The article investigates, through a comparative analysis, the different mechanisms of influence that the EU and Russia are projecting in their shared neighborhood in shaping domestic politics. It focuses on the economic and energy sectors in order to analyze two relevant policies for contrasting EU and Russia’s influence in the case of the Southern Caucasus. Contrary to commonly held opinions, Russian influence is receding in both areas and is a dominant external actor only in Armenia. In contrast, the EU is slowly increasing its presence in the economic area and has become a key player in the energy sector.

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