Azerbaijan-Armenia dispute resolution faces disruption

Significance Hosted in Sochi by Russian President Vladimir Putin, the two leaders repeated past general commitments to stability, border demarcation and open transport communications. The clashes on November 15-16 were the largest, though not the first, military escalation since the 2020 war over Nagorno-Karabakh. Baku seems to be waging a campaign of attrition to force Yerevan to submit to its wishes. Impacts The resurgence in fighting close to where Russian peacekeepers are deployed highlights Moscow's limitations as rule-maker. Iran may increase its diplomatic support for a weakened Armenia in order to maintain a regional balance. Turkey will encourage or reject a possible rapprochement with Armenia, depending on what Azerbaijan does.

Subject The Russo-Turkish intergovernmental TurkStream agreement. Significance An agreement signed by Russian President Vladimir Putin and his Turkish counterpart Recep Tayyip Erdogan on October 10 envisages a 31.5-billion-cubic-metres/year (bcm/y) natural gas transit line under the Black Sea and through Turkey to the Turkish-Greek border. One of two parallel pipes would supply 15.75 bcm/y gas to Turkey, replacing an existing pipeline. The second would export the same volume to European markets via a planned border 'hub' and export route yet to be announced. Impacts TurkStream's extra volume will increase Turkish dependence on Russian gas but allow more supply flexibility during peak winter demand. Delivering more Russian gas to Central-Eastern Europe will make it more difficult for other potential gas suppliers to secure market share. The agreement will bring Ankara and Moscow closer and may be followed by a new deal to restart the frozen Akkuyu nuclear plant.


Significance The exercise was described by NATO as a "show of force", while the Dutch foreign minister referred to it as "a warning" to Russian President Vladimir Putin. Multinational military exercises have become more frequent over the past 25 years. The United States participates in dozens of exercises annually and spends billions of dollars to do so. However, there are significant questions over the utility and purpose of such multinational exercises, which serve both a practical function for the militaries involved, as well as a diplomatic signaling effect. Impacts Like BALTOPS, regular exercises will assume greater salience when their regional focus sees new external threats. This could prompt policy changes from adversaries, as they attempt to respond to the exercises. As a result, exercises designed to deter may risk escalating tensions.


Subject Turkmenistan's gas diplomacy. Significance Turkmen President Gurbanguly Berdymuhamedov met Russian President Vladimir Putin on November 1 during his first visit to Russia since 2011. They reportedly discussed trade, regional security and most importantly bilateral gas arrangements. Russian energy giant Gazprom announced a week later that it had suspended legal action against its Turkmen counterpart Turkmengaz, but did not offer to resume gas purchases. Impacts A prolonged period of low gas prices would create risks to social stability. Turkmenistan's desire to mend fences with Russia will be constrained by its reluctance to join Moscow-led regional blocs. Russia and a resurgent Iran will try to blunt Turkmenistan's ambition to become a significant gas supplier to Europe.


Significance The visit, sandwiched between the July 11-12 NATO Summit and July 16 meeting of Trump and Russian President Vladimir Putin in Helsinki, returns UK Prime Minister Theresa May's trip to Washington in January 2017. Impacts The post-Brexit UK-EU deal could scupper a UK-US free trade deal. Trump’s visit may see some new UK-US business deals, and new security and military cooperation pledges. New UK Foreign Secretary Jeremy Hunt will need to build ties with Trump and his administration.


Significance The first four-party summit in three years gave President Volodymyr Zelensky his first introduction to the 'Normandy format', and also to Russian President Vladimir Putin, with whom he also had a separate meeting. Zelensky was elected on a promise to bring peace but has been consistently warned by opponents that giving too much away would count as betrayal. In that sense the summit was a success for him: little was agreed but the atmospherics were positive. Impacts Progress on peace is unlikely to be fast enough to prevent EU sanctions on Russia, which run to June, being extended to end-December. Zelensky's success in not making concessions will reduce the intensity of domestic opposition, but not for long. The revival of talks creates space for Zelensky's team to focus on economic policy and governance.


Subject Budapest's balancing between traditional and non-traditional ties. Significance Hungarian Prime Minister Viktor Orban recently received two important visitors in Budapest: German Chancellor Angela Merkel (February 2) and Russian President Vladimir Putin (February 17). The short interval between them is symbolic of Hungary's foreign-policy balancing act. However, the Fidesz government's 'Eastern opening' strategy has increasingly shown its limits in the past year, prompting Orban to make gestures towards his Western allies. Impacts Central European allies are likely to distance themselves further from Hungary following Putin's visit to Budapest. Despite addressing discriminatory taxes on TV advertising, political control will continue to limit foreign media investments. Anti-Russian sentiment within Hungarian public opinion may open a window of opportunity for opposition parties.


Subject Drivers and constraints in Israeli engagement with Russia Significance Israeli Prime Minister Binyamin Netanyahu visited Moscow on June 7 for the third time in under nine months. His frequent meetings with Russian President Vladimir Putin reflect his irritation with US President Barack Obama as well as a desire for more diverse international engagement. He also needs to ensure good communication on military actions in Syria given that Russian and Israeli interests are so disparate. Impacts The appointment of a pro-Russian defence minister in Israel, Avigdor Lieberman, should improve security relations. While supplying arms to Iran, Russia will press Israel not to supply arms to Ukraine. Putin's encouragement for Israel to revive ties with Turkey may indicate he wants a similar thaw with Ankara.


Subject The EU-Ukraine trade agreement. Significance The delayed EU-Ukraine Deep and Comprehensive Free Trade Area (DCFTA) will start in January. The accord is set to strengthen ties between the EU and Kyiv. Russian President Vladimir Putin has ordered the ending of a free-trade zone with Ukraine, arguing that the new Kyiv-EU deal will harm Russia's economy. Also, in retaliation for Kyiv's participation in sanctions against Russia, the Kremlin has ordered an embargo against Ukraine food imports into Russia, which could cost Kyiv 300-600 million dollars per year. Impacts Ukraine will continue to reorient itself and sell food and products to other markets, such as Turkey and Israel. An influx of imports from the EU could prove a serious challenge to many local producers and thus should stimulate reforms. Termination of Ukraine trade with annexed Crimea from mid-January will weaken Kyiv-Moscow ties further.


Significance Opposition to the retirement age increase is widespread, with frequent street protests, Communist successes in the regional elections and talk of a referendum. President Vladimir Putin initially stayed out of the debate but finally stepped in on August 29, offering some concessions but backing the thrust of the reform in a television address to the nation. Impacts The pension reform controversy shows the limits to Putin's vision of a purely technocratic, apolitical government. The issue also highlights the deficiencies of state-controlled narratives when people do not want to listen. The Communist Party has a rare chance to grow into a stronger force but is unlikely to seize this opportunity under its current leadership.


Significance The two countries have in recent years intensified cooperation and deepened bilateral ties, after a slow thaw over two decades. The warmth of the relationship between Russian President Vladimir Putin and Saudi Crown Prince Mohammed bin Salman at the recent G20 summit in Argentina was plain to see. Putin was clearly showing that Russia, unlike many other states, would not allow the killing of Jamal Khashoggi to influence Moscow’s ties with Riyadh. Impacts If Mohammed bin Salman’s path to the throne were to be blocked, Saudi-Russia relations would be damaged. Russian friendship with Saudi Arabia could persuade the kingdom to fund Syria’s reconstruction, even with Assad remaining in power. Growing Russian influence in Saudi Arabia could draw Islamist hostility in the kingdom away from the West. Royal opponents of the crown prince may perceive a danger of him emulating Putin’s aggressive and autocratic leadership style.


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