South Caucasus Brief - May 2026
Welcome to the South Caucasus Brief, a monthly update from the Institute for Security Analysis. Now more than ever, stakeholders need clarity and cohesion when it comes to South Caucasus policy. In this newsletter, ISA's experts provide personal observations and analysis on overlooked developments reshaping the South Caucasus.
Leading this month
On September 11, dozens of giddy diplomats descended on Nagorno-Karabakh for a tour of the conquered territories. Dignitaries shuttled between medieval Armenian monasteries and newly unveiled infrastructure projects, feigning awe at Azerbaijan's reconstruction drive. Others danced for the cameras at lavish evening receptions. The delegation's broad composition - featuring representatives from global heavyweights - effectively lent legitimacy to Azerbaijan's brutal conquest and ethnic cleansing of Nagorno-Karabakh.
The tour was shepherded by Hikmet Hajiyev, Azerbaijani President Ilham Aliyev's shadow foreign minister and hybrid warfare guru. (Hajiyev is the mastermind behind Baku's ongoing pacification campaign against Armenia.)
This PR blitz also marked a personal triumph for Ilham Aliyev. Despite waging a brutal campaign to wrest and reshape Nagorno-Karabakh, Aliyev has emerged not as a pariah but as a major regional player - courted by Western capitals. These lofty circumstances owe much to Azerbaijan's manipulation of foreign actors - and the eager cooperation of Armenia's political elite. (The Pashinyan administration has played a key role in Azerbaijan's international rehabilitation.)
As expected, the Armenian government's response was largely muted. Only days after the maelstrom, amid mounting criticism and perhaps eager to insulate himself, Prime Minister Nikol Pashinyan mustered a few circuitous comments defending the Armenian provenance of Gandzasar Monastery. (That same day, Pashinyan reiterated his commitment to shutter Artsakh's representation in exile.)
The trip's vulgar antics have provoked a wave of opprobrium across Armenian society - and Azerbaijani opposition circles. The European Union's Special Representative for the South Caucasus, Magdalena Grono, has drawn particular scrutiny over comments contesting the provenance of Armenian monasteries in Nagorno-Karabakh. Her remarks provide fodder for Azerbaijan's so-called Caucasian Albanian narrative - widely viewed by observers as part of a state-backed historical-revisionist project.
Grono's myopic conduct mirrors the West's longstanding approach to Azerbaijan - lavishing deference on Baku in a bid to secure energy diversification and perhaps contain Russia. But pandering to Baku's whims has largely backfired. Azerbaijan continues to undermine Western interests in coordination with Russia, while making deeper economic and political inroads across Europe.
One area where Azerbaijan's malign activities are wreaking havoc is sanctions enforcement around Russia.
As previously reported, Azerbaijan has leveraged its sprawling energy infrastructure to systematically help Russia skirt wartime sanctions. Data from the Office of the United States Trade Representative - which helped shape sweeping Russia sanctions legislation recently passed by Congress - listed Azerbaijan as the fifth largest importer of Russian crude. (Slovakia and Hungary ranked third and fourth, respectively.)
Since Moscow's invasion of Ukraine, Azerbaijan has channeled Russian crude across Europe. But in a particularly brazen scheme, Baku - leveraging both its access to Russian energy and its sway in Kyiv - has also covertly supplied Russian-origin fuel to Ukraine itself.
According to 2023 Ukrainian court records, Switzerland-based Wexler Group used foreign intermediaries and false contracts to conceal the Russian origin of petroleum products imported into Ukraine. The Azerbaijan-linked Coral Energy Group served as a key Wexler supplier, sourcing products from Russian producers Rosneft and TAIF-NK.
Wexler - now renamed Nexara - has more recently funneled Russian-origin diesel into Ukraine through SOCAR-linked channels. In May 2025, the company imported roughly 3,000 tonnes of suspected Russian-origin diesel via SOCAR's Kulevi terminal. (In July, the EU sanctioned Kulevi for laundering Russian oil.) Since 2023, Wexler has also imported purportedly Indian-origin diesel through Turkey's Marmara Ereğlisi terminal. (Several shipments were exported to Ukraine in coordination with SOCAR's Romanian subsidiary.)
A Ukrainian energy expert, speaking on condition of anonymity, suggested that a portion of these Indian-origin shipments likely consisted of Russian diesel supplied via false certificates.
Azerbaijan is also extending a lifeline to Russia's beleaguered economic networks. Last month, France pressed the EU to lift sanctions on prominent Russian-Uzbek oligarch Alisher Usmanov - in exchange for Baku's release of two French nationals. This extraordinary brinkmanship briefly threw the broader sanctions regime into disarray, raising the prospect of its partial collapse. (Slovakia and several Central Asian states also lobbied on Usmanov's behalf.)
