A (Chinese) spy paradise? Theories and practices of Chinese foreign policy in the post-Cold War Caucasus

The post-Cold War Caucasus is an area situated between the Black Sea and the Caspian Sea, occupied by Georgia, Armenia, Azerbaijan, the Russian Federation, de facto (Nagorno-Karabakh) and partially recognised states (Abkhazia and South Ossetia). It is home of the Caucasus Mountains with Mount Elbrus, the highest peak in Europe, which has historically been considered a buffer zone between the Russian and Ottoman empires at the intersection between Europe, Eurasia, the Middle East, and Asia.

The strategic location of the Caucasus partly explains the geopolitical and macroeconomic tensions between great powers seeking more influence to ensure their safety. Following the breakup of the Soviet Union, countries in the Caucasus decided to adopt either pro-Western (Georgia), pro-Russian (Armenia) or more neutral (Azerbaijan) foreign and military policies.

The abundance of Soviet/Russian and Western military pieces of equipment in the same area can be considered to be an asset to foreign powers able to gather military intelligence. Moreover, unrecognised states makes it possible to trade weapons and exchange confidential documents because international law does not apply. In such context, the Ministry of Foreign Affairs and intelligence services of the People’s Republic of China have expressed a growing interest regarding the Caucasus – especially Georgia – as underlined by the growing investments and Chinese delegations on site.

The Chinese interest in the Caucasus is not a new phenomenon. Nonetheless, it is the first time in Chinese contemporary history that the country can play a major role and offer an economic and military alternative to the West, Turkey, and Russia. China can offer a new type of diplomatic cooperation to counterbalance European soft power and Russian smart power.

This article underlines the relevance of the Caucasus to Chinese foreign policy and Beijing’s strategies to gather data in a place historically outside of its influence.

The cradle of post-Cold War espionage

The geopolitical battle between the West (United States / European Union), Russia, and Turkey

Until the 20th century, the Southern Caucasus and Southern Dagestan formed a part of the Persian Empire before they were forced to cede the territories to Imperial Russia. In the 1940s, thousands of people – including the Germans from the Caucasus (Volksdeustche – Swabian) – were deported to Central Asia and Siberia. Afterwards, the Southern Caucasus was unified in a single political entity under the rule of the Soviet Union. Stalin played a major role in the region, using minorities to divide the citizens. He shaped the Caucasus in a way that countries with antagonist religions, languages, and ethnicities had to live together.

Following the dissolution of the Soviet Union, three countries – Georgia, Azerbaijan and Armenia – became autonomous, often fighting internally and with foreign states to secure their interests. The Nagorno-Karabakh War (1988–1994), the East Prigorodny Conflict (1989–1991), the War in Abkhazia (1992–93), the First Chechen War (1994–1996), the Second Chechen War (1999–2009), and the 2008 South Ossetia War are all the consequence of Stalin’s policy.

Each new country has been seeking foreign support to recover full sovereignty and answer to separatists. Georgia has focused on Western support from the United States and the European Union against the Russian military support in Abkhazia and South-Ossetia, while Armenia has asked for the support of Russia to face Azerbaijan in Nagorno-Karabakh. Azerbaijan has decided to focus on a more domestic approach due to its large oil resources.

Georgia

To the United States, economic and military ties with Georgia are an opportunity to weaken Russian influence in its neighbourhood and ensure more American military influence over the whole Black Sea region. Backed up by many European Union member states, the West is exerting more pressure on Russia in the Caucasus, similar to what has been done by the United States and the European Union in the Baltic states and the Balkans. In that context, similarities between the three areas (Balkans, Baltic Sea and Black Sea) must be underlined with a similar process when it comes to asymmetric warfare. For example, because the United States and some EU member states recognised Kosovo, Russia recognised Abkhazia and South Ossetia a few months later.

The leaders in Tbilisi have agreed to rely on the West for the protection of their national sovereignty, and this pro-Western political approach has led to a complex relationship with Armenia and the People’s Republic of China in the last decade.

