Hotspot Geopolitics: Political Economy of the Belt and Road Initiative in South Caucasus

How do China’s BRI-based relations with Armenia, Georgia, and Azerbaijan create geopolitical and geoeconomic opportunities and challenges in the South Caucasus and for each state? Analysing semi-structured interviews and existing literature and official documents, implementing case studies on every country, this paper argues that BRI can create a geopolitical and geoeconomic interconnection between China, Armenia, Azerbaijan, and Georgia, which can contribute to the security and economic development of the South Caucasus, a geopolitical hotspot caught in great power competitions. We use the concept of political economy to examine the intertwined geopolitical and geoeconomic dynamics that present challenges and opportunities to the BRI. We offer recommendations on how the BRI might proceed in geopolitical hotspots to encourage peace and prosperity. Key recommendations include the foundation of a China + South Caucasus forum to discuss and establish multilateral cooperation and China’s mediation between Armenia and Azerbaijan to contribute to negotiating a peace treaty and reconnect roads and railways. This will help the BRI utilise Azerbaijani, Armenian, and Turkish (along with Georgian direction) railways and roads to reach European markets. The findings suggest that the BRI’s objectives should include improving geopolitical and geoeconomic relationships in the South Caucasus and bringing peace to the region. Regional interconnectivity can strengthen China’s role in the South Caucasus and encourage multilateral cooperation and regional peace through new infrastructure investments. Such a plan would also align with China’s interests. China wants to provide additional transportation opportunities to improve Asia-Europe transportation.