Is EU’s Fuzzy Natural Gas Math Leading to Major Minuses in the Caucasus? 

As the EU continues to play a key role in the bungled peace process between Armenia and Azerbaijan,  the bloc continues to lean on Azerbaijan for more natural gas in order to make up for its shortfalls from Russia. Has this affected EU mediation that has seen Armenia cede contested territory and which has led to widespread resentment and protests in Armenia?

As the EU assumed a lead role in steering negotiations over the past few years, its reliance on Azerbaijan for gas was steadily growing, as  shown by the European Commission’s recently released report on the bloc’s 2023 gas markets.

In the fourth quarter of 2023, EU pipeline imports amounted to 44 bcm. Norway remained the EU’s biggest pipeline gas exporter with a share of 50% (22 bcm), followed by North Africa (19%), Russia (18%), and then Azerbaijan (7%).

Azerbaijan steadily increased its market share from 3% (8 bcm) in 2021 to 5% (11 bcm) in 2022 and 7% (11 bcm) in 2023. But those figures belie the country’s importance to the EU in today’s geopolitical landscape, as Azerbaijan plays an increasingly crucial role in the energy security of Eastern and Southern European countries, which have been mostly dependent on Russian gas.

And Azerbaijan’s role could get much bigger soon – kind of.

While Ukraine’s contract to transit natural gas from Russia to Europe ends at the end of this year, and there have been no signs it will be renewed, EU officials want to use the pipelines to transit Azeri gas instead.

This is where it gets tricky. Azerbaijan has no access to the Ukrainian pipeline network, and the Azerbaijan pipeline to the EU is already at full capacity. According to Bloomberg, the EU is proposing a “swap” with Russia providing “Azeri” gas to the EU, while Azerbaijan sends “Russian” gas elsewhere. How exactly those details get worked out remains to be seen, but it would presumably allow EU officials to pat themselves on the back and say they’ve cut off Russian pipeline gas completely.

The plan would add to the ludicrousness of the EU efforts as even the gas that is piped from Azerbaijan through the South Caucasus Pipeline, the Trans-Anatolian Natural Gas Pipeline, and the Trans-Adriatic Pipeline has a Russian flavor to it. Due to Russian companies’ large investments in the Azerbaijani oil and gas sector, it is one of the bigger beneficiaries of Brussels’ efforts to increase energy imports from Azerbaijan in order to replace Russian supplies. Azerbaijan is also importing more Russian gas itself in order to meet its obligations to Europe.

The EU is also pushing for a doubling of capacity through the pipelines from Azerbaijan to southeastern Europe by 2027.

A Disaster for Armenia

Against the backdrop of Project Ukraine, the new Cold War, and the EU’s search for new sources of gas, mediating countries began to compete for the status of the main moderator of the Armenia-Azerbaijan negotiations, which was traditionally handled by Moscow. Yerevan began to favor the West, however, and talks mostly moved to European platforms despite the EU’s increasing reliance on Baku for energy creating such an obvious conflict of interest.

It was during those EU meetings that Armenia agreed to officially recognize Nagorno-Karabakh as part of Azerbaijan. On its face, that’s not a bad outcome. The region was (and is) recognized as Azerbaijani territory by the international community but was overwhelmingly populated by ethnic Armenians. Roughly 100,000 of them fled to Armenia after Azerbaijan blockaded the region for months and then moved militarily to assert control in September – an operation that resulted in hundreds of deaths. Armenia got nothing in return for its recognition except perhaps promises from the EU and NATO about future integration.

The latest from the West-led peace process has Armenia giving up more occupied land to its neighbor Azerbaijan with nothing in return. The EU, meanwhile, continues to benefit in the form of natural gas agreements while simultaneously helping to bring Armenia “into the Western fold.”

At the same time that Armenia cedes contested land as part of the EU-guided peace process, its government blames Russia for the losses as part of a coordinated effort to sabotage all ties with Moscow.