Armenia

Contrary to Georgia, Armenia decided to focus on Russian support to back up Yerevan in the Nagorno-Karabakh conflict. Armenia has not recognised Nagorno-Karabakh and Russian economic presence in the Eurasian Economic Union does not include Nagorno-Karabakh. Nonetheless, diplomats in Yerevan allowed Moscow to have a military outpost in Armenia and are ready to compromise with Russia to ensure foreign and military support in Nagorno-Karabakh.

The diplomatic and military position of Armenia is difficult because Yerevan would also like to improve its relationship with pro-Western Georgia. Moreover, Yerevan is interested in more cooperation with Iran and China but afraid to offend Moscow. As a consequence, Armenia would like to purchase some Chinese military equipment and get closer to China for economic reasons but is not able to do so without the approval of Russian leaders. As a result of Armenia’s integration into the Eurasian Economic Union in 2015, the possibility of cooperation with the European Union is not expected soon.

To Russia, Armenia is strategically one of the two most important states in the Southern Caucasus (the other being Abkhazia). The military facility in Armenia establishes a buffer zone between NATO and Russia. In the future, Moscow could decide to support Armenia by sending peacekeepers in Nagorno-Karabakh. It could also do the reverse and support Azerbaijan by closing the Russian military facility on the Armenian territory.

Azerbaijan

Azerbaijan remains by far the most autonomous country in the region. Due to its prosperous oil industry, the country is now able to purchase modern military equipment from abroad, establishing political ties with the West and China. The modernisation of the armed forces and favourable macroeconomic context are, however, not sufficient to counterbalance Russian influence. All attempts to take back Nagorno-Karabakh with armed forces have thus far been unfruitful because of the friendship between Moscow and Yerevan.

In that context, Azerbaijan is of major interest to foreign powers such as the People’s Republic of China because of the potential for economic and military cooperation. The West is also interested in Azerbaijan but reluctant because of the political regime. While Georgia can be considered to be a part of Europe, Azerbaijan is more of a Central Asian country, closer to the Caspian Sea than the Black Sea in the mind of the United States and European Union.

Types of military equipment and intelligence on the ground

Tensions between countries in the Caucasus and different strategic partners make the area a cradle for modern espionage. While the Georgians are spying on Armenia and Azerbaijan to understand the Russian projects in the Caucasus, Armenia is doing the same in Georgia and Azerbaijan. The proximity and capabilities to spy on each other make both Western states and Russia careful when it comes to technical characteristics of the modern military equipments in the region.

Due to its Soviet past, Caucasia relies on Soviet pieces of equipment. During the Cold War, western nations struggled to gather information regarding the military capabilities of the USSR. However, at the end of the Soviet Union when former Soviet armed forces integrated into the EU and NATO, western countries increased their expertise on Soviet equipment.

Nonetheless, some states have recently been provided with or acquired new military technology, and following the Russian military involvement in Armenia and the modernisation of armed forces in Azerbaijan, new intelligence can now be gathered on the ground.

The high number of espionage attempts in the Southern Caucasus makes Russia cautious about further military involvement and explains its reluctance to deploy new types of equipment on the ground. Moscow prefers to rely on S-300, T-72/T80 and Su-24 aircraft instead of S-400, T14 Armata and Su-35/57. It is a smart military strategy because it allows for little military intelligence to be gathered in Abkhazia and South-Ossetia, either by the West or Georgian intelligence. Russia’s reluctance to deploy modern equipment in the Caucasus is understandable, and the United States has adopted a similar strategy. While it has been ready to support Georgia for several decades, Washington always provides lower quality equipment to the Georgian armed forces to ensure no intelligence can be gathered by Russia and its allies.

Azerbaijan might be considered to be an exception in the military intelligence landscape. Baku is the only country able to purchase modern equipment with a 1.8 billion US dollars annual budget. Due to the relationship between Yerevan and Moscow, Baku has decided to purchase various types of equipment from the West, Russia, and even Israel.

