Executive Intelligence Snapshot
The Collective Security Treaty Organisation (CSTO) has assessed an increased geopolitical risk in the South Caucasus because of the destabilising spillover effects of the Middle East crisis.
The organisation noted that global military expenditures reached 2.9 trillion US dollars in 2025, with European spending increasing by 14%, signalling heightened militarisation that impacts regional stability.
Although the ongoing Armenia–Azerbaijan peace process may reduce immediate tensions, the CSTO emphasised that external variables, particularly instability in the Middle East, pose significant challenges to the regional security architecture.
Context
On 28 May 2026, during the 14th International Security Forum held under the auspices of the Russian Security Council, CSTO Secretary General Taalatbek Masadykov addressed the security parameters of the Caucasus.
The organisation underlined the positive developments in Armenia–Azerbaijan relations, which have temporarily stabilised the regional environment. However, the CSTO officially forecasts a potential deterioration in the security situation, directly linking this vulnerability to the volatile Middle Eastern context.
Simultaneously, diplomatic monitoring indicates that a framework agreement between the United States and Iran is reportedly 95% complete, with unresolved issues limited to the nuclear arsenal and the status of the Strait of Hormuz, underscoring the fluidity of the broader Middle Eastern security landscape.
Why Does It Matter?
The security of the South Caucasus is shaped by the strategic imperatives of regional states, domestic political developments, and the actions of external actors.
The Armenia–Azerbaijan peace agreement signed in Washington in July 2025 provided a framework for the current stabilisation of bilateral relations. This window of opportunity, however, remains vulnerable to broader geopolitical shifts.
The upcoming parliamentary elections in Armenia on 7 June 2026 represent a critical juncture for the region’s foreign policy trajectory.
- A victory for Prime Minister Nikol Pashinyan and the Civil Contract party would reinforce his peace agenda with Baku and consolidate Yerevan’s orientation toward Brussels and Washington.
- Conversely, an opposition victory, by blocs such as Strong Armenia (led by Samvel Karapetyan) or the Armenia Alliance, could reshape the government and foreign policy, potentially revisiting recent peace decisions and re‑aligning Yerevan with Moscow.
Importantly, the CSTO’s public warnings of regional vulnerability serve a dual purpose: while addressing genuine security threats, they also function as a political narrative from Moscow aimed at warning regional actors against drifting too far into Western diplomatic orbits
The Middle East crisis, triggered in February 2026 when the US–Israel coalition launched military strikes against Iran, has already produced tangible spillover effects in the South Caucasus. The geopolitical temperature spiked significantly following a direct cross-border drone attack targeting Nakhchivan airport. While the incident stopped short of triggering a direct Iranian–Azerbaijani kinetic confrontation, it illustrated how quickly regional states can be drawn into the conflict. This military friction was compounded economically when Iran suspended critical exports on 3 March 2026, severely disrupting trade-dependent supply chains across the Caucasus.
Furthermore, continued instability inside neighbouring Iran creates a vacuum. This fragile environment may enable hostile external actors, insurgent factions, or transnational terrorist networks to exploit porous borders and expand their operations into the South Caucasus.
Outlook
In the short term, the trajectory of the South Caucasus will depend on whether local bilateral normalisation can withstand mounting external shocks. While the Armenia–Azerbaijan track has benefited from the 2025 Washington-brokered peace agreement, the domestic political environment remains exceptionally fluid. Armenia’s June 2026 parliamentary elections will ultimately dictate whether Yerevan continues its Western-leaning alignment or returns to Moscow’s traditional orbit.
Looking to the medium term, the region’s stability hinges on whether local actors can successfully insulate their political processes from external disruptions. A finalized US–Iran framework agreement could help contain broader regional escalation. However, if conflict persists in the Middle East, militant proxies and extremist groups will find ample opportunities to exploit vulnerabilities across the fragile South Caucasus security landscape.
The CSTO is projected to sustain intensive monitoring of the South Caucasus, using the threat of external spillovers to actively pressure local actors into closer security cooperation with Moscow. Should the Middle East crisis worsen, Moscow’s leverage as a traditional security guarantor is likely to grow, allowing it to frame dependency on the alliance as an absolute necessity for regional survival. Consequently, the bloc will highly capitalise on these mounting vulnerabilities to counter Western diplomatic encroachment and bind the region closer to its strategic orbit.
