TOPIC OF THE WEEK: The South Caucasus through a strategic lens

CAUCASUS / CENTRAL ASIA - Report 30 Jan 2026 by Ivan Tchakarov

A new era is dawning in the South Caucasus, in which politics, geopolitical developments, and a changing energy and security picture will increasingly feature as key investment variables, rather than background noise. Elections will take place in 2026 in Armenia, consolidation in politics is underway in Georgia, and Azerbaijan is seeking to use its energy and transit position to expand its own weight, all of which means that politics (and geopolitics)—not economics—will be driving market outcomes.

For investors, this means that having a clear picture of the newly-forming regional risk map would matter more than growth metrics for shaping returns in the months and years to come. In this report I attempt to offer a pithy 30,000-feet view of the evolving power shifts and investment risk for the region as a whole and for individual countries. This big-picture view is not necessarily meant to be exhaustive in any direction, but rather propose a useful and simple framework to think about how countries fit into the newly-emerging power alignment.

All this is happening within the broader framework of an unstable Iran, which plays a critical role for Armenia in terms of routing its international trade. Given the hot electoral cycle, the analysis, however, places greater emphasis on Armenia due to its central role this year in the regional space. The prognosis basically argues that, given Russia's weakening position in the space, the new geo-strategic paradigm that is unfolding in the region will feature Turkey emerging as the key winner (initially in the South Caucasus, but also in Central Asia), Azerbaijan solidifying its position as the strongest state in the South Caucasus, Armenia forming as a satellite state, and Georgia finally succumbing to Western pressure.

This new geopolitical framework will likely be formally institutionalized in February as U.S. Vice President J.D. Vance visits Yerevan and Baku to sign into existence the TRIPP Development Company.

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