The latest is an announcement from Washington and Yerevan that they will elevate their bilateral relations to the level of “strategic partnership,” with Washington helping Yerevan with trade, military matters, its judicial system and democracy.

Just what type of pressure or bribes had to be dangled in front of Armenian Prime Minister Nikol Pashinyan in order for him to look at how the Americans helped another former USSR state – Ukraine – with its democracy and decide, ‘I want some of that,’ is anyone’s guess.

To make matters worse, Armenia is in an even more difficult spot than Ukraine ever was as it is mostly surrounded by countries it does not get along with and was reliant on Russia for its security, as well as economically. No matter, Pashinyan is apparently intent on withdrawing Armenia from the Russia-led Collective Security Treaty Organization. In doing so he is gambling that the West can prevent Azerbaijan and Türkiye from taking more Armenian land by force, especially their long-coveted corridor through southern Armenia. But it’s also entirely possible that the West is willing to bargain with Armenian land there as well in order to seek cooperation elsewhere from Baku and Ankara.

More to the West’s Plan?

Azerbaijan is making off quite well. It has its gas deals with Europe, maintains good ties with Russia, has the full backing of Türkiye, a strong oil for weapons arrangement with Israel, and is managing to improve ties with Iran – although the potential Azeri-Turkish corridor through southern Armenia remains a source of disagreement between Tehran and Baku.

Russia, as usual, is remaining patient with the West’s machinations in Armenia.  As Russian Foreign Minister Sergey Lavrov said months ago:

“I hope, Yerevan is aware that any deepening of cooperation with the alliance may result in its losing sovereignty in the sphere of national defense and security…This cannot but cause our concern. We have repeatedly drawn the attention of our Armenian colleagues to the fact that NATO’s true goal is to strengthen its positions in the region and create conditions for manipulation based on the ‘divide and conquer’ scheme.”

The big question is what exactly is the plan of the Collective West here – if there is one.

France continues to ink deals to send weapons to Armenia – the latest being a June 17 agreement to purchase CAESAR self-propelled artillery systems – which led to a war of words between Paris and Baku. France, which is the home to the largest Armenian diaspora community in Europe, is also sending 50 Arquus Bastion armored personnel carriers, Thales-made GM 200 radars, and Mistral 3 air defense systems. Armenia almost doubled its defense spending last year to roughly $1.5 billion.

Is this enough to make up for Armenia’s disadvantages? Almost certainly not. The real question is if France and the EU have enough leverage to prevent Azerbaijan and Türkiye from taking land from Armenia by force now that the latter is leaving Russia’s security umbrella. I guess we’ll see.

Are the EU and NATO really serious about bringing Armenia into those organizations?

The EU recently launched a four-year 270 million Euro fund to help “bring Armenia into the Western fold.” Actually bringing Armenia into the EU would require significantly more than that, especially if Russia decided to scale back economic ties with Yerevan. As Fitch Ratings notes, Armenia’s economy relies significantly on Russia for both trade and energy. For example, Armenia also currently pays Russia $165 per thousand cubic meters of gas, well below the market price in Europe, and Russia is Armenia’s number one trading partner. According to the Armenian government data, it accounted last year for over 35 percent of the South Caucasus country’s foreign trade, compared with the EU’s 13 percent share in the total.

As much money as it would cost to bring Armenia into the EU, NATO could cost a lot more in more than just money. It would be problematic for all of Armenia’s neighbors –not least among them, current NATO member Türkiye. If you thought Erdogan held up Sweden’s accession bid for a long time, imagine what Armenia would be like. An increasing Western military presence in Armenia also runs the risk of some sort of demilitarization operation by some combination of Azerbaijan, Türkiye, and Russia. And NATO would then have no real way to defend Armenia.

