U.S. eyes greater influence in the South Caucasus
The Trump administration is managing regional challenges in the South Caucasus to enhance U.S. presence while addressing Russia’s strategies.
In a nutshell
- The U.S. aims to strengthen ties in the South Caucasus amid strategic shifts
- Russia’s weakened influence creates opportunities for the U.S.
- External powers like Iran and China are impacting regional alignments
- For comprehensive insights, tune into our AI-powered podcast here
The South Caucasus, comprising Armenia, Azerbaijan and Georgia, has been a focal point for geopolitical tensions for many years. Russia has historically played a strong role in influencing this region. The current administration of President Donald Trump sees both opportunities and challenges in deepening the United States’ engagement there and in Central Asia, where energy and critical resources are in relative abundance. With China’s expanding reach and assertive moves by Russia and Iran, Washington has strong incentives to bolster its presence.
Russia’s war in Ukraine shapes South Caucasus geopolitics
In recent years, Russia’s role as the main mediator and security provider in the South Caucasus has diminished, largely due to its ongoing war in Ukraine, the 2020 Nagorno-Karabakh War and the 2022-2023 Blockade of Nagorno-Karabakh. The outcome of Russia’s war on Ukraine will undoubtedly play a pivotal role in South Caucasus dynamics.
To maintain its military efforts, Moscow has redirected resources from the region to the front in Ukraine. Furthermore, Russia has relied heavily on trade to bypass sanctions and market restrictions imposed by Western countries. According to a 2024 report by Oxford Economics, Moscow draws on:
A re-routing of trade flows to circumvent EU restrictions on the shipment of goods by Russian companies and sanctions against Russian financial institutions. … Furthermore, some ex-Soviet Union countries are expanding their manufacturing sectors to export more to Russia, thereby exploiting gaps left by the departure of Western companies from the Russian market.
Russia relies on the region as an avenue to bypass Western sanctions and, as a result, benefits from the status quo. Each of the three countries has pursued a distinct path, leading them to consider how the outcome of the war in Ukraine might shape Russia’s future plans for reengagement in the South Caucasus, the Caspian Basin and Moscow’s ability to reassert its sphere of influence.
Political turmoil in Georgia as Russian influence remains
Georgia, situated at the intersection of Europe and Asia, has faced significant political instability in recent years, marked by contested elections and prolonged public protests against the government, which is led by the pro-Kremlin Georgian Dream Party. Despite these challenges, the government’s policies – heavily shaped by billionaire and former Prime Minister Bidzina Ivanishvili, the country’s wealthiest individual and a figure sanctioned by the U.S. and some European countries – aim to maintain relations with Russia and China.
At the same time, opposition political parties and movements are struggling with fragmentation and internal conflicts, while facing Russian meddling in their efforts, thus making it difficult for them to effectively mobilize their support base. In parallel, the Georgian Dream government has been systematically marginalizing its political opponents. This has led Western nations to take steps to downgrade their relations with Tbilisi. For instance, in January, the European Union revoked visa-free travel for Georgian diplomats and officials. In 2024, the U.S. Department of the Treasury imposed sanctions on two officials within the Ministry of Internal Affairs in Georgia for “serious human rights abuses against protesters.”
Georgia plays a crucial role in the Middle Corridor, linking Central Asia, the Caspian Sea and the Caucasus with the Black Sea, Europe and Turkey.
As a result, the Georgian government has adopted a more confrontational stance toward both the European Union and the U.S. Signaling a more independent course and strengthening its ties with China, Education Minister Alexander Tsuladze introduced a new educational program in April: “A Chinese language standard will be established as a second language” in Georgian schools.
Despite a history of strained relations, the U.S. has significant interests in Georgia. The country plays a crucial role in the Middle Corridor, linking Central Asia, the Caspian Sea and the Caucasus with the Black Sea, Europe and Turkey. The development of these corridors enhances global supply chain resilience and limits opportunities for China, Iran and Russia to interfere.
As a littoral state, Georgia could help maintain a free and open Black Sea. However, Russia, since invading Georgia in 2008, occupies 20 percent of the country’s territory, namely the regions of Abkhazia and South Ossetia. Additionally, Moscow is building a new Russian naval base in Abkhazia.
Washington has raised apprehensions about China’s involvement in Georgia’s Anaklia deep-water port situated on the eastern edge of the Black Sea, citing security, political and economic implications. Meanwhile, Tehran is actively developing a North-South Corridor connecting Russia to Iran through Georgia, a route that could reduce the regime’s vulnerability to economic and political isolation from the U.S.
The American government is in a bit of a quandary. It views the punitive approach of the administration of former President Joe Biden toward Georgia as largely ineffective, creating opportunities for greater Russian and Chinese leverage. Yet, the U.S. remains uncertain about how to engage pragmatically with the Russian-aligned Georgian government while addressing legitimate concerns about the treatment of its westward-looking political opposition.
Armenia’s shift toward Western alliances
The present Armenian government is clearly distancing itself from the country’s longstanding alignment with Moscow, pursuing closer ties with Europe and the U.S. In April, the government enacted a law establishing a legal basis for the South Caucasus nation to progress toward EU membership. In early 2025, Armenia signed a strategic partnership charter with the U.S. Since 2021, the EU and Armenia have been party to the Comprehensive and Enhanced Partnership Agreement. Meanwhile, the country upholds trade and diplomatic relations with Moscow and Tehran, while striving to reopen its closed borders with Azerbaijan and Turkey. Armenia also enjoys cordial relations with Georgia, which has facilitated several trilateral efforts with Armenia and Azerbaijan.
