In the 18th century, Russia began to pursue expansionist goals in the Caucasus and Transcaucasia. In 1801, Georgia was conquered, and in accordance with to the Treaty of Gulistan, Persia yielded to Russia the khanates of Karabakh, Baku, Shaki, Shirvan, Derbent, Quba, and Talysh.
Russia’s conquest of the Transcaucasia (including the Erivan Khanate in 1827) was a huge military-political event. It also opened up broad opportunities for the economic development of the region. Absolutely new economic relations have arisen, best described by David Ananun:
“At that time, the commercial and industrial development of the region was at an initial stage. Trade basically had only one goal: to satisfy the modest needs of the local population. It did not have a wide field of activity: each khanate was a self-sufficient tax unit, which hampered the development of trade. Not to mention the instability of the region.
The situation changed when the Russians took control over the region. First, all the Khan’s obstacles in the way of trade collapsed. Then, Transcaucasia entered into direct relations with Russia, a vast country with a relatively high cultural level.
Secondly, a large contingent of Russian officialdom and military was established in the Transcaucasia. They, as consumers, put forward new demands before the regional economy. More than that, this contingent was different from the former officialdom: it not only received its share of goods produced in the region but also paid for it. The Russians introduced money supply in the South Caucasus.
Constant wars demanded big expenses. Thus, the population had the opportunity to convert agricultural products and handicrafts into money. This meant that the former well-established regime was retreating, the foundations of natural farming were being refined, and a society was being formed based on the production of goods and commodity circulation.
Russian domination was of crucial importance for the economic life of Transcaucasia.”
The Russian contingent, the officialdom and the military, did not act as an economic entity. Instead, they were conquerors, a power that was supposed to carry out economic activities. But how and through whom?
Through the three main peoples of Transcaucasia: Armenians, Georgians, and Tatars (i.e. Azerbaijanis). The latter due to their nomadic way of life and mentality were completely deprived of abilities for any kind of economic activity. More than 80% of Georgians lived in villages and also did not have any experience in this area.
On the other hand, the Armenians have preserved the traditions of centuries-old trade and economic activities. Located in a common political, legal, and economic area, they immediately assumed the role of the leader.
The main form of economic management of the Russian authorities was the contract, and it was the Armenians who became contractors, thus entering the stage of forming the initial capital of Eastern Armenians. And immediately after the conclusion of the Gulistan Treaty, the Russian authorities turned their close attention to the Baku oil.