Usmanov is a first among equals of oligarchs. A trusted confidant of Russian President Vladimir Putin, he commands interests across strategic sectors of the Russian economy, including metals, telecommunications and media. (He also operates Kommersant, a top Russian business newspaper.) His delisting is a boon for Moscow's ever-adaptive economic networks.
This bout of hostage diplomacy is poised to deliver multiple dividends for Baku. It has already enabled Azerbaijan to cow Paris into submission - hence the spirited participation of Sophie Lagoutte, France's envoy to Azerbaijan, in the recent Nagorno-Karabakh tour. Azerbaijan is also burnishing its strategic value vis-à-vis the Kremlin, creating a pathway for future concessions from Moscow - and perhaps from Usmanov himself.
In the process, Azerbaijan is also sabotaging a sanctions regime that has tightened considerably in recent months - curtailing its ability to launder and profit from sanctioned crude.
This high-stakes gambit is part and parcel of Baku's geopolitical playbook: fostering strategic entanglements, leveraging them at opportune moments and reaping concessions. It also reflects the country's deft duality - managing the West while servicing authoritarian actors - a modus operandi that has fueled its transformation into a regional heavyweight, to the detriment of stability in the South Caucasus.
What we are watching
Proxy disinformation. In recent years, both the sophistication and scale of Azerbaijan's disinformation apparatus have transformed. The country's sprawling influence networks - animated by a cast of academics, business figures and political operatives - enable Baku to swiftly craft, amplify and deploy narratives targeting key stakeholders. These campaigns often distort the geopolitical realities of the South Caucasus and Eastern Europe, seeking to sway policymakers and shape decision making in the West.
Azerbaijan also increasingly enlists foreign partners to corroborate its specious narratives - and secure diplomatic cover. In July 2026, the Foreign Intelligence Service of Ukraine declared that Azerbaijan had extinguished Russian dominance over the South Caucasus. The sweeping geopolitical claim appears to rest largely on Baku's protest over a Russian strike on a SOCAR facility in Ukraine. The agency also cited President Ilham Aliyev's suggestion that Azerbaijan could "completely replace Russia" in Europe's oil and gas market - a striking irony.
That same week, Ukraine's Energy Ministry lauded Azerbaijan's delivery of nearly 40 tonnes of railway equipment. This largesse is part of a broader stream of highly publicized humanitarian assistance that has helped Baku project solidarity with Kyiv.
The timing was notable. The media campaign launched mere days after the European Union sanctioned Georgia's SOCAR-linked Kulevi refinery as part of a broader crackdown on Russian energy revenues.
At a quick glance, this information operation was a triumph. It served its purpose perfectly: muddying geopolitical perceptions while securing Baku a diplomatic reprieve. In the process, Azerbaijan also extracted a high-value narrative from Kyiv - casting itself as a counterweight to Moscow - that can be recycled across successive influence campaigns.
Tripping: Across the region, there is great, albeit premature, fanfare surrounding the economic prospects of the TRIPP corridor. In recent months, Azerbaijan, Armenia, and the Trump administration have promoted the corridor as a landmark regional economic enterprise - and a vehicle for U.S. investment.
Azerbaijan is particularly eager for the TRIPP initiative to assume a regional character. Over the summer, Baku courted Central Asian participation, presenting the corridor as a gateway connecting the region to Europe. During an August visit to Uzbekistan, Azerbaijani President Ilham Aliyev invited countries and companies to participate in an international consortium around the so-called "Zangezur Corridor."
During his remarks, Aliyev also indicated that American officials were keeping Baku abreast of construction plans within Armenia. (According to a well-placed Armenian official, third parties, including Turkish firms, are vying for infrastructure contracts.)
By roping in its Central Asian allies, Azerbaijan is pulling off a prudent geopolitical feat: cultivating stakeholders with a vested interest in TRIPP's success while concealing its underlying geopolitical design - a de-facto land grab across Armenia's southern environs.
The Trump administration is also leveraging TRIPP as a vehicle for broader economic integration, linking Central Asia and the South Caucasus to Western markets.
On the sidelines of September's UN General Assembly, private sector firms and regional representatives gathered under the auspices of Washington's TRIPP envoy, Konstantin Sokolov, to discuss the corridor's economic prospects. The engagement also served to launch the $201 million Trans-Caspian Enterprise Fund, aimed at accelerating regional connectivity via critical infrastructure. (Trump's special envoy Steve Witkoff also attended.)
Despite touting TRIPP as an economic marvel - and a key cog in the emerging "Middle Corridor" connecting Europe and China - many experts argue its commercial potential is overstated. (Despite years of effort, neighboring Georgia has yet to reap significant dividends from its stretch of the Middle Corridor.)