The present Armenian government is clearly distancing itself from the country’s longstanding alignment with Moscow, pursuing closer ties with Europe and the U.S.
Yerevan’s top priority is securing a peace treaty with Baku following the prolonged war over the disputed territory of Nagorno-Karabakh. Turkey has already expressed its intention to normalize relations with Armenia once the peace agreement is finalized.
Although the treaty text is complete and agreed upon by both parties, Baku has introduced new conditions. Armenians worry that a failure to implement the treaty could undermine the country’s pro-Western parliamentary majority, enabling pro-Russian factions to gain control. There are also concerns about increased gray-zone operations from Moscow or renewed conflict with Azerbaijan, possibly to secure a land bridge to the Nakhchivan Autonomous Republic (an exclave of Azerbaijan). Additionally, there is apprehension that efforts to seize territory or establish the proposed Zangezur Corridor from Russia to Turkey, bypassing Armenian authorities, could trigger a military response from Iran, as it might disrupt Tehran’s access to Armenia and Europe.
Read more by James Jay Carafano
- NATO summit: Defense spending and U.S. tensions at play
- U.S. action in Panama signals a shift in global strategy
- Counterterrorism returns as a top U.S. priority
The strategic objectives of Armenia’s current government align closely with U.S. interests. Armenia’s pivot toward a pro-Western stance, its efforts to resolve the Nagorno-Karabakh conflict with Azerbaijan and normalize relations with Turkey can significantly enhance regional stability if maintained and built upon.
This is critical for the development of the Middle Corridor (also known as the Trans-Caspian International Transport Route or Central Asia-Caspian-Caucasus Corridor), which aims to link Chinese and European markets via Central Asia and the Caucasus. The corridor advances U.S. goals by offering regional countries a trade alternative to the North-South corridor from Russia to Iran. The route can foster diversified supply chains, open new markets, and secure energy and resource access for Western countries, while limiting the influence of Russia and Iran. Moreover, in parallel with its new critical minerals agreement with Kyiv, the U.S. is also actively pursuing mining and processing agreements in Armenia, as part of its global strategy to counter China’s dominance in rare earths and critical minerals production.
The Trump administration is likely to continue constructive engagement with Armenia.
Azerbaijan’s strategic role
The government in Baku has made significant efforts to strengthen its ties with Western countries, to balance Russian and Chinese interests. At the same time, Azerbaijan maintains robust, long-standing relationships with Turkey and the Central Asian states. Most notably, it has emerged as an important energy partner for Europe through projects like the South Caucasus Pipeline, the Trans-Anatolian Pipeline and the Trans-Adriatic Pipeline. The country also serves as a regional ally for Israel, though, regarding Europe, it has been adversarial toward France.
Baku has indicated that it wants to accelerate cooperation with Washington under the Trump administration. In a speech delivered in July 2024, the Azeri President Ilham Aliyev noted, “If you look at the development of our relationship [with the U.S.], particularly the visible aspects, of course, with the Republican administration, our relations have always been much more productive, fruitful and result-oriented.” In March, Tel Aviv announced plans to initiate a trilateral dialogue involving the U.S., Azerbaijan and Israel, and to promote Baku’s inclusion in the Abraham Accords.
The U.S. has substantial interests in Azerbaijan which is a crucial link connecting Central Asia, the Caspian Sea and the Caucasus to Western markets. Moreover, American-Israeli-Azeri cooperation regarding Iran would greatly benefit Washington’s strategic interests. Prospects for a strong and pragmatic partnership between Washington and Baku are highly likely.
Scenarios
Most likely: Russia’s influence declines in Armenia and Azerbaijan
In the most likely scenario, Russia’s sway among the South Caucasus states of Armenia and Azerbaijan will remain weakened due to the consequences of its war against Ukraine and these two countries seeking greater trade ties with Europe. This also creates an opportunity for greater U.S. engagement, as these countries seek American presence and foreign direct investment to fill the vacuum. Moscow’s influence in Tbilisi, however, will likely remain firm.
Likely: U.S. boosts partnerships in Armenia and Azerbaijan
Successful U.S. cooperation with all South Caucasus countries could strengthen ties and deepen engagement, but regarding Georgia, the U.S. will likely defer to Russia. This is even more likely given Washington’s signaled intent to maintain constructive relations with Turkey. However, the pace of engagement is likely to be shaped by factors beyond the U.S.’s direct control. The most vital factor is the Azerbaijani-Armenian peace process. A stable resolution could facilitate deeper U.S. involvement, while a reversal or renewed conflict might complicate or even derail American efforts.
Moscow, as the most likely external disruptor, is worried about its declining influence and appears prepared to take steps to preserve its authority. Tehran, in contrast, prefers the status quo, while China, despite interest in expanding its authority, is constrained by economic challenges and other global priorities, making the South Caucasus less urgent. However, the U.S. seems hesitant to fully compete with Moscow for influence in the region. Washington’s goal appears to be more focused on connectivity with the South Caucasus and Central Asia than establishing a hard sphere of influence that completely blocks out either Russia or Iran.
Unlikely: Georgia, with its southern neighbors, develops a trajectory independent of Moscow
While a more Western orientation is still popular among many Georgians, the likelihood of a government that would embrace a break with the current Russian government is low. That said, there is always a possibility that the regime in Tbilisi might adopt a more aggressive balancing strategy that tilts in favor of engagement with the West.
Contact us today for tailored geopolitical insights and industry-specific advisory services.
Sign up for our newsletter
Receive insights from our experts every week in your inbox.
