Briefing by George Niculescu, Head of Research, EGF, Brussels, THE GEOPOLITICS OF ENERGY IN THE SOUTH CAUCASUS AND THE PROSPECTS FOR REGIONAL ENERGY SECURITY COOPERATION   Briefing by George Niculescu, Head of Research, EGF, Brussels,

THE GEOPOLITICS OF ENERGY IN THE SOUTH CAUCASUS The South Caucasus is a region of strategic importance for European energy supply. Therefore, energy security is high on the agenda of both NATO’s and EU’s relations with the regional states. On the other hand, exerting influence in the South Caucasus is a crucial element in Russia’s geopolitical strategy, given the region’s importance as an energy producer, and its vitality as a primary corridor for the transit of oil and gas to European markets. The current geopolitical fragmentation of the South Caucasus is evolving into increasing regional energy security fragmentation, while the protracted conflicts of the region will continue to reinforce this process

A REGIONAL ENERGY COMMUNITY IN THE SC? RSSC Study Group of PfPC attempted to provide a framework for a regional energy resources regime, that would be able to divorce energy from politics Energy and geopolitics are bound to remain “innately correlated” in the South Caucasus, BUT… the SG came up with policy recommendations. However, few of them may be implemented at inter-governmental level, while leaving most of the work to be done within multilateral formats, and by Track II diplomacy. Energy experts regular and inclusive dialogue; Joint management of energy/water resources; Expose the use of energy as geopolitical tool; South Caucasus Trust Fund to promote regional cooperation; Promote privatization of energy industries.

A REGIONAL ENERGY COMMUNITY IN THE SC? The second workshop, aimed to cooperatively develop an embryonic regional organization to manage and resolve issues related to energy security in the South Caucasus on: handling energy emergencies, and Trust Fund to address energy price fluctuations. Participants agreed that the South Caucasus region provided the ground and opportunity for the creation of a post-conflict regional energy security organization that would be beneficial to each participating stakeholder as well as to the region as a whole.

PHASE 1- 2012 THE FULL RESEARCH PAPER available on http://gpf-europe

Economic Incentives as conflict resolution tools in the sc: the case of nk In January 2014, the European Geopolitical Forum-EGF (http://gpf-europe.com) started an in-depth investigation on whether ‘economic incentives’ (including regional energy security cooperation measures and projects) can provide a fresh approach towards conflict resolution in the NK peace process. Exchanges of views with stakeholders of the NK conflict led to the assumption that the economic incentives may work by combining the vision of an economically integrated South Caucasus with a number of very broad and uncontroversial principles. Aimed at developing an alternative narrative on Nagorno-Karabakh (NK) conflict resolution through Track 2 diplomacy.

Economic Incentives as conflict resolution tools in the sc: the case of nk This new approach to the role of economic incentives in NK conflict resolution was widely discussed with regional and international experts over a series of EGF seminars held between March 2014 and July 2015. Create a platform for exchange of information between Armenian and Azerbaijani experts on energy, transport, trade issues, the rehabilitation of the territories affected by the conflict, and the return of IDPs to their homeland. It was deemed that such an economic dialogue could lead to the development of post-conflict scenarios for the whole Karabakh based on a roadmap leading towards an economically integrated South Caucasus. The research focused on developing economic incentives in the framework of post-conflict scenarios, while establishing links between the economic dialogue, on the one hand, and political and security negotiations, on the other.

To Both Armenia and Azerbaijan Potential Regional Economic, Energy and Infrastructure Projects of Common Interest To Both Armenia and Azerbaijan No. Title of the Project Existing Feasibility Study Data for Feasibility Study Available Links with the situation of IDPs Potential International Stakeholders 1. Baku-Fizuli- Megri- Nakhitchevan-(Yerevan)-Gyumry-Kars railway Partial Mirimanova Yes Turkey, EU, Russia 2. Baku-Ijevan-Diljan-Yerevan-Nakhichevan railway N/A No EU, Russia, Turkey 3. Baku- Bharda- Aghdam- Sisian (Armenia)-Nakhichevan highway EU, Russia,Turkey 4. Establishing a regional electricity grid covering Georgia-Armenia-NK-Azerbaijan Various sources EU, Turkey, Russia, Iran 5. Baku- Aghdam – Shusha – Lachin – Goris – Sisian – Nakhichevan - Turkey gas pipeline EU, Turkey, Russia, stakeholders of Shah Deniz II 6. Restoration of transport infrastructure in the territories surrounding NK Muzafarli, Ismailov EU, Russia, Turkey, Iran 7. Restoration of telecommunications network in the territories surrounding NK 8. Restoration of social facilities in the territories surrounding NK EU 9. Legalization and modernization of the Sadakhlo market in Georgia EU, Georgia, Turkey

conclusionS Energy security and geopolitics are bound to remain “innately correlated” in the South Caucasus. Therefore, the current geopolitical fragmentation of the South Caucasus is evolving into increasing regional energy security fragmentation, while the protracted conflicts of the region will continue to reinforce this process. The prospects for regional energy cooperation are rather blurred and uncertain, while remaining dependent on the prospects of continued geopolitical confrontation in the South Caucasus. However, post-conflict energy security regional cooperation scenarios can offer a sound framework for confidence building, and for developing blueprints that could be implemented in the future. They could also play an important role in South Caucasus conflict resolution.

DISCUSSION