In order to not create further tensions with Russia, Baku decided to buy a large number of modern Russian weapons, such as the S-300 and 48N6E2. Drones like the Hermes 450, IAI Heron, and IAI Searcher are coming from Israel. Purchasing equipment is also a way to improve diplomatic relations and Azerbaijan has expressed a strong interest in the European Aster 30 used on the French Mamba system (an alternative to the S-300 / S-400). Compared to Armenia and Georgia, Baku has purchased the Milkor Multiple Grenade Launcher from South Africa, IMI Tavor for special forces, HK G36 from Germany, and US M4 carbine assault rifle. The variety of equipment underlines Azerbaijan’s good relationship with foreign countries from all around the world. Azerbaijan has also developed a national defence industry. The variety of pieces of equipment in the country makes it appealing for western countries and Russia to conduct espionage operations in Azerbaijan and gather intelligence on military equipment and urban warfare.

Military intelligence is not exclusive to Georgia, Armenia, and Azerbaijan. It also applies to partly recognised and de facto states. During the conflict in April 2016, Nagorno-Karabakh was the epicentre of espionage with covert activities in the airport basement. The unused airport is close to a military facility and has sufficient space to hide military aircrafts. During the conflict in 2016, schools and official buildings were also used to camouflage tanks and light vehicles. As of today, even Russia is not fully aware of what is happening in Nagorno-Karabakh.

Contrary to Nagorno-Karabakh, Abkhazia and South Ossetia are more Russian-oriented, and South Ossetia is a door between arms traders from Russia and the Middle East. Some equipment comes to the area and disappears before ending up in the Northern Caucasus, Ukraine, and sometimes the Middle East. For example, South-Ossetia remains one of the main epicentres in Europe – with Eastern Ukraine and Chechnya – when it comes to illicite firearms trafficking.

Overall, an estimated number of 2,500 Russian nationals have been fighting alongside the Islamic State of Iraq and the Levant (ISIL), a large number coming from the Russian Caucasus with small arms.

Due to the variety of equipment from around the world and the presence of de facto and para-states, the Southern Caucasus is now one of the epicentres of espionage for foreign countries interested in knowing more about Russian and Western military equipment.

An increasing knowledge of the equipment on site is a way to gather intelligence and increase the sales of other equipment that outperforms Russian and western standards. In that context, the People’s Republic of China has become active in the Southern Caucasus in the last decade from a commercial and geopolitical intelligence perspective.

Chinese foreign policy in the Southern Caucasus

Political interests and geopolitical intelligence

The People’s Republic of China is interested in the Caucasus for several geopolitical and military reasons. Although China’s economic engagement was initially embraced by most states in Central and Eastern Europe, it has been recently reported that the 16+1 framework was established by Beijing as a means to deepen its footprint in this region and potentially weaken western countries, Russia, and Turkey.

In Georgia

From a geopolitical perspective, Beijing is interested in having an economic outpost in the Caucasus because it is the easiest way to connect the Middle East with Russia. The main project of China is to establish a direct connection between Iran and Russia going through Armenia, Georgia and the partially recognised states of Abkhazia or South Ossetia.

Such a geopolitical project is based on the idea of weakening the United States in the region. A stronger relationship between Iran and Russia could lead to more military support from Russia to Iran and counter-balance Washington’s smart power in the Middle East.

The People’s Republic of China has already settled in Georgia with several facilities founded by the Hualing Group in the Tbilisi Sea Plaza. The total construction area of the Tbilisi Sea Plaza is 150,000 square metres. Market and commercial facilities include a market zone, warehouse zone, commercial pedestrian streets and many other businesses, which will serve as motive power for the main body of the commercial area and its economic development. At present, merchants from China, Turkey, and the United Arab Emirates have signed agreements to enter Hualing International Trade Center and have already started operating.

Regarding the economic capabilities of the Georgian market, the Tbilisi Sea Plaza is not limited to Georgia and will develop its full potential once the connection between Russia and the Middle East is achieved.

