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Explainer: Why The Nagorno-Karabakh Crisis Matters

  • Charles Recknagel

A soldier with separatist forces in Nagorno-Karabakh carries weapons in Martakert province, which was reportedly affected by recent clashes over the breakaway Caucasus region.

A soldier with separatist forces in Nagorno-Karabakh carries weapons in Martakert province, which was reportedly affected by recent clashes over the breakaway Caucasus region.

This week's Nagorno-Karabakh crisis might strike most people as nothing more than another minor conflict in a remote, faraway place.

But the role of the Caucasus in the global energy trade and the potential for full-scale hostilities between Azerbaijan and archrival Armenia or its clients drawing in major regional powers are reason enough to keep a close eye on whether the April 5 cease-fire holds.

Two pipelines carry oil and gas from Azerbaijan westward through the Caucasus, and both pass near the disputed Nagorno-Karabakh enclave. Any widening conflict could endanger both them and Europe's hopes of tapping the Caspian region to reduce its dependence upon Russian energy sources.

At the same time, any escalating conflict could draw in neighboring powers, thanks to Armenia's military pact with Russia and Azerbaijan's pact with Turkey. That could lead to a showdown between Moscow and Ankara, which are already at odds over Russia's intervention in Syria and Turkey's shooting down of a Russian warplane in November.

Here are some points to consider.

Pipelines

The Caspian region has rich oil and gas reserves that regional countries want to export to Europe. However, there are only two export routes. One is northwest through Russia; the other southwest across the Caucasus.

However, northern routes through Russia do not satisfy Europe's long-term hopes of one day freeing itself from its dependence upon Moscow for energy supplies. The European Union's unhappiness with that reliance has grown for years as it has watched Russia use energy as a foreign-policy tool to apply pressure to states like Georgia and Ukraine. In some cases, cutoffs of gas to Ukraine over price disputes have caused shortfalls downstream in eastern EU states.

That's why Europe values the pair of oil and gas pipelines that currently bring Caspian energy out through the Caucasus, and why it hopes to see more such pipelines in the future. But those hopes are limited so long as the conflict over Nagorno-Karabakh remains unsettled.

"A potential conflagration over Nagorno Karabakh is quite likely to affect both of these pipelines," says Theodoras Tsakiris, assistant professor for energy, geopolitics, and economics at the University of Nicosia in Cyprus. "They are of critical significance primarily for Azerbaijan, then Turkey and, to a lesser extent, Europe and the global economy."

He notes that, in the case of a sustained conflict, Azerbaijan would likely shut down the pipelines for safety reasons to avoid oil spills and gas leaks if they were damaged.

The most immediate impact upon Europe would be oil supplies. The pipeline link from Baku to Ceyhan, on Turkey's eastern Mediterranean coast, carries some 1 billion barrels of oil per day, with most of it going to Europe plus some to Israel.

Tsakiris notes that any cutoff would be a setback for the EU's hopes of progressively reducing its current reliance on Russia for 35 percent of its crude oil supplies. It would not likely affect oil prices, however, due to oversupplies of oil on the world market.

Of less immediate worry to Europe would be any cutoff of Caspian natural gas. Currently all of the 9 billion cubic meters of gas moving westward from Azerbaijan goes to the Turkish market. However, just as with oil, Brussels hopes one day to use Caspian gas to lower its current dependence on Russia for nearly one-third of its natural gas supply.

Under its Southern Gas Corridor strategy, the EU hopes to see an additional 10 billion cubic meters of Caspian gas moving through new pipelines onward to southern and Central Europe by the early 2020s. That would be the first step toward even larger possible volumes in the future.

"The important thing is to open up the corridor and have the possibility to build more pipelines through southeastern Europe which over the next 10 to 15 years could seriously open up the Caspian Sea generally for future supplies," says Tsakiris.

But so long as there is conflict in the Caucasus, any new pipeline projects remain risky financial propositions.

Military Pacts

The other threat a growing Nagorno-Karabakh conflict presents is the possibility of drawing in neighboring states.

Azerbaijan and NATO member Turkey signed an Agreement on Strategic Partnership and Mutual support in 2010 under which both agree to support each other "using all possibilities" in the case of military aggression against either.

The two countries have sought to add teeth to their agreement by conducting annual joint military exercises. Worrisome for Yerevan was a military exercise last year in Azerbaijan's exclave of Naxcivan, along Armenia's southeastern border. That raised the possibility that, in any major military conflict, Yerevan could face a two-front war with Baku in which Turkey might intervene.

Equally dangerous is the possibility that Russia might intervene on Armenia's side under the two countries' 1992 Tashkent Collective Security Treaty. Any such showdown would further ramp up the tensions that exist between Russia and Turkey, both of which view themselves as major regional powers.

Ankara, with its military pact with Baku, has shown that it considers its fellow Turkic nation part of its sphere of influence.

Russia, through its support of Armenia -- where it has 5,000 troops permanently stationed -- has long made it clear it considers the Caucasus very much its continuing sphere of influence.

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