Agence France Presse
October 26, 2008 Sunday 2:18 AM GMT

‘Location, location, location’ key in struggle for Caucasus

by Michael Mainville
TBILISI, Oct 26 2008

As a piece of global real estate, the South Caucasus region certainly
fits with the old adage that "location, location, location" will have
suitors knocking at your door.

Wedged between Russia, Turkey and Iran in a rugged strip separating
western markets from eastern energy, the nations of the South Caucasus
have hosted a string of VIP visitors in the wake of the Russia-Georgia
war in August.

The leaders of France, Germany, Russia and Turkey, as well as US Vice
President Dick Cheney, have all visited Armenia, Azerbaijan or Georgia
in recent months, stepping up efforts to gain influence in the region.

Analysts say the influx reflects the region’s unique strategic
position.

"The Caucasus has throughout its history been a flashpoint region at
the crossroads of East and West," said Shalva Lazarishvili, an analyst
with the Tbilisi-based Foundation for Democratic Development.

A land of soaring mountain peaks and ancient ruins, the Caucasus has
long been dominated by foreign empires, from the Persians, to the
Ottomans, to the Russians.

When the region’s three countries gained their independence with the
collapse of the Soviet Union in 1991, the United States emerged as a
new player on the scene.

Whether it was giving substantial foreign aid to Armenia, backing new
energy projects in Azerbaijan or supporting Georgia’s pro-Western
leader Mikheil Saakashvili, Washington made significant inroads into
the Caucasus in recent years.

The United States has also become involved in the Caucasus on a
security level, funding various programs that include upgrade of
equipment in Azerbaijan and training for military and other security
personnel in Georgia.

But as a new force in the region, US gains are fragile, analysts said,
and the war in Georgia has shown Russia remains a force to be reckoned
with.

"Russia’s presence in the Caucasus has a 200-year-old history, it has
unique knowledge of how to act there," said Sergei Mikheyev, an
analyst with the Moscow-based Centre for Political Technologies.

"Cultural and historical context is very important, and the North
Caucasus belongs to Russia. All this makes Russia a very strong
player," he said.

Russia sent troops into Georgia on August 8 to repel a Georgian
military attempt to retake the Moscow-backed rebel region of South
Ossetia. Russian troops occupied swathes of the country, but later
withdrew to within South Ossetia and another rebel region, Abkhazia.

To widespread international condemnation, after the conflict Russia
recognised South Ossetia and Abkhazia as independent states.

Analysts said the conflict has left Russia in a strong position. With
plans to deploy about 7,600 troops in South Ossetia and Abkhazia, it
has gained a key military position south of the Caucasus
mountains. But more importantly, Moscow has made clear it is willing
to take drastic, and potentially risky steps to maintain its influence
in the region.

"The August events demonstrated to Georgia and its neighbours that the
Caucasus remains a priority for Russia," Lazarishvili said.

But experts say the "Great Game" for influence in the region is far
from over.

Despite opposition rumbling, Saakashvili’s hold on power in Georgia
appears secure for now and his government continues to win Western
support, including a pledge of 4.55 billion dollars (3.5 billion
euros) in Western aid on Wednesday.

In energy-rich Azerbaijan, President Ilham Aliyev is expected to
continue walking a fine line between Russia and the West after
securing a second term on October 15. Azerbaijan has benefited hugely
from a Western-backed corridor of pipelines delivering oil and gas
from the Caspian Sea to European markets, but has been careful to also
continue energy cooperation with Russia.

Armenia remains Moscow’s strongest ally in the region and is home to a
key Russian military base, but the country is also one of the largest
recipients of US foreign aid, thanks to the large Armenian diaspora
living in the United States.

Analysts say that with its proximity to a resurgent Russia,
NATO-member Turkey and volatile Iran, the region is in too crucial a
location to ignore.

"The strategic importance of the South Caucasus is growing," said
Svante Cornell, deputy director of the Central Asia Caucasus Institute
and Silk Road Studies Programme in Stockholm.

"It’s about opening up after 200 years of Russian dominance. It’s
about transit of Caspian Sea energy resources to the West. It’s about
transcontinental commerce."