From the US perspective, neocons have long dreamt of using Armenia and Azerbaijan to simultaneously weaken Iran and Russia, but that requires some combination of countries going against their own interest, exploiting ethnic and religious divisions, missteps by Moscow and Tehran, and overall chaos. As of now, the US really only has one small part of that equation working: Armenia kneecapping itself, but with the US/EU apparent control over the Armenian government and neocons’ penchant for chaos, they have the bargaining chip to try to do it: the Zangezur Corridor – a potential transportation connection between Azerbaijan and its Nakhchivan exclave wedged between Armenia, Turkiye, and Iran. More than that, it is one of the most convenient route through the Caucasus, which connect Eurasia in all directions.

Baku wants travel of people and cargo between Azerbaijan and Nakhchivan to be free of inspection and customs and expects Yerevan to agree to the deployment of Russian border guards along the corridor. Moscow agrees with the deployment of its border guards, even if it doesn’t see eye to eye on the customs issue (it wants the Russians to conduct the security checks).

Iran is opposed to the corridor because it doesn’t want to lose its profits from gas and cargo transfers through Iran and the influence it allows over Baku.

Türkiye wants to link up with Azerbaijan to avoid having to use Iran as a transfer route around Armenia.

Even India is concerned that the opening of the route would upset the power balance in the region in favor of Türkiye and Azerbaijan, which New Delhi opposes due to their close ties with Pakistan.

Whatever ends up happening, it’s safe to say that the Collective West is working to prevent the peaceful and prosperous outcome outlined here by Security & Defense Quarterly:

Armenia can enjoy the advantages of the Zangezur corridor; in other words, if it attaches importance to regional cooperation, it may experience positive indicators in socioeconomic fields. First of all, it will get an opportunity to emerge from economic isolation and undergo economic development. Otherwise, it will lose a clear opportunity to improve and integrate its overall economy. Therefore, the Zangezur corridor is a major project which has a true potential to contribute to the establishment of long-lasting peace to end decades of long enmity.

The problem for the West, and even more so for Yerevan, is that the countries of the region – aside from Armenia – seem wise to the divide and rule strategy and are thus far determined to avoid conflict while continuing to pursue infrastructure projects that contribute to integration. Azerbaijan, Iran and Türkiye are in discussions on the issue and may construct an alternative arrangement through Iran.

Meanwhile, the number of good outcomes for Armenia is quickly declining. Judging by its geography, it’s difficult to see how continuing to pursue membership in the EU and NATO won’t cause problems that will be used in an attempt to ignite some sort of conflagration in which Armenia is at the center and overwhelmed by its adversaries.

Who knows what else is on the neocons’ bingo card?

Maybe a return to the more hardcore Armenian nationalism of the 1970s when ASALA (Armenian Secret Army of the Liberation of Armenia) waged a terror campaign in an effort to force Türkiye to recognize the 1915 events as genocide, pay generous compensations to the Armenian victims and their families, and cede territory to Armenia. To achieve these goals, ASALA killed dozens of Turkish officials in the 70s and 80s. (Türkiye had its own paramilitary forces targeting ANSALA).  This more radical strain of Armenian nationalism was also turned against the USSR, including 1977 explosions in Moscow that killed seven people.

A Cryptic Religious Figure Promises Salvation 

The ineptitude on behalf of Pashinyan has been so striking it’s difficult to believe it’s not intentional. Predictably, the land giveaways have generated widespread backlash in Armenia. Despite efforts to place the blame for them at the feet of Moscow, protestors are increasingly irate with the government in Yerevan. And yet the Pashinyan government seems determined to make matters worse.

Police have been arresting protestors en masse and on June 12 used stun grenades in effort to disperse a demonstration outside of the Armenian National Assembly. Dozens of protestors were injured, including one whose hand was blown off.

As I mentioned back in October, Pashinyan was on the road to being forced out – likely by more nationalist forces determined to stop the humiliation he was inflicting on the country.

