Azerbaijan has uniquely among Russia's post-Soviet neighbors established its autonomy from Russia not by integrating with NATO or the West, but through a strong defense, security, and political partnership with Turkey, which allowed it to act militarily in its own region (retaking Nagorno-Karabakh) while remaining insulated from strong Russian military responses.

Geography limits both US and EU engagement: the EU formally expanding into the South Caucasus is challenging because it would share no borders with any regional state, and including Armenia without Georgia is even more complicated since everything must pass through Georgia, which is moving in a retrograde direction.

There is a fundamental tension between the principle of territorial integrity and the right to self-determination, which is a recurring problem all around the periphery of the former Soviet Union because of embedded ethnic autonomies, and it underlay the failure to reach a lasting Karabakh peace deal.

The Nagorno-Karabakh autonomous oblast was a principally ethnic-Armenian region (almost 90% in the early 1920s) assigned to Azerbaijan by the Soviet leadership consistent with Soviet nationality policy, which created ethnically autonomous regions within republics—a pattern that produced many post-Soviet conflicts (Abkhazia in Georgia, Transnistria in Moldova).

When Azerbaijan attacked in 2020 and 2023, Russia and the CSTO declined to support Armenia on the grounds that the fighting was confined to Karabakh, which is not juridically part of Armenia—leading many in the Armenian elite to question why they should accept the compromises of Russian dependence if Russia won't provide support when needed.

A key Armenian objective of the peace agreement is to plug NATO-member Turkey into the regional security complex and open the Armenia-Turkey border to trade, dramatically reducing Armenia's dependence on Russia and Iran; the Turkish government has signaled it will move quickly on normalization once a deal is signed, with Azerbaijan—not Turkey—being the current obstacle.

Azerbaijan's government under Ilham Aliyev uses conflict with external actors (Russia, Armenia, Iran) as a domestic political tool, since the father-to-son dynasty benefits from having a cause to rally the public around, especially now that the Nagorno-Karabakh issue is off the table.

The escalation of tensions between Russia and Azerbaijan can be read as a Russian effort to 'throw sand in the gears' of the Armenia-Azerbaijan peace process, pressuring Azerbaijan to adhere to Russian preferences, because the consummation of a bilateral peace deal negotiated with minimal Russian participation would be a significant blow to Russia's ability to manipulate regional dynamics.

Azerbaijan's 2010s oil and gas boom funded a major military buildup and, combined with the strategic Turkish alliance that trained and in some cases commanded its forces, shifted the balance of power away from Yerevan, enabling Azerbaijan's rapid victory in the 2020 Second Karabakh War.

Azerbaijan publicly photographed arrested Russian journalists and citizens who had clearly been physically abused in government custody, and highlighting this is a deliberate, open effort at humiliating Russia—striking coming from a country the size of Azerbaijan.

In September 2023, after blockading the single road to Karabakh, Azerbaijan launched a rapid offensive that dissolved the de facto Armenian state institutions and caused most of the ethnic Armenian population to flee, so that Nagorno-Karabakh no longer exists as an entity and is now under effective Azerbaijani control.

Pashinyan's 2018 'velvet revolution' rise to power looked to the Kremlin like a color revolution akin to those in Georgia and Ukraine, generating mistrust; but Pashinyan deliberately emphasized that his accession did not portend a geopolitical reorientation away from Russia, unlike Saakashvili's Georgia.

After the 2023 loss of Karabakh, Armenia pushed away from Russia—freezing CSTO membership, skipping summits, floating EU membership, signing arms deals with India and France, and engaging Turkey—largely to demonstrate that it had other options and was not a Russian vassal.

US interests in the South Caucasus are comparatively limited; the region is an important transit route, but one of much more benefit to the EU and Turkey than to the US, so it will be the EU (via Global Gateway, TRACECA, and energy companies interested in Caspian oil and gas) that drives engagement, especially if regional peace opens new transit routes.