October 17, 2010: The oil rich Turkic nation of Azerbaijan is increasing its defense budget 87 percent, to $3.1 billion. Nearly half the budget will be spent to modernize the armed forces. Located on the Caspian Sea, in the Caucasus, Azerbaijan was part of the Soviet Union until 1991, and much of its military equipment is of Cold War vintage. Azerbaijan is mostly Moslem, and has some serious territorial disputes with its Christian neighbor, Armenia. The two countries have been at each other's throats for nearly two decades because of a land dispute. Although Azerbaijan has three times more people and much more money (because of oil), the Armenians are better soldiers, and the dispute has been stalemated. Azerbaijan has a population of nine million and a GPD of $43 billion compared to 3.2 million for Armenia and GDP of $8.7 billion. There are over nine million Armenians worldwide (including the 3.2 million in Armenia), making it clear that most Armenians want to be anywhere but Armenia. But not everyone could get out. Moreover, Armenians have been in Armenia for over 3,000 years, but there is a certain attachment to the place.

Azerbaijan is determined to reverse this string of defeats, and this rivalry has taken some strange turns. Last year, Armenia accused Azerbaijan of hiring Internet criminal hackers to cripple Armenian access to the Internet. Apparently, someone in the Azerbaijan government got familiar with Internet criminal gangs, which have been quite popular in Russia and Eastern Europe, mainly because of either no laws against Internet based crime, or lax (or just inept) law enforcement. Nothing came of this rumored plot.

This year, Armenia signed a pact with Russia that, in effect, makes it a protectorate of Russia. The deal extends the lease on a Russian military base in Armenia from 2020 to 2044. The 3,000 man Russian force in Armenia may be increased and Russia, in effect, guarantees Armenia's security. Armenia needs all the help it can get, as it is a landlocked Christian nation surrounded by three hostile Moslem states (Turkey, Azerbaijan and Iran). To the north, there is Georgia which, while Christian, has its own problems with Russia. This deal makes any major move against Armenia by Azerbaijan very risky. While the Russians want to remain friendly with Azerbaijan, they have definitely taken sides here.

In return for this security, Armenia will have to follow Russia's lead in diplomacy, and any other area the Russians feel is important. Meanwhile, the Russians will provide new weapons and equipment for the 43,000 troops in the Armenian military, and help arm an even larger reserve force.

The only active enemy Armenia has at the moment is Azerbaijan. Both countries continue to disagree over possession of Nagorno-Karabakh, a 4,400 square kilometer district, full of Armenians, surrounded by Azerbaijani territory. Technically, there has been a truce between Armenia and Azerbaijan since 1994. But it has been a hot truce. Between 1991 and 1994 there was a war between the two countries over Nagorno-Karabakh, which Armenia won. Some 20,000 people died, and over a million (400,000 Armenians and 700,000 Azerbaijanis) fled their homes as Armenia occupied 31,000 square kilometers of Azerbaijani territory, to connect Nagorno-Karabakh to Armenia. Most of the refugees were from areas dominated by one group, who drove out the minority. Some 40,000 Azerbaijani civilians were driven from Nagorno-Karabakh. The situation was humiliating for Azerbaijan, who saw it as yet another example of more powerful and wealthier (via oil fields) Moslems being defeated by a smaller number of armed and more capable non-Moslems.

The Armenians have survived, although surrounded by Moslems, for centuries. But the Armenian economy is a disaster, particularly since Turkey and Azerbaijan have closed their borders with Armenia. Since the early 1990s, the best educated Armenians have been emigrating. They join a six million strong community of expatriate Armenians. This group can raise millions of dollars on short notice, and have provided the emergency funds when needed for the fighting against Azerbaijan. Some twelve percent of the 150,000 Armenians in Nagorno-Karabakh are armed and organized to defend the mountainous area, and are backed up by even more troops in Armenia.

But Azerbaijan is making a serious effort to create an effective military, and revive their economy. Azeri defeats at the hands of better trained, led and organized Armenian troops were caused, in part, by Azerbaijani corruption and double dealing among themselves. Moreover, the Armenians have a military tradition going back centuries. The Azeris are working hard to redress the military balance, thus the Armenian need for a Russian alliance, and the sharp jump in Azeri military spending.