The South Caucasus has long been a region of geopolitical intrigue, where the interests of great powers intersect with the struggles of small states trying to assert sovereignty and stability. Yet beneath the layers of diplomacy, shifting alliances, and promises of modernization lies a persistent obstacle: entrenched corruption and state capture. A new study by the Global Initiative Against Transnational Organized Crime (GI-TOC) sheds light on the enduring strength of informal governance systems in Armenia, Georgia, and Azerbaijan. Despite decades of political upheavals and economic reforms, the structures that enable elites to exploit state institutions for private gain remain largely intact.

The report, the second in a two-part series, provides a sobering assessment of how deeply corruption is embedded in the region’s political economies. It identifies three levels of corruption-petty corruption, high-level corruption, and state capture. Petty corruption, while disruptive, typically involves everyday bribery at service delivery points such as schools, hospitals, or licensing offices. High-level corruption is more insidious, encompassing the manipulation of laws, regulations, and policies by elites to enrich themselves. At its most extreme lies state capture-the systematic subordination of public institutions to the interests of powerful networks, effectively turning the machinery of government into a tool for private profit.

Among the three countries, Azerbaijan is described as the most consolidated example of state capture. Political and economic power is concentrated in the hands of a small ruling elite whose grip has tightened over the past two decades.........

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