Beijing has remained active from an economic perspective and less from a military one. Chinese commercial investments have multiplied in Georgia. In 2014, China accounted for 217.94 million US dollars in foreign direct investment. In January 2017, CEFC China Energy agreed to purchase 75 per cent of shares in the Free Industrial Zone at Poti on Georgia’s Black Sea coastline. Georgia’s main export product to China is wine, which amounted to 5,299,820 bottles in 2016, nearly double the amount exported the previous year. Furthermore, in May 2017, Georgia and China signed a Free Trade Agreement.

Beijing has also used the specificity of Georgian-Hong Kong relations (by contrast to the Georgia-PRC relationship). Following the removal of all duty-related customs and administrative controls in Hong-Kong on February 2008, Hong Kong has developed into a wine trading and distribution centre for the Asian market and Georgian wine can be exported with less restrictions compared to mainland China. To attract Georgia, Beijing is using Hong-Kong economic power.

The agreements with Georgia cover several key elements, including elimination or reduction of tariffs, liberalisation of non-tariff barriers, and flexible discipline on rules of origin. This will facilitate bilateral trade, customs facilitation procedures, promotion and protection of investment, liberalisation of trade in services, and a legal and institutional arrangement for dispute settlement.

In Abkhazia

The main obstacle to start construction of the train and road lines from Moscow to Tehran is Georgian relations with Sukhumi.

As long as the conflict is not be solved, it will be impossible to connect Moscow to Tehran. This is the main reason why China has become so active in Georgia and Abkhazia recently. In 2016, the Ministry of Foreign Affairs of Abkhazia received a request from a Chinese delegation to settle 3,000 Chinese workers for renewal of infrastructures in Abkhazia.

China is keeping several options to exert pressure on the Georgian government. Such pressure can go from increasing investments in Abkhazia, economic pressure on Georgia (eg. refusing to export wine to China for sanitary reasons), settling of Chinese peacekeepers in Abkhazia, and diplomatic recognition of Abkhazia and South Ossetia. The diplomatic recognition of Abkhazia and South Ossetia is by far the best asset of Beijing because it will strengthen Sino-Russian cooperation. China is a permanent member of the United Nations and such recognition will make it impossible for Georgia to recover sovereignty over Abkhazia.

Due to Chinese interest in solving the issue between Georgia and Abkhazia, the United States has become more active in Georgia recently and Russia has exerted more economic pressure on Tbilisi.

To the United States, the increasing power of Beijing is now a threat to the stability of Asia, Central Asia, and also Georgia. As a consequence, both countries are actively spying on each other in the Caucasus. United States intelligence on the ground is interested in knowing more about the current projects going on between Georgia and China because Georgia is an ally of the United States. However, Georgia’s economic cooperation with China is showing a discrepancy between political discourse and actions. At the same time, China is interested in knowing what the United States is capable of in the Caucasus. Currently, the United States is more active in the field of public diplomacy, but China’s increasing influence is an undeniable reality.

Theories of Chinese peacekeeping operations in partially recognised and de facto states

Beijing is interested in selling more weapons in the Caucasus. From a commercial perspective, China is interested in reaching Azerbaijan’s market because of its potential and interest in providing new aircraft, tanks, and light vehicles. Armenia and Georgia do not currently have the economic capabilities and flexibility to purchase a large number of foreign products.

Besides weapon trading, Beijing would also like to increase its military presence in the Caucasus through the use of peacekeepers. In July 2016, China became the second-largest financial contributor to the UN peacekeeping budget at just over 10 per cent, surpassing Japan. Peacekeeping operations were also at the centre of the October 2019 military parade in Beijing.

