When the Lisbon Treaty entered into force, there was a qualitative shift in the relations between the European Union (EU) and the countries covered by the European Neighborhood Policy (ENP). Several of the institutional changes brought about by the new Treaty have already promoted positive developments to the ENP, namely through the close cooperation between the new High Representative for the Common Foreign and Security Policy (CFSP) and the Commissioner for Enlargement and the ENP. This paper looks at some of the key institutional changes within the CFSP, and assesses their interaction with the realities of the South Caucasus on two specific principles: differentiation and regional cooperation. The paper argues that although the Treaty per se did not make major changes to how the two principles are perceived by the EU, other steps such as the creation of the Eastern Partnership and the revision of the ENP offer valuable insights into how the EU addresses the conflicting nature of these two principles in its relations with the South Caucasus. Thus the paper seeks to illuminate the ways in which EU policy interacts with the realities of the South Caucasus states, both in terms of their bilateral relations with the EU and in their regional dynamics.