With the recent codification of the joint forces agreement binding Georgian breakaway region Abkhazia and Russia, observers of the South Caucasus have anxiously anticipated a similar change in Moscow’s relations with South Ossetia. As a prelude to my next article, updating the situation in South Ossetia, here I will examine the strategic importance of Georgia for Russian strategists. Why does Georgia matter?

When reporting on Eurasia, invariably those largely unfamiliar with the Caucasus in particular wonder aloud, why is the Caucasus important? More importantly, given the sheer expense of political capital Moscow spends on ensuring a consistent influence in the South Caucasus and, why is the region important to Russian policy makers?

Georgia represents strategic ground in the Caspian Sea basin. Related to this, the South Caucasus energy corridor pivots largely on the central location of Georgia in being an essential throughway between the extraction of gas and oil resources in the Caspian Sea by Azerbaijan and transport to European markets via Turkey. Consequently, the stability of Georgia, based on its security and its ability to defend its borders, ensure the integrity of its territory, and assure the population of the government’s own legitimacy, is an essential component of Caspian Sea basin energy resource transport to European markets.

The recent cancellation of the South Stream pipeline by Russia is both a reflection of the economic and financial constraints derivative of the devaluation of the Russian currency as well as the spiraling price of oil, on which Russia’s economy bases an overwhelmingly large percentage of its nation’s Gross Domestic Product. Having anticipated oil prices in excess of $100 a barrel for the coming year, the downward trajectory of oil market prices since July has been a shock to the Russian state. Inflation has increased while the value of the national currency (the Ruble) has decreased in relation to both the Dollar and the Euro.