Abkhazia Institute for Social and Economic Research

 The newly independent states of the Transcaucasia region have recently found themselves to be at the centre of a commercial triangle which involves the United States, Russia, and oil.  This region which encompasses Armenia, Azerbaijan, and Georgia is important internationally because of its ‘virgin’ oil fields and its ‘vulnerable’ governments.  Following the collapse of the Soviet empire, these states gained a shaky independence from Russia.  As a result of proximity and history, the influence of the Russian Federation is prominent and on going in this area.  The United States has found itself trying to maintain a precarious balance between not stepping on the toes of the Russian government and supporting (fiercely at times) its commercial interests in the Caspian[i] region.  And not surprisingly, Transcaucasia has its own policies regarding the extraction and transportation of oil.  It looks to the US for economic and military support, yet is also engulfed in the contradictory foreign policies of the Russian Federation. 

This essay seeks to examine the nuances of this triangle, particularly with reference to the geopolitical obstacles to oil extraction and transportation and the shared responsibilities of the three governments and various investors involved.  I will argue that no matter how much money is pumped into and how much oil is pumped out of the region, the geopolitical problems in Transcaucasia will still exist and may even worsen.  Therefore, the political problems, which investors call ‘obstacles’, must be dealt with pre-investment.  It is not feasible to invest first, and look to the accumulation of wealth as a precursor to solving complex ethnic conflicts.   It is certainly not the intent of this essay to say that investment must be halted.  Instead, these countries must be given a chance, between now and the actual ratification of oil deals, to work with non-governmental institutions, other governments, and international organizations in an attempt to stabilize their governments and find suitable arrangements for long term solutions to the ethnic conflicts in the area.