By: Manvel Keshishyan


China is spreading its soft power relentlessly in the South Caucasus, with interests not only in energy but the transportation system as a means of advancing its Silk Road tentacles across the region, which is bordered on the north by Russia, the west by the Black Sea and Turkey, on the east by the Caspian Sea, and on the south by Iran.

China sees the region as a rich source of energy as well as a means of pushing out its transport system. It is also a region that is considered to be a bone of contention, given its geopolitical location between powerful countries. The US and Turkey have always competed with Russia for a leading role. That has now been complicated further with the entry of China and Iran into the ring. 

The Russian Bear Rules

The Big Bear, Russia, is the regional leader, with great influence on its neighbors’ politics and economics. China, which appears to be reaching for any possibility to enter the region, is ready to do huge investment, with its impact on the region growing rapidly.

China finds the  Caucasian developing countries an attractive market, giving Beijing a unique opportunity to overwhelm the region with its affordable products and take a leading role. Given its resources and growing markets, it is fast coming into competition with  Moscow. Russia, despite  considering China an ally, will hardly make the mistake of letting another major competitor onto its own economic battlefield.

In this struggle, even Western countries are likely to support Russia to hinder the growth of Iranian and Chinese influence. Either Russia will get its share of the pie or nobody will taste it.  Nevertheless, Chinese diplomats are hardly unaware of the dynamics and if they take concrete steps it means they know how to take their targeted share.

Although China and Russia have strong diplomatic relations, it does not prevent them from mini economic skirmishes. Geographically, China’s number one ally is Iran. Thus, many diplomatic actions by the Iranians are considered to be on behalf of Beijing. China delivers its goods and commodities to this part of the world through Iran, an active and influential player.

Despite attempts at diplomatic isolation from the western powers, Iran has strong and developing economic relations with Turkey, Russia, Azerbaijan and Armenia. Although an Armenian-Iranian railway project is on the table, it appears that only China’s sponsorship can turn the project from paper to reality. The line is anticipated to stretch 316 km from to the Iranian border and to cost more than US$3 billion.

And although China may have more profitable business projects to finance, the railway’s geopolitical value is clear. One of the most important reasons is that Armenia can become the linchpin between the Persian Gulf and Black Sea and a direct path for both China and Iran to Europe. Taking into account the favorable relations that would accrue between Armenia and China, such a sponsorship looks attractive.

The railway is not a new idea. A railway already exists although it is out of order for political reasons. It passed through Nakhijevan, historically Armenian territory under the thumb of Azerbaijan since 1921, when then-Soviet Russia and Turkey signed an agreement in Moscow over the handover of the territory to Soviet Azerbaijan.