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ANALYSIS: WOULD AZERBAIJAN GIVE UP OIL IN EXCHANGE FOR KARABAKH?
By Aris Ghazinyan
ArmeniaNow reporter
21.07.10 | 16:59
Analysis
Azerbaijan's strongest and weakest point is oil-based economy.
Despite the statements quite frequently voiced by the Azeri authorities
on the possibility of resuming hostilities against Armenia, it is
yet extremely premature to speak about prospects of a new war. There
are no objective prerequisites in current circumstances that would
indicate launch of war in the near future.
Azerbaijan is building its statehood on oil, and oil tariffs nowadays
reflect quite positively on main economic indicators. In that view
it is highly unlikely that Azerbaijan would go for a cardinal change
of situation, especially with most indefinite outcome prospects.
What tangible loss would Azerbaijan suffer in case of resuming the
war over Karabakh?
First of all it is Azerbaijan's appeal for investors in the oil sector,
in other words - the only stable base for state construction.
In September of 1994, in Baku palace of Gyulistan, an agreement was
signed which was later called the Contract of the Century. Thirteen
companies were presented in that document among them British Petroleum,
McDermott, Lukoil, Turkish Petroleum, and others from eight countries
such as Turkey, USA, Japan, Great Britain,etc.
In fact, yet in autumn of 1992, former British Prime-Minister Margaret
Thatcher visited Baku as a representative of British Petroleum, however
the Contract of the Century was not signed because of the Karabakh war.
Naturally, none of the investing companies in that period could invest
big money in Azerbaijan. Only the signing of cease fire in May of
1994 made it possible for the contract to be signed later that year,
in September.
As president of State Oil Company of Azerbaijani Republic (SOCAR)
Rovnag Abdullayev said, "as of today the foreign investment into
oil-gas sector of Azerbaijan is over $38 billion".
It is obvious, that a new war would bring to naught Azerbaijan's
appeal to investors, completely destroy the country's economic and even
political structure, and Ilham Alliyev would never sign up for to it.
Besides the fact that a new war minimizes the country's attraction
for investments, it is fully capable of destroying practically the
whole pipeline fairly enough considered the main blood vessel of the
Azeri state organism.
The thing is that practically all Azeri hydrocarbon is transported
through four pipelines, three of which pass only a few kilometers
away from the frontline, on the northern borders of both Karabakh
and Armenia: Baku-Tbilisi-Jeihan oil pipeline opened in July of 1996,
Baku-Suspa oil pipeline functioning since 1999, Baku-Tbilisi-Erzrum
gas pipeline (South-Caucasian pipeline) officially put into operation
in March 2007.
It's not a big secret that Armenian cannons are pointed directly
at these communications and in case war would start the destruction
of that vitally important to Azerbaijan infrastructure would be the
top priority.
As a result, Azerbaijan can lose not only its appeal as a secure
investment ground, it might be deprived of all its means of
transporting oil and gas to the outer world.
A new war would mean that Azerbaijan might also lose control over a
strategic sector of river Kura, along which Baku-Tbilisi railroad lies
(it continues further to Turkey). That railroad runs parallel to the
pipelines and is again only a few kilometers from the frontline.
One quick-march would be enough to take control over this strategic
sector, after which the correlation of power in the region would
become principally different.
Armenia, which has been in a blockade for the past twenty years first
all by Azerbaijan, can quite successfully explain to the international
community the solid reasons for such a step.
Armenian control over a sector of Baku-Tbilisi railroad would in fact
cut Azerbaijan not only from Georgia, but also Turkey. The only railway
vector into the outer world would, in that case, be the "northern"
one connecting to Russia.
The Azeri president is well aware of the scale of these threats, and,
not less importantly, their feasibility. He would not go for such
obvious risks in exchange for the unobvious prospect of establishing
control over Nagorno Karabakh - a territory that has no connection
to Azerbaijan whatsoever, neither has it any influence on the tempo
of its development.
The only layout of events that could theoretically be in favor of
a new war is either drastically shaken positions of Aliyev clan in
Baku fraught with an inevitable reprisal, or catastrophic drop of
oil tariffs (below $15 per barrel). None of it can be observed at
the moment.
From: A. Papazian
By Aris Ghazinyan
ArmeniaNow reporter
21.07.10 | 16:59
Analysis
Azerbaijan's strongest and weakest point is oil-based economy.
Despite the statements quite frequently voiced by the Azeri authorities
on the possibility of resuming hostilities against Armenia, it is
yet extremely premature to speak about prospects of a new war. There
are no objective prerequisites in current circumstances that would
indicate launch of war in the near future.
Azerbaijan is building its statehood on oil, and oil tariffs nowadays
reflect quite positively on main economic indicators. In that view
it is highly unlikely that Azerbaijan would go for a cardinal change
of situation, especially with most indefinite outcome prospects.
What tangible loss would Azerbaijan suffer in case of resuming the
war over Karabakh?
First of all it is Azerbaijan's appeal for investors in the oil sector,
in other words - the only stable base for state construction.
In September of 1994, in Baku palace of Gyulistan, an agreement was
signed which was later called the Contract of the Century. Thirteen
companies were presented in that document among them British Petroleum,
McDermott, Lukoil, Turkish Petroleum, and others from eight countries
such as Turkey, USA, Japan, Great Britain,etc.
In fact, yet in autumn of 1992, former British Prime-Minister Margaret
Thatcher visited Baku as a representative of British Petroleum, however
the Contract of the Century was not signed because of the Karabakh war.
Naturally, none of the investing companies in that period could invest
big money in Azerbaijan. Only the signing of cease fire in May of
1994 made it possible for the contract to be signed later that year,
in September.
As president of State Oil Company of Azerbaijani Republic (SOCAR)
Rovnag Abdullayev said, "as of today the foreign investment into
oil-gas sector of Azerbaijan is over $38 billion".
It is obvious, that a new war would bring to naught Azerbaijan's
appeal to investors, completely destroy the country's economic and even
political structure, and Ilham Alliyev would never sign up for to it.
Besides the fact that a new war minimizes the country's attraction
for investments, it is fully capable of destroying practically the
whole pipeline fairly enough considered the main blood vessel of the
Azeri state organism.
The thing is that practically all Azeri hydrocarbon is transported
through four pipelines, three of which pass only a few kilometers
away from the frontline, on the northern borders of both Karabakh
and Armenia: Baku-Tbilisi-Jeihan oil pipeline opened in July of 1996,
Baku-Suspa oil pipeline functioning since 1999, Baku-Tbilisi-Erzrum
gas pipeline (South-Caucasian pipeline) officially put into operation
in March 2007.
It's not a big secret that Armenian cannons are pointed directly
at these communications and in case war would start the destruction
of that vitally important to Azerbaijan infrastructure would be the
top priority.
As a result, Azerbaijan can lose not only its appeal as a secure
investment ground, it might be deprived of all its means of
transporting oil and gas to the outer world.
A new war would mean that Azerbaijan might also lose control over a
strategic sector of river Kura, along which Baku-Tbilisi railroad lies
(it continues further to Turkey). That railroad runs parallel to the
pipelines and is again only a few kilometers from the frontline.
One quick-march would be enough to take control over this strategic
sector, after which the correlation of power in the region would
become principally different.
Armenia, which has been in a blockade for the past twenty years first
all by Azerbaijan, can quite successfully explain to the international
community the solid reasons for such a step.
Armenian control over a sector of Baku-Tbilisi railroad would in fact
cut Azerbaijan not only from Georgia, but also Turkey. The only railway
vector into the outer world would, in that case, be the "northern"
one connecting to Russia.
The Azeri president is well aware of the scale of these threats, and,
not less importantly, their feasibility. He would not go for such
obvious risks in exchange for the unobvious prospect of establishing
control over Nagorno Karabakh - a territory that has no connection
to Azerbaijan whatsoever, neither has it any influence on the tempo
of its development.
The only layout of events that could theoretically be in favor of
a new war is either drastically shaken positions of Aliyev clan in
Baku fraught with an inevitable reprisal, or catastrophic drop of
oil tariffs (below $15 per barrel). None of it can be observed at
the moment.
From: A. Papazian