved their operations to RoA.

These opportunities, however, cannot be seized if RoA skids into the war effort demands that might be imposed by Russia. RoA’s abstention in the UN General Assembly voting regarding this war was a promising move towards the right position. This distancing from the conflict must continue and the neutrality of RoA should be preserved despite the challenges.