In recent months the previously unknown Archbishop Bagrat Galstanyan of the Tavowš diocese, one of the areas most affected by the latest disputes between Armenians and Azeris, arrived on the scene to lead the opposition against the Pashinyan government.

Galstanyan is apparently suspended from his pastoral duties at his own request, but he nevertheless takes to the streets in his episcopal garb. He says he is ready to lead the country and the opposition has rallied around him. The constitution bars Galstanyan from becoming prime minister due to the fact he also has citizenship in Canada – although he has promised he will throw away his Canadian passport. Galstanyan was reportedly educated in Canada along with England, and has support from groups like Christian Solidarity International, the Armenian Revolutionary Federation in the US, and the Armenian Relief Society, which is headquartered in Boston.

The opposition in Armenia, however, does not have enough votes in parliament to subject Pašinyan to impeachment proceedings, and they have already been defeated in early elections once. Nevertheless, as Asia News puts it, “[Galstanyan’s] parable of the last month appears to many Armenians as a true revelation of the divine will for the rebirth of Christian Armenia.”

What exactly that would mean for the country is hard to tell. Galstanyan is vague in his comments. He condemns Pashinyan’s stance towards Azerbaijan as “worthy of a slave.”

Yet, also declares that, “We will achieve real, stable, and long-term peace. But this man [prime minister Nikol Pashinyan] leads us to war and prolongs the conflict.”

The primary goal at this time for Galstanyan is to topple Pashinyan with all possible options under consideration. Here’s Galstanyan, according to JAM News.

“The main goal is to achieve our aim through legal means. The movement’s organizational or ideological team will decide on the tactics.”

On the issue of Armenian relations with Russia, Galstanyan recently said the following:

“Today, Armenia’s relations with Russia are based on agreements, although these relations, to put it mildly, are not in a good state, if not to say that they have been totally or largely soured. That is why, although we have a lot of questions for the Russian side, these relations should be brought to the level of relevant agreements, and brought back on course,” he noted, stressing that their relations need a profound dialogue and understanding because they are “non-existent at the moment”.

“There are a lot of problems, but we must be ready to address them at the level of mutual understanding and dialogue,” he continued.

Archbishop Galstanyan stressed that Yerevan should be guided by “Armenia’s interests in everything,” adding that Armenia’s relations with the world should not develop “against anyone.”

Some believe that Galstanyan is controlled by pro-Russia interests. The Armenian Mirror-Spectator takes a closer look at Galstanyan and isn’t sure what to think:

On May 26, the movement was unable to present itself as a group of experienced and capable leaders ready to lead and inspire confidence. Instead, Archbishop Galstanyan presented himself as the only apparent leader, as well as the prime ministerial candidate with the pretention of replacing the current authorities. He also announced that he has “frozen” his ecclesiastical activities, both clerical and administrative, without even explaining the meaning and scope of this “freezing.” On May 26 and afterwards, until today, the complete absence of an alternative national political platform from the movement led to even more disillusionment. All that remained was the demand for the immediate resignation of the prime minister and the government, so that Archbishop Galstanyan would head a completely new and unknown government.

Despite Pashinyan’s string of mistakes, the paper advises relying on early elections or waiting until the next regular elections in 2026 rather than taking a leap into the unknown and bringing Galstanyan to power in another way.

We’ll see. The Pashinyan government is doing its best to help Galstanyan with its heavy handed crackdown, and Armenia looks to be once again caught between two bad options.

As the US splits the world into two blocks, existing in that middle ground can be a fertile place to be. It can also be risky. Armenia’s neighbor, Türkiye, and Erdogan’s high wire act is a good example, where he is able to (mostly) use that position to Türkiye’s advantage. But if a country’s leader plays their cards wrong or ends up with a incompetent and/or corrupt leaders that allow the country to be used as a pawn, you can end up like Ukraine. So far, Armenia looks to be on the path of the latter with unpredictable results for the Caucasus.