The opportunity for China to send peacekeepers to the Caucasus would show greater commitment to the Sino-Russian friendship. Moreover, Chinese involvement in Nagorno-Karabakh would underline the interest of China in supporting either Armenia or Azerbaijan. From a theoretical perspective, talks regarding settlement of Chinese peacekeepers in Abkhazia and South Ossetia would be positively received by several countries in the region. To the Russian Federation, it will show commitment to the its foreign policy in the Caucasus, and in Abkhazia it will be perceived as the first step to additional Chinese military involvement.

From the Georgian perspective, Chinese presence in partially recognised states is an issue; nonetheless, it could be interesting because Tbilisi could talk to Beijing in the future and avoid talks with Moscow.

The theoretical intervention of China in the Caucasus also underlines a more active approach regarding this part of the world and, moreover, constitutes an opportunity to gather information on foreign military processes and equipment.

After the breakup of the Soviet Union, a large part of military facilities were abandoned and are not currently used. The Sukhumi airport and the harbour facilities on the shore of the Black Sea could be renovated by the Chinese peacekeepers and constitute an opportunity to establish an outpost close to Russia and the European Union. It could also be an opportunity to see how Great Powers will react to a larger Chinese military involvement abroad and to a more coercive Chinese presence around Taiwan.

Contrary to the West and Russia, the Ministry of Foreign Affairs and intelligence services of China are accustomed to dealing with separatism because of experiences with Hong-Kong, Macau, and Taiwan, two of which were recovered without any violence.

The Chinese conception of trade and foreign policy regarding separatism is a major breakthrough compared to the classic Western and Russian conceptions because China brings more flexibility to the practices of international law in grey areas.

As of today, the Ministry of Foreign Affairs of China has remained silent regarding any possible peacekeeping forces in the Caucasus. Nonetheless, such a possibility would be welcomed by Russia, Armenia, Abkhazia, South Ossetia, and Nagorno-Karabakh.

Georgia remains more sceptical of Chinese interests and sees Beijing as an alternative to Russian influence.

To Baku, the Chinese presence in Nagorno-Karabakh is a major issue because China will become, due to its military capabilities and United Nations status, the only player able to decide the future of the region. Azerbaijan is also interested in improving its relationship with China because a partnership will make Baku able to exert more pressure on Nagorno-Karabakh and avoid further backup from Russia.

The future of the Caucasus in regards to Nagorno-Karabakh, Abkhazia, and South Ossetia, as well as the economic prosperity of the connection between Moscow and Teheran, will rely on Chinese economic and foreign policy success in the region.

In theory, the People’s Republic of China will be the only Great Power able to decide the future of the Caucasus for the simple reason that European Union and NATO laws prohibit the integration of a state without fully recognised borders. According to EU and NATO laws, Georgia, Armenia, and Azerbaijan, are currently not able to apply for membership. Russia’s position in partially recognised states like South Ossetia and Nagorno-Karabakh should not change shortly. Therefore, the status quo in the Southern Caucasus is expected to remain unless Beijing’s decides otherwise.

This won’t be the first time the People’s Republic of China will be dealing with other Great Powers. We should keep in mind that China already opposed itself successfully to the United Kingdom in Hong-Kong and to Portugal in Macao. At that time, Beijing managed to take back two territories with valuable economic resources from another Great Power with nuclear military capabilities.

Beijing also settled in a western-dominated area of Africa (Djibouti) without any retaliation from Japan, France, Italy, and the United States. Looking at the recent past and what China has managed to do in Hong Kong, Macao, and Djibouti, further military/peacekeeping involvement in the Caucasus remains theoretical but feasible. Chinese involvement in the Caucasus will also be a warning to another partially recognised country – Taiwan, which is currently supported by the United States.

Dr. Michael Éric Lambert is a diplomatic historian with an interest in European strategy (European Union, Switzerland, Russia) and foreign affairs of the People’s Republic of China in the post-Soviet space. Michael owns a Ph.D. in History at Sorbonne University – INSEAD, Europe Campus. After a short stay at the French Directorate of Military Intelligence (2014), he moved to Ottawa to study asymmetric warfare process (2015) and to Prague to continue his research on cyber/ICT security and smart power (2017 – ).