Russia’s Kavkaz-2012 strategic military training exercise later this month in the North Caucasus region may portend economic problems for the West. This is because the exercise is strategically linked to Russian expectations that Iran will be destabilized by the end of this year. If Iran is destabilized, Russia will uphold its obligations to Armenia under the Collective Security Treaty Organization (CSTO). Russia could cut a military corridor through the center of Georgia, taking control of all oil and gas lines leading westward from the rich fields of the Caspian Sea. If this is combined with fighting in the Persian Gulf, energy prices may spike.

While some Russian training exercises have preceded major combat operations (Chechnya 1999, Georgia 2008), they are routinely conducted in order to test ongoing reforms. Kavkaz-2012 is the first major exercise to be held in Russia’s Southern Military District since December 2010, when Russia introduced fundamental changes to its Ministry of Defense and joint strategic commands. Georgian officials are protesting that the exercise is intended to influence their parliamentary elections on Oct. 1. Less than a month after Kavkaz-2008, Russian troops fought a five-day war in Georgia. Russia recognized the independence of two Georgian breakaway regions, Abkhazia and South Ossetia, immediately after that August 2008 war.

Russian officials insist that Kavkaz-2012 is a routine exercise, unrelated to events in other countries. They emphasize that the exercise will occur entirely on Russian territory and that they deliberately excluded units from Russian military bases in South Ossetia, Abkhazia, and Armenia. Armenia is a member of the CSTO along with Belarus, Kazakhstan, Kyrgyzstan, Russia, and Tajikistan. In Armenia, from Sept. 3-8, the CSTO will hold its own Rapid Reaction exercise dubbed “Interaction-2012.”

According to Col.-Gen. Alexander Postnikov, deputy chief of the General Staff of the Russian Armed Forces, Interaction-2012 is entirely separate from Kavkaz-2012, despite the fact that they are being held barely a week apart on opposite sides of Georgia. During Interaction-2012, representatives from the International Committee of the Red Cross will participate in a CSTO exercise for the first time. According to Postnikov, their role will be to “work out issues related to humanitarian assistance in areas where, according to the plan of exercise, a conflict situation will appear.”

Russian officials anticipate that Iran’s nuclear program will be attacked by Israel or the United States prior to the end of 2012. Last winter, Russia evacuated civilians from its 102nd military base near the Turkish border in Armenia. Because it has poor relations with Turkey, Azerbaijan, and Georgia, Armenia depends upon Iran for energy and other basic supplies. Since Russia’s 2008 war with Georgia, Russia has supplied its 102nd base by air.

A sustained Israeli or American attack will lead to serious instability south of Armenia’s border. Armenian supplies likely will be cut, and Armenia may see an influx of refugees. Russian military officials doubt that a swift Israeli strike can eliminate Iran’s nuclear facilities.

An attack on Iran probably will be followed by provocations in areas disputed by Armenia and Azerbaijan. Since the early 1990s, the two countries have been engaged in a “frozen conflict” in the Nagorno-Karabakh region. The Azerbaijani government is increasingly aligned with both Israel and the United States, apprehensive about Moscow, and covetous of traditional Azeri territory in northern Iran along with Armenian-controlled territory to the west.

In the event of fighting in Iran or Azerbaijan, Azerbaijani refugees probably will move northward to Russia. In March, Russia moved over 20,000 troops to positions within 100 miles of its border with Azerbaijan. 

In the event of instability in Iran, a Russian push to Armenia could be motivated partially by CSTO obligations, along with humanitarian concerns. Nevertheless, this would give Russia control of the Baku-Ceyhan energy corridor, bringing oil and gas from the Caspian region to the Turkish port of Ceyhan. Because Russia controls the Baku-Novorossiysk pipeline, the West’s only other energy corridor from rich Caspian hydrocarbon fields, Russian control of nearly all Caspian energy, together with fighting in the Persian Gulf, could lead to unprecedented energy costs and economic instability in the West.

Read more by Robert Bruce Ware

• What Will Come of Anna Politkovskaya’s Death? – October 20th, 2006
• Opening With an Apology – September 28th, 2006