The South Caucasus is a strategic crossroads between Europe, Asia and the Middle East, and its geopolitical importance has grown considerably over the past six years.
This is the result of regional and systemic shocks, including the 2020 Karabakh war, Russia’s full-scale invasion of Ukraine and the rapid reshaping of transit and energy corridors, particularly the Caspian Middle Corridor.
At the same time, regional powers such as Turkey, China and Iran have become more assertive, while the US is clearly renewing its strategy for the region. These transformations have increased the region’s importance to Europe and its ambitions for connectivity, supply-chain resilience and energy diversification. They pose complex challenges, but also present opportunities for the European Union’s traditional framework for engagement.
The European Union currently has a broad and diverse range of tools and institutional frameworks for engagement in the region. These include bilateral relations with Armenia, Azerbaijan and Georgia; the long-standing multilateral framework of the Eastern Partnership; the high-leverage Global Gateway strategy and its connectivity platform; and the recently prioritised strategy for the Black Sea.
Although these separate tools each have their own value and programmatic purpose, their combined implementation has failed to produce a coherent regional strategy capable of responding to the rapid developments unfolding in and around the region. They remain valuable but isolated pieces of a broader geopolitical puzzle, and do not provide a clear understanding of the EU’s long-term goals or the role it seeks to play in the South Caucasus.
The absence of a unified regional policy significantly limits the Union’s ability to shape outcomes. Specifically, it reduces the EU’s capacity to manage competing bilateral priorities among the three South Caucasus countries, capture the benefits of cross-border connectivity, shape regional security and present a credible stance towards external competitors.
To address these vulnerabilities, a new European approach must move beyond fragmented programmes and achieve regional coherence while remaining sensitive to national differences.
This approach requires an explicit link between bilateral engagement models and macro-regional goals, including resilient trade infrastructure, conflict mitigation, greater economic and energy resilience, and calibrated security cooperation designed to avoid zero-sum escalation.
The need for institutional innovation
To put this new strategic vision into practice, the Union must move to a model built around four interconnected pillars:
- Strategic political dialogue,
- Connectivity and economic integration,
- Stability and conflict management and
- Targeted cultural resilience-building across the digital technology and climate sectors.
Implementing these pillars will require new institutional innovation in Brussels, including the appointment of a dedicated regional coordinator for connectivity, the creation of an integrated financing framework combining Global Gateway funds with the Neighbourhood Instrument and member states’ investments, and the establishment of an inter-agency working group to ensure diplomatic coherence.
By pursuing this targeted approach, the European Union can evolve from a reactive economic contributor into a primary strategic architect, capable of defending European interests while consistently supporting regional stability and sovereign choices.
The new strategic reality
The South Caucasus has undergone a structural shift from a regional theatre of European neighbourhood policy to a critical nexus of Eurasian security, energy diversification and trade. The region’s internal and external dynamics have been transformed completely.
The regional balance of power has shifted as a result of several developments, notably Azerbaijan’s territorial reintegration after 2020, the initialling of the Armenia-Azerbaijan peace agreement in August 2025 and Armenia’s efforts to reduce its long-standing security dependence on Russia.
Systemic external shocks, such as Russia’s ongoing war in Ukraine, have turned the South Caucasus into a major transit zone where the strategic interests of Europe, Turkey, Iran, China and the United States directly collide. These developments present new strategic challenges and opportunities for the EU.
It is therefore important to analyse the contours of this new environment and identify the steps needed for the EU to move from a reactive payer to a coherent, proactive geopolitical actor in the South Caucasus.
If the EU is to safeguard its long-term stability, secure supply chains along the Caspian Middle Corridor and serve as a credible anchor of regional stability, it must abandon fragmented, short-term approaches.
Instead, the EU needs a comprehensive, cross-institutional regional strategy that explicitly links its considerable financial leverage, including the Global Gateway initiative, to specific political goals and conflict-sensitive objectives.
* Teimuraz Janjalia is an Ambassador and senior fellow at the EU Awareness Centre.