Lofty geopolitical ambitions aside, American officials' foray into the South Caucasus also appears to be motivated by a smidge of personal avarice. Following the launch of the Trans-Caspian Enterprise Fund, Cerberus Capital Management, the investment firm founded by billionaire Deputy Secretary of Defense Steve Feinberg, quietly registered a subsidiary called the Cerberus Trans-Caspian Fund. (Feinberg has long been dogged by corruption allegations.)
And according to scattered reports, Sokolov - who has accumulated a portfolio of strategic firms in Armenia - is gunning to secure assets seized from embattled oligarch Gagik Tsarukyan.
As international stakeholders coalesce around TRIPP, the corridor's scope and governance structure remain opaque, stirring national security concerns within Armenia. Over the last year, the Armenian Foreign Ministry routinely dodged TRIPP-related inquiries. And during a recent parliamentary briefing, Armenian Foreign Minister Ararat Mirzoyan failed to divulge additional details.
What we do know is that the Armenian stretch of TRIPP is poised to operate under a consortium with a majority American stake. Under the proposed arrangement, a U.S. entity will control 74 percent of the joint venture, compared with Armenia's 26 percent. Azerbaijan, meanwhile, will retain full control over infrastructure on its territory.
Of particular concern is whether stakes held by American or other foreign investors could eventually be transferred to third parties - including Azerbaijan-linked actors. (Reports suggest Kazakhstan could become a potential shareholder.)
With an expanded mandate, TRIPP is also raising the prospect of an infrastructure boom. Nascent plans envision multiple corridors crisscrossing Armenia's southern provinces, accommodating new roads, pipelines, fiber-optic cables, and electricity transmission lines. But this construction frenzy is also poised to foster fresh dependencies. In recent months, Baku has pitched itself as an alternative supplier of electricity and gas to Armenia, perhaps signaling an interest in cultivating dependence on Azerbaijan's energy sector.
Against this backdrop, Armenia's nuclear sector has also returned to the forefront of the public agenda. Yerevan is reportedly weighing a Russian proposal for replacing the aging Metsamor nuclear power plant. In September, Alexei Likhachev, director general of Russia's state-owned nuclear firm Rosatom, visited Yerevan and floated a new 1,000-megawatt nuclear power plant. (Over the last decade, Azerbaijan has repeatedly called for shuttering Metsamor.)
This atomic overture has raised eyebrows. In the last two years, Armenia has engaged in sustained dialogue with Washington to secure small modular reactor (SMR) technology. (U.S. Vice President JD Vance inked a nuclear accord with Pashinyan during a February visit to Yerevan.)
For seasoned observers, the potential volte-face comes as no surprise. Yerevan often teases strategic dialogue with Western stakeholders - with no meaningful policy shifts. This performative engagement follows a familiar playbook: engage Western partners, score political capital, string them along and abruptly change course. All the while, Armenian authorities have avoided Russian red lines - and onlookers are none the wiser.
Wolf warrior diplomacy: In early September, Azeri officials and government-aligned commentators lashed out at the United Kingdom over a string of critical reports on political repression and human rights. Baku's Media Development Agency characterized reports by the BBC, The Independent and The Guardian as part of a targeted information campaign against Azerbaijan.
The heavy-handed response is part of a familiar playbook. Under shadow foreign minister Hikmet Hajiyev, Azerbaijan has embraced "wolf warrior" diplomacy - pairing diplomatic pressure with coordinated media campaigns against perceived foreign opponents. France has borne the brunt of these efforts. In recent years, Baku has cultivated ties with Corsican, French Polynesian and New Caledonian independence movements through the so-called Baku Initiative Group - a platform promoting anti-colonial narratives. The latest rhetoric suggests that London may now be drifting into Baku's crosshairs.
One notable salvo came from Azerbaijani analyst Farhad Mammadov, director of the South Caucasus Research Center and a fixture within Baku's foreign-policy ecosystem. In a social media post, Mammadov suggested that the Baku Initiative Group could turn its sights to the United Kingdom, sarcastically invoking the "rights of Argentine refugees" from the "Malvinas Islands occupied by Britain." He went on to accuse Britain of occupying and renaming the islands before declaring that a "left-liberal plague" had replaced British brains "with rubber."
(Argentina's firebrand president, Javier Milei, has recently dialed up the Falklands dispute amid slumping poll numbers.)
Mammadov's role is particularly noteworthy given his role in the Armenia-Azerbaijan normalization track. He serves as Azerbaijan's coordinator for the so-called Peace Bridge initiative, which has arranged a series of "civil society" meetings with Armenian counterparts. The initiative is closely linked to Hajiyev, whom participants met during visits to Baku in November 2025 and April 2026.
