Azerbaijan 2014: between Russia and the West

Abstract: In the next few years, with a total $56 billion investments in transport infrastructure [Table 1], Azerbaijan wants to emerge as a major transit corridor between Europe and Asia. Russia, the big and resourceful northern neighbor of Azerbaijan, is not happy about these projects, because a new inter-continental transit route that bypasses it could undermine Moscow’s interests in both continents. So, Russia uses various channels of influence, including the protracted territorial conflict over Nagorno Karabagh, the undefined status of the Caspian Sea, and the substantial number of Azerbaijani immigrants in the Russian Federation, to exert pressure on Baku and create obstacles for new regional projects. Considering its geographic location, a complete isolation from the northern influence, is practically unattainable for Azerbaijan, but so far Baku has somehow managed to maintain a balanced foreign policy course. On account of the evolving political dynamics in the region, Azerbaijan needs committed and reliable partners in order to withstand the Kremlin’s pressures. In light of common interests, alliance with the Euro-Atlantic community is the best opportunity for Azerbaijan to implement its ambitious projects.

by Huseyn Panahov

Table 1

Table 1: Summary of investments in Azerbaijani energy and transport infrastructure

I. Geo-strategic background

When the Soviet Union collapsed Russia had a chance to leave behind its Communist past and follow the path of Euro-Atlantic integration, but Moscow was too ambitious to become an equal member of the European club. Instead, Kremlin pursues to maintain the influence of the former Soviet empire. Moscow’s attempts to keep former Soviet republics within Russian sphere of influence, creates multiple tensions with newly independent states that are pursuing absolute sovereignty.

In the early 1990’s, in order to provide a legal framework for its policies, Moscow created new regional cooperation institutions, such as Commonwealth of Independent States (CIS) and Collective Security Treaty Organization (CSTO). Since neither of these institutions was able to become a real game changer in the region, Moscow is now making its last effort with Eurasian Customs Union (EAU), the success or failure of which will be instrumental in defining Russia’s role in the region.

In order to incentivize its former dominions to join the Moscow-led cooperation initiatives, Russia uses a policy of carrots and sticks. For example, in return for joining CSTO and accepting the terms of the EAU, Armenia pays only $110 per thousand cubic meters of gas from Russian Gazprom, while Ukraine and Azerbaijan are paying $230. Similarly, Russia sells weapons to Armenia with special loans and at half the price, it offers the same military products to Azerbaijan.

Despite being a Co-Chair of the OSCE Minsk Group, tasked to mediate a peaceful resolution to the Karabakh conflict, Russia is selling weapons to both Armenia and Azerbaijan. Russia is probably the only country that benefits from a protracted conflict in Nagorno Karabagh, as it makes both Azerbaijan and Armenia vulnerable to Russian influence. Azerbaijan is left without 15% of its territories and nearly one million Internally Displaced Persons and refugees, Armenia is hosting two Russian military bases and has turned into a protectorate of the Kremlin. Ashot Manucharyan, a famous political figure in Armenia, recently made a statement that “If a war breaks out in Karabagh, Russia will immediately send forces into Azerbaijan… Russia will take this step not for the sake of Armenia as a partner, but because Russia is waiting for a chance to remove its opponents in Azerbaijan and bring the country under control.” Today, there is a real concern of Russia provoking a war in Karabakh and using it as a pretext to deploy troops in Azerbaijan.

In a similar fashion, Russia uses the breakaway Transnistria to maintain leverage against Moldova, Abkhazia and South Ossetia against Georgia and now, Crimea against Ukraine. Moscow has been able to shape these conflict zones as pressure points on the regional countries, since the West had previously considered this area to be in the Russian sphere of influence and turned a blind eye to the individual needs and aspirations of regional states. A turning point in the Western approach to this region came after the Russo-Georgian war in 2008. During this five-day war, in order to avoid direct confrontation with Russia, the West did not provide enough support to its friend and ally, Georgia. As a result, Tbilisi lost control over South Ossetia and Abkhazia. However, in an overdue response to the war, the EU-28 launched the Eastern Partnership (EaP) program in 2009 and has been trying to be more engaged in this region ever since.

EaP is the European Union’s new platform to discuss common issues and strengthen ties with the countries in this region, namely Armenia, Azerbaijan, Belarus, Georgia, Moldova, and Ukraine. The EU’s attempt to be more involved has turned this area into a confrontation zone with Russia, where each country has domestic political forces favoring both Brussels and Moscow. The next few years will be decisive in the fate of these countries, as they will have to choose between the Russian-led led Customs Union and deeper association with the European Union.

In order to discuss common points of tension, leaders of the EU and Russia convened in Brussels in January 2014. At the press-conference following his meeting with President Putin, Manuel Barroso told the press that “we cannot pretend that everything is ok while it is really not ok.” Political expert and president of Carnegie Europe, Jan Techau, commenting about the outcomes of the EU-Russia summit mentioned that “We know that Russia is part of the European family very clearly but we also feel often that Russia is a strange partner, a partner we don’t understand, a partner that we clash with. And then we have Russia, of course, as a country with whom we have technical issues.” Unfortunately, the EU-Russia summit did not yield any positive results and relations between the West and Moscow are currently strained to the point war may break out any day.

Based on the developments in this region it is fair to predict that Russia will not easily give up on Azerbaijan, which is the eastern-most member of the EaP program and is the only country that can offer a door into Central Asia that bypasses Russia and Iran. Azerbaijan is engaged in projects which, if successful, will encourage Euro-Atlantic integration in the South Caucasus, assist economic emancipation of land-locked Central Asian states, reassure energy security of the European Union and contribute towards developing trade and cooperation across Eurasia at large.

Zbigniew Brzezinski, in his famous book, The Grand Chessboard, wrote that, “The independence of the Central Asian states can be rendered nearly meaningless if Azerbaijan becomes fully subordinated to Moscow’s control.” In his book, first published in 1998, Brzezinski also adds that, “Almost as much as in the case of Ukraine, the future of Azerbaijan and Central Asia is also crucial in defining what Russia might or might not become.” Current events in Ukraine demonstrate that Russia is going to throw down its entire arsenal in order to have control over Azerbaijan.

II. Azerbaijan’s path

After regaining independence from 70 years of Soviet occupation, Azerbaijan had to establish its foreign policy agenda from scratch. The newly independent Azerbaijani state launched nascent diplomatic relations, trained a new ambassadorial corps, and defined the overarching foreign policy course for the country. From Baku’s perspective, Azerbaijan has faced two main foreign policy objectives, since self-government: one, gaining international support to regain Nagorno karabakh and two, finding reliable trade partners, especially in the energy industry.

In order to achieve both of these immediate policy goals and not fall back under Kremlin’s sphere of influence, Baku has consistently looked towards the West. Even after two decades of diplomatic negotiations, Azerbaijan has not been able to repatriate Nagorno Karabakh, however, as a result of successful partnership with Euro-Atlantic countries, Azerbaijan has revived its economy and managed to remain truly independent. In the near future, Azerbaijan will complete new multi-billion dollar projects that will strengthen its ties with the West and also provide a safe transit route for trade between Europe and Asia.

In 2004, during an energy ministerial conference in Baku, the EU signed the so-called “Baku initiative,” an energy cooperation agreement with Black Sea, and Caspian Sea littoral states and their neighbors. The agreement aims to establish routes for delivering energy resources from Central Asian countries to the EU, thus diversifying sources of energy imports for the EU. As the largest supplier of energy to EU, Russia is concerned that the Baku Initiative is against the Kremlin’s economic interests.

Today, with more than 150 billion cubic meters per annum (bcma), Russia provides almost a quarter of Europe’s gas demand, while only 10 bcma out of Azerbaijan’s currently projected exports will reach the EU. Even though Baku cannot compete with Moscow in terms of sheer volumes of energy reserves, its geographic position allows Azerbaijan to become a transit route for the transport of energy to EU countries from other Caspian Sea states. During the press conference of the Atlantic Council’s 5th Annual Energy and Economy Summit in 2013, the president of Azerbaijan’s state oil company, SOCAR, mentioned that, “By 2025, Azerbaijan’s overall gas export potential will reach 40-45 bcm per year.”

There is a consensus among energy experts that increasing the capacity of gas and oil pipelines running from Azerbaijan would be economically advantageous if Central Asian countries would also join them. Energy-rich states like Kazakhstan and Turkmenistan are interested in diversifying their destination markets, but Russia prefers to buy Central Asian oil and gas through Soviet-era pipelines at below-market rates, and then re-export it at a markup. Despite increasing trade volumes with China, countries in Central Asia are still economically reliant on Moscow, which wants to preserve that dependency.

In order to maintain its grip on the region, the Kremlin initiated the Eurasian Customs Union, which is an exclusive partnership framework that would create challenges for the EAU members to trade and cooperate with other states. Contrary to Moscow’s interests, the emergence of Azerbaijan as a transit corridor would make it less lucrative for Central Asian states to join the Customs Union, thus decreasing their dependence on Russia. As a result, Putin’s administration is increasingly concerned about competition with the Southern Corridor stretching from Asia to Europe through Azerbaijan, Georgia and Turkey.

Baku very rarely speaks openly about pressures emanating from Moscow, but it has always considered Russia an imminent source of threat. In order to maintain peace and stability in the South Caucasus region and protect its interests, Azerbaijan would like to intensify cooperation with Euro-Atlantic institutions, but Baku does not want to cause a confrontation with Russia. Especially after the Russo-Georgian war of 2008, Azerbaijan felt even more discouraged to publicize political course of Euro-Atlantic integration. However, the National Security Concept of Azerbaijan the guiding document of Azerbaijan’s security strategy, adopted in 2007, makes it clear that: “Integration into the European and Euro-Atlantic political, security, economic and other institutions constitutes the strategic goal of the Republic of Azerbaijan. The Republic of Azerbaijan views its partnership with the Euro-Atlantic structures as a means for contributing to security, economic prosperity and democracy in the whole Euro-Atlantic area.”


III. Regional projects of Azerbaijan

In the aftermath of the dissolution of the Soviet Union, European countries, looking forward to accessing Caspian energy fields, found Azerbaijan as the most reliable trade partner. From south to north, there are three countries that can offer access to Caspian natural reserves for Europe: Azerbaijan, Iran and Russia. While the relations between Iran and European countries have not been friendly since the Islamic Revolution of 1979, Moscow’s aspirations to inherit the influence of the Communist regime over the post-Soviet space created challenges for cooperation between Russia and Western countries. Thus, driven by the growing demand for energy and concerned about the instabilities in the Middle East, Western Oil companies came to Baku, in the early 1990’s.

In 2005, Azerbaijan celebrated the inauguration of the Baku-Tbilisi-Ceyhan (BTC) pipeline that delivers about 1 million barrels of oil per day from the Caspian basin to the Mediterranean Sea, where it is distributed all over Europe. Dubbed as the “Contract of the Century,” the BTC brought the equipment, expertise, and financial investments of Western companies that created thousands of news jobs and stimulated economic growth in Azerbaijan. Through the BTC, Azerbaijan revived its stagnant oil sector, generated billions of petro-dollars, and, up to this day, secures around 4% of EU’s crude oil imports. Last but not least, the success of the BTC proved that the South Corridor is a secure and reliable transit route.

Nowadays, success of the Southern Corridor as an established transit path is creating the appetite for new regional projects in Azerbaijan that will transform the geostrategic map of Eurasia. This year, Azerbaijan completed the expansion of the Baku International Airport, tripling its transport capacity. By the end of 2014, construction will be completed along the Baku-Tbilisi-Kars (BTK) railway, which travels from Baku, via Georgian capital Tbilisi, to Turkish city Kars, where it joins the 4th Pan-European railways. Primarily sponsored by the State Oil Fund of Azerbaijan, the BTK will become part of a sea-to-sea intercontinental rail link that runs from the United Kingdom to China. Azerbaijan’s Minister of Foreign Affairs said that the BTK will “create conditions for the revival of the historical Silk Road and [will] develop the Europe-Caucasus-Asia corridor, [deepening] the region’s integration into Europe.” By 2015 all major highways in Azerbaijan will also have been modernized, further expanding the transport capacity of the New Silk Road. Overall, since 2004 Baku has spent more than $10 billion USD for renovation of roads and railway systems within the country.

Next year, Azerbaijan is also going to celebrate the opening of the Alat International Seaport, which will cost another $1.1 billion USD. Little town located 65 km south of Baku, Alat will host the largest seaport in the Caspian basin, according to a CNN report. As Kazakhstan is spending billions to expand its railway network, trade vessels from all over Asia will soon be able to reach Kazakhstan’s Aktau Seaport via railroads, ship across the Caspian Sea to Alat, where they will then be able to travel all the way to Europe along the BTK. For the past three years, oil income in Azerbaijan has been steadily decreasing as the peak of the oil industry is already left behind. With millions tons of cargo in annual total shipping capacity between Europe and Asia, these new transportation projects are expected to compensate for Baku’s losses in the oil sector.

The main substitute for declining oil income, however, will be generated from natural gas sales. In 1999, Azerbaijan discovered one of the largest gas-condensate fields in the world, Shah Deniz, with total reserves of over 1 trillion cubic meters. In partnership with a BP-led consortium, the Azerbaijani government has set up a two-stage plan for development of the gas-field and transport of the produced gas to the end market. Producing 9 bcma of gas and approximately 50,000 barrels of condensate a day, the first stage of Shah Deniz began operating in 2006. Since the inauguration of the 700 km South Caucasus pipeline, Shah Deniz 1 supplies gas to Georgia and Turkey.

During Shah Deniz Stage 2, Azerbaijan will be producing 16 bcm of gas annually, which will be transported through the Trans-Anatolian-Pipeline (TANAP) to Turkey and through Trans-Adriatic-Pipeline (TAP) from Turkey to countries of the EU. Out of the 16 bcm produced during Shah Deniz 2, Italy will import 8 bcm, Turkey 6 bcm, and Greece and Bulgaria 1 bcm each. TAP will start delivering natural gas to Europe in 2019, exactly a decade after Russia cut off gas to Ukraine to exert political pressure on Kyiv.

IV. Outstanding Issues

When Russia cut off gas to Ukraine, several European states were left without gas and energy security soon became one of the main topics at the EU discussion tables. In order to avoid overreliance on one country for energy supply, European states made diversification of energy sources a top priority matter. However, for a long time, the EU could not find a reliable alternative source of energy to meet its growing demand. In this regard, agreement on TAP is significant, because it is the first real project that fits into the EU’s diversification strategy. There are high hopes that in the future, other energy rich countries on the eastern shores of the Caspian Sea will also join Azerbaijan’s projects.

Turkmenistan, which is located 300 km across the Caspian Sea, from Azerbaijan, sits on the world’s second largest gas field, and ranks among the top five gas rich countries in the world. With total reserves reaching 17.5 trillion cubic meters, Turkmenistan could easily provide for a significant portion of Europe’s growing gas demand in a few years. For this purpose, the EU signed an agreement with Azerbaijan and Turkmenistan in 2011 indicating trilateral consent to support a Trans-Caspian-Pipeline project that would deliver Turkmen gas to Europe via Azerbaijan. According to experts, the construction of an underwater Trans-Caspian pipeline would not be as complicated as it may sound from an engineering perspective and would not have any serious environmental consequences. Vice president of SOCAR, Elshad Nasirov, once mentioned that Azerbaijan “is capable of the construction of 100 kilometers of pipeline across the Caspian Sea in about a year.”

However, despite numerous bilateral agreements among Caspian littoral states, the status of the Caspian remains undefined, which hinders cooperation initiatives and causes tensions among Caspian states. Russia, as well as Iran, exploits the undefined status to prevent the realization of a Trans-Caspian project, which would be extremely disadvantageous for their strategic interests. Last year, Russian Minister of Foreign Affairs Sergei Lavrov alleged that the European Union is pushing the Trans-Caspian project on Azerbaijan and Turkmenistan, while adding that the project “cannot be implemented unless all five Caspian states reach an agreement on the status of the Caspian basin.”

Back in the early 1990s, when Azerbaijan was inviting international oil companies to Baku to initiate the BTC project, Moscow was opposing it in a mirror fashion. The Kremlin thought of the BTC as an anti-Russia plot and demanded that without an agreement of all the littoral states, Azerbaijan had no legal authority to initiate energy projects in the Caspian basin. At a meeting of the Caspian states in 1993, Russia initiated the signing of the Astrakhan Protocol, which stated that the Iran-Soviet Treaty of 1940 should remain in force until a new unilateral agreement is signed among all five Caspian states.[1] At the time Azerbaijan was the only littoral state that abstained from signing the Protocol, because it would illegalize Azerbaijan’s operations on its oil fields in the Caspian basin. A month after the Astrakhan meeting, then President of Azerbaijan, Heydar Aliyev invited Russia’s Minister of Energy, Yuri Shafranik, to Baku for discussions about the BTC project and suggested the inclusion of the Russian Oil Company Lukoil as a partner in the contract.[2] Before leaving Baku, Mr. Shafranik gave an approval on behalf of the Russian government and the Western oil companies felt safe enough to invest in the BTC.

However, there were still very influential opponents of the project in Moscow, who resented Shafranik’s approval. After the contract was signed, a message from Russian Minister of Foreign Affairs, Andrey Kozyrev, to Prime-Minister Victor Chernomyrdin leaked to press, in which Kozyrev was advocating that Russia should impose harsh sanctions against Baku and prohibit Azerbaijani access to the Volga Don Canal. At the time Volga Don was crucial for Azerbaijan to bring in the necessary equipment for oil explorations and production. The Volga canal is the only navigable connection between the Caspian Sea and the world ocean.  Only, with the political support of the West and by paying 10 times the price for every vessel, Azerbaijan managed to successfully begin construction of the BTC.

Since, then, Caspian states have not yet been able to reach a consensus on either the status of the Caspian basin or seabed delimitation. The 35th meeting of the Ad Hoc Working Group of the Convention on Legal Status of the Caspian Sea was held on January 30th of this year without any results. If the Caspian basin is recognized either as a sea or a lake, the littoral countries will have to abide by certain international regulations: if it is a “sea” the United Nations Convention on the Law of the Sea of 1982, but in the case of a “lake” customary international law concerning border lakes will be the guiding legal framework.

According to a Chatham House research of the Caspian basin’s legal status, “Throughout the history of negotiations over a new legal status for the Caspian Sea, Russia and Iran supported the position that the Sea was governed by a condominium regime.” If Caspian states agree to condominium system, a unilateral agreement of the littoral states will provide the legal basis for management of the Caspian and there will be no need to recognize it either as a sea or a lake. In international law condominium is not a favorable approach, as it implies shared administrative control, which gives more powerful parties in the agreement more room for maneuvering. For this exact reason Russia and Iran favor the condominium solution, as it would provide a legal foundation for their objections to the construction of Trans-Caspian project.

Russia has by far the most powerful fleet in the Caspian Sea and is eager to preserve its dominance in the years to come. A plaque with a quote by Peter the Great, “Our interests will never allow any other nation to claim the Caspian Sea,” stands in the headquarters of the Russian Caspian Flotilla today. According to Joshua Kucera, political analyst with extensive experience in the Caspian region, “Russia plans an ambitious year for the Caspian flotilla in 2014, as it will add an additional five warships, as well as a number of support ships, setting the stage for this year to be the largest yet for Russian naval expansion in the sea. Most intriguing is that in the last two years, the Russian navy has added eight Serna assault battleships to their Caspian fleet (three in 2012 and five in 2013). The Russian navy has not disclosed the overall number of Serna boats in the Caspian, but the main feature of the boat is that it can carry up to 92-men as a landing party. While the main purpose of employing these ships in the Caspian is unknown, it is obvious that Russia wants to be feared.

Baku is mainly concerned about the security of its energy production and transit facilities. Energy infrastructure is the heart of the Azerbaijani economy and any terrorist attack or war in the region that disrupts its functionality would cost Azerbaijan millions of dollars every day. In 2012, under the auspices of the CSTO framework, Armenian military forces, conducted drills simulating attacks on energy infrastructure in a joint training with Russians. Armenians were learning how to hit energy production and transport facilities using Russian produced rockets. During a press conference following the drills, Armenian General Davtian noted that “In particular, I can stress that we modeled several strikes on oil and gas infrastructures, energy carriers that would affect the economy [of the enemy]”. Any person remotely familiar with regional politics of the South Caucasus can attest that these simulations were targeted against Azerbaijan’s energy infrastructure.

Baku is trying its best to avoid confrontation with Russia and not to provoke hostile sentiments in the Kremlin. However, Azerbaijan is not willing to compromise on its independence, either. In 2012 Azerbaijan asked the Russians to leave the Gabala Radar Station, which marked a major milestone in the history of Azerbaijan. For the first time in the past 200 years, Azerbaijan no longer had to endure Russian soldiers on its soil. The decision came after Baku increased the annual rent price of the radiolocation center from $7 million to $300 million per year. The Azerbaijani government essentially asked the Russians out of the country, without explicitly saying as much.

The “balance of powers” is the most commonly used definition to characterize Azerbaijan’s foreign policy course. Out of the three countries in the South Caucasus, Georgia has a clearly pro-Western foreign policy agenda. Due to a number of subjective and objective reasons Armenia has remained under the Kremlin’s sphere of influence. Whereas Azerbaijan is walking along a thin trajectory in between, trying to slowly integrate into the Euro-Atlantic community without antagonizing Russia. Unlike Georgia, Azerbaijan did not sign the EU Association agreement during the Vilnius summit last year, but sufficed with ratifying a visa facilitation program with the EU, as did Armenia. However, unlike Erevan, Baku has signed neither the Free Trade Zone agreement of CIS countries, nor has expressed any intentions to join the Eurasian Customs Union.

As Azerbaijan refuses to join the Russian led Union, Moscow increases the pressure on Baku. The first victims of the Kremlin’s fury were the Azerbaijani labor migrants in Russia, who are mainly engaged in blue collar work. Since Russia inherited most of the wealth of the Soviet Union, in the early aftermath of the dissolution of the Communist regime, laborers from all post-Soviet countries were flooding into Russia to earn money for living. War-torn Azerbaijan was no exception. Today, the trend is changing, as the number of Azerbaijanis coming back to their home country is increasing with every year, while the number of emigrants leaving for Russia is decreasing. However, there are still hundreds of thousands of households in Azerbaijan that are dependent on Russia for their monthly income.

Though Baku’s main trade partner may be Europe, population in the regions of Azerbaijan is still mainly dependent on Russia for their incomes. Most of the agricultural products produced in Azerbaijan’s countryside are exported to Russian markets and a large part of the middle-aged men from Azerbaijan are in Russia earning money they can send back home. According to the Azerbaijani Diaspora Committee, overall, there are around 2.5 million Azerbaijanis residing in Russia.

Last year, anti-migrant riots targeting vegetable warehouses in Birulevo hit the news headlines in Russia. The events were followed by closing the Birulevo warehouse, where mainly Azerbaijanis were employed. Russian Border guards started creating issues for Azerbaijanis and new limitations on Azerbaijani immigrants were imposed. The events were ignited by the killing of a 25-year old Russian citizen, allegedly by an Azerbaijani immigrant, working at the local vegetable warehouse. It is interesting to note that before any judicial process took place, Russian news services were broadcasting a Special Forces helicopter delivering the accused Orkhan Zeynalov to the Russian Interior Minister’s office, where the Minister, Vladimir Kokoltsev did not say anything, but gave an angry look at the immigrant suspected in murder. There were reasonable arguments that the whole process was orchestrated from Moscow as a response to Baku’s refusal to join the Custom’s Union.

Considering that Azerbaijan’s population is 9 million, there are reasonable concerns that the economy would not be able to consume a sudden influx of such a large number of labor migrants. However, as the Azerbaijani economy continues to grow, this will become less of an issue. Independent political analyst Zardusht Alizade claims that Azerbaijan’s state of relative economic health means that the deportations “will not become an efficient lever to force Baku to join the Customs Union.” A recent research by a leading Azerbaijani think tank, the Center for Economic and Social Development, concluded that “Taking into account the pros and cons of accession to the Customs Union and Azerbaijan’s strategic political and economic priorities, we conclude that although Azerbaijan might receive short-term benefits from accession, in the long run, it is not beneficial.” So, Kremlin tightening its policies towards Azerbaijani labor immigrants could be a hard hit on this country, but it is a hit that Azerbaijan will be able to handle.

It should also be noted that Russia needs labor migrants as its own labor pool is diminishing year by year. Demographic experts predict that in the next decade Russia’s native labor force will shrink by more than 12 million workers, or approximately 15 percent. Boris Denisov, a demographer at Moscow State University, says that, “The number of workers coming in to the labor force is about half the number who are leaving.” For this reason, Russia’s anti-migrant policies usually target specific ethnic groups. Prior to Russo-Georgian war in 2008, Georgian immigrants were the primary target of Kremlin’s pressure.

Nowadays Azerbaijan is increasingly turning into Russia’s subject of pressure. Asking Russians out of the Gabala radiolocation center, selling gas to Europe over Russia, refusing to join the Free Trade Zone of CIS countries, and now snubbing the Customs Union, are all expressions of Azerbaijan’s independent policy course. However, since they are not in line with Moscow’s ambitions, the Kremlin sees them as an anti-Russia blueprint.

Today, Moscow is concerned that if Azerbaijan emerges as a transcontinental corridor bypassing Russia, it might marginalize Russia’s role in the region. So, Moscow has intensified its pressure on Azerbaijan to keep Baku under control. In late January of this year there was an intense exchange of fire on the frontline between Azerbaijan and Armenia. According to reports from the Azerbaijan Defense Ministry, besides Armenian, the attackers were using another foreign language. The Azerbaijani government refrains from calling Russians the enemy as it would be a self-fulfilling prophecy, instigating Russian violence on Azerbaijan. However, considering that Russians are the only foreign troops stationed on the territory of Armenia, it is obvious what the Azerbaijani Ministry of Defense implied.

V. Conclusion

Azerbaijan, the smallest country on the shores of the Caspian, has trod through a very challenging geostrategic environment during the last twenty years of independence and in the near future, the situation around Azerbaijan will become only more menacing. Between Russia, Armenia, and Iran, which is interested in establishing a Shia state in Azerbaijan, Baku is engaged in a restless struggle to preserve peace and stability in this key region.

Back in 1998, US oil-industry-executive, Dick Cheney (later US Vice-President) was telling executives in Washington that “I can’t think of a time when we’ve had a region emerge as suddenly to become as strategically significant as the Caspian.” Today, Baku is getting ready to launch projects that will not only deliver Caspian energy reserves to European markets, but also offer a transcontinental route for trade between Europe and Asia. As Azerbaijan is about to assume a more important role in the region, it is facing more pressures from its unfriendly neighbors.

Therefore Azerbaijan is looking for allies who would provide it with moral, political and even military support if needed. It should be mentioned that any instability in this region caused by a war or terrorist attack, would affect not only the Azerbaijani economy, but would also undermine European energy security, render South Caucasus as an unreliable transit route and shut the strategic door between Europe and Asia. Hence, it is in the best interests of Euro-Atlantic countries and Azerbaijan to develop a framework of cooperation that would guarantee peace and stability in this region. The top two issues on the table should be the resolution of Nagorno Garabagh conflict and the development of a joint international security mechanism to protect Azerbaijan’s energy facilities.

VI. Recommendations

Regarding Nagorno Garabagh conflict resolution

  • UN Peacekeeping forces deploy to Nagorno Karabakh for five years, while the situation in the region is still very tense. It will also put a timeline and more pressure on the mediators and conflicting sides to achieve an immediate resolution to the conflict. Some of the ISAF troops leaving Afghanistan at the end of this year and Russian troops currently based in Armenia could constitute part of the peacekeeping coalition.
  • Azerbaijan invests into the infrastructure of the war-torn regions to improve the conditions of living.
  • In a step-by-step process, all the IDPs and refugees that left Karabakh during the war return to their homes. International peacekeeping forces guarantee the security of civilian population.
  • Armenia returns to Azerbaijan 7 nearby regions around Karabakh that are not part of the dispute: Agdam, Fizuli, Jebrayil, Kalbajar, Lachin, Qubadli and Zangilan.
  • A temporary council with representation from both Armenians and Azerbaijanis will be established to govern the disputed territories.
  • The joint commission plans the organization of a public referendum within a reasonable timeline with the participation of international organizations
  • Human rights of all ethnic minorities within Nagorno Garabagh are respected and guaranteed on the protection of international law. Public education, radio stations and TV channels are available in both Armenian and Azerbaijani languages. Nagorno Garabagh could be a good example for neighboring Iran as well, where close to 25 million Azerbaijanis constitute the largest ethnic minority group in the world that does not have access to education in its own language.
  • Mandatory peace-education programs are promoted in the region to minimize communal conflicts at the initial stages of resettlement.
  • Turkey opens its borders for economic trade and cooperation with Armenia
  • Armenia takes part in all regional projects initiated by Azerbaijan

Regarding energy infrastructure security

  • Azerbaijan and NATO work out a joint threat-response mechanism that will guarantee security of the energy produced in or transited through Azerbaijan and consumed by NATO countries.
  • Adopt a legal framework for joint response for such attacks along the whole Southern Corridor
  • Develop a special regional cyber-center to oversee the cyber-security of the energy infrastructure delivering oil and gas for NATO countries.
  • Lift the ban on arms trade, to decrease the military dependency of the regional countries on Russian weapons supplies. Currently neither Azerbaijan nor Armenia can purchase military equipment from NATO countries due to the ongoing Nagorno Garabagh conflict.


[1] Petersen, Alexandros, and Fariz Ismailzade. Azerbaijan in Global Politics: Crafting Foreign Policy. Baku: Azerbaijan Diplomatic Academy, 2009, p. 238

[2] Petersen, Alexandros, and Fariz Ismailzade. Ibid, p. 239

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