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World Politics Review
Sept 19 2012
Strategic Posture Review: Azerbaijan
By Richard Weitz, on 19 Sep 2012, Report
Despite its relatively small size, Azerbaijan has frequently been the
focus of foreign attention since it gained independence after the
collapse of the Soviet Union. This is in large part due to
Azerbaijan's sizable energy resources and pivotal location, which
provides the only viable pipeline route for Caspian Basin oil and gas
to reach the West without passing through Russia or Iran. Azerbaijan's
leaders have tried to exploit these geopolitical assets to help manage
the challenges presented by the country's volatile neighborhood, which
include a number of disputes over Caspian energy reserves, heavy
interference by outside powers and the potential for a new war between
Azerbaijan and Armenia over the disputed Nagorno-Karabakh region.
Historically, Azerbaijan and the rest of the Caucasus region were an
object of rivalry between the Persian, Ottoman and Russian empires.
Today, Russia, Iran, the United States and various European
governments continue to seek to influence Azerbaijan's foreign and
domestic policies. Since regaining its independence in 1991,
Azerbaijan has sought to balance and manipulate these rivalries while
pursuing its own regional objectives, which focus on recovering
territories occupied by Armenia, averting a war with Iran, minimizing
foreign leverage over Azerbaijan's domestic policies and establishing
Baku, the nation's capital and a major port city, as a center for
regional commerce.
By constitutional definition, Azerbaijan is a presidential republic.
Since independence, however, the country's foreign policymaking
process has been largely personalized and connected to the person of
the president. After the turbulent immediate postindependence period,
Heydar Aliyev became Azerbaijan's president in 1993 and pursued a
balanced foreign policy, both regionally and beyond. Aliyev helped
stabilize Azerbaijan's foreign relations, attract foreign direct
investment to develop the country's energy reserves and consolidate
political power in the hands of a strong presidential administration.
He presided over the so-called contract of the century in 1994 with
the Azerbaijani International Operating Company (AIOC), a consortium
that was made up of 11 U.S., European, Saudi and Japanese companies.
In keeping with Aliyev's balanced foreign policy, Russia's Lukoil
company was included in the project. This production-sharing agreement
on the Azeri-Chirag-Guneshli oil fields successfully established the
foundation for using hydrocarbon revenues to develop the Azