BACKGROUND: Since the collapse of the Soviet Union, Russia and the United States have engaged in a mixture of geopolitical competition and cooperation in the Caucasus region. Considering the region as its own backyard, Russia looked with suspicion to American efforts to engage the newly independent countries of the Caucasus into western military, political and economic institutions. The U.S. has in its turn gradually engaged the region through energy projects, military cooperation and political alliances. The resulting competition has impeded the solution of regional ethnic conflicts and has delayed the construction of main export pipelines for oil and gas. The recent parliamentary elections in Georgia and the ensuing regime change has raised Russian fears about losing influence over the region, as Moscow regards the new regime in Tbilisi as \"pro-Western technocrats.\" This in turn led to additional and open Russian support for the separatist regimes in Abkhazia and South Ossetia as well as to the maverick Ajarian regional leader Aslan Abashidze – thus blackmailing the new Georgian government and questioning the territorial integrity of Georgia. In Azerbaijan, developments took a different turn, as President Heydar Aliyev’s son Ilham was elected to the presidency on October 15 and received the endorsement of both Moscow and Washington. Major regional players, including Turkey, seemed to agree on the candidacy of Ilham Aliyev as the most optimal choice for their respective national interests. The U.S. hoped that the younger Aliyev would maintain the political stability in the country but accelerate the economic and energy projects started by his father. Russia, in its turn, hoped that Ilham Aliyev would be easier to influence and that the Moscow-educated President would soon follow pro-Russian policies in the region. The recent visit of U.S. Defense Secretary Donald Rumsfeld to Azerbaijan and Georgia, and subsequent talks about the possible opening of U.S. mobile military bases in Azerbaijan, might put an end to this fragile balance of influence. Azerbaijan is an active member of the U.S.-led anti-terror coalition, and the U.S. seeks new opportunities to further increase its military and security presence in the country. Russia’s ambassador to Azerbaijan Nikolay Ryabov immediately reacted to the visit by holding a press conference the next day and expressing Moscow’s complete objection to any foreign military presence in the region. Azerbaijani Defense Minister Safar Abiyev, in his turn, stated in Moscow that U.S. military bases in Azerbaijan are “not ruled out.” U.S. Deputy Secretary of State Mark Grossman echoed this statement, saying that the U.S. government has made an initial decision to relocate its military bases from Germany to the countries in Eastern Europe, including republics of the former Soviet Union. He also tried to downplay Russian fears by saying that \"these relocations are done to change the spirit of the Cold War.\"

IMPLICATIONS: The previous leadership of Azerbaijan and Georgia had established a relative balance of power in the Caucasus. With them gone, geopolitical competition between Russia and the U.S. risks increasing. Russia seems to utilize several traditional mechanisms in order to check a further increase of U.S. influence in the region, including support for ethnic separatism and economic pressures. In Azerbaijan, Russia is more likely to turn to economic factors. Approximately two million Azeris live and work in Russia, and their legal status remains vague. Should the Azerbaijani government allow U.S. military bases in the country, Russia might threaten to deport those Azeris, thus breeding socio-economic tensions in Azerbaijan due to the increase in the numbers of unemployed people and a loss of income. At the same time, pressures on the Baku-Tbilisi-Ceyhan pipeline, currently under construction and expected to be completed by 2005, will increase. Azerbaijani newspapers have reported of Russian sabotage threats to the pipelines, and Azerbaijan’s Minister of National Security Namik Abbasov, two weeks ago ordered an increase of security measures in the pipeline areas. In Georgia, Russia seems to focus on the Ajaria card, implicitly threatening the new Georgian government. Nino Burjanadze, interim President of Georgia, traveled to Ajaria to convince the regional leader Aslan Abashidze to recognize the new Georgia government, but failed to do so. On the other hand, Russia is also likely to use its influence over the peace process in the Nagorno-Karabakh conflict and could thereby obstruct, as it has done before, a final solution. Moscow could hinder the work of the OSCE Minsk group and pressure Armenia away from making concessions to Azerbaijan. The recent visit of the Minsk group\'s co-chairs to the region brought no new proposals and ideas and further strengthened the impression among the general public that the co-chairs are neither able nor willing to solve the conflict. Russia uses this avenue purely for the purposes of controlling the peace process. With these circumstances, it is likely that the solution of the Abkhazia and Nagorno-Karabakh conflicts will be delayed for several more years, while the likelihood of separatism in Ajaria will increase. This will add further political instability to already war-torn and fragmented Georgia.

CONCLUSIONS: With the construction of the Baku-Tbilisi-Ceyhan pipeline, the integration of Azerbaijan and Georgia into the Western markets will be irreversible. At the same time, the continued war on terror pushes the U.S. to increase its security and military presence in the Caucasus region. This will lead to more military cooperation between the U.S. and Azerbaijan and Georgia. Russia, in its turn, is disposed to preventing this from happening, and under these circumstances the security of the regional energy projects could come under serious threat. The new Azerbaijani and Georgian leadership will need urgent Western, primarily American, political and economic support to overcome and withstand Russian pressures. Meanwhile, it is imperative that the West push for the solution of regional conflicts, as they remain a useful and effective tool in the hands of Moscow policy-makers to pressure the Caucasian republics. Revived geo-political competition will not bring positive changes to the region. Local governments could, to avoid this, pursue a policy of \"balance of powers\" and the outside powers should avoid making radical demands on the local leaders at the expense of other powers. Otherwise, the current fragile stability in the region could get out of control, serving neither the national interest of the U.S. or Russia.

AUTHOR’S BIO: Fariz Ismailzade is a freelance writer on Caucasus geopolitics and economics based in Baku. He holds a master\'s degree from Washington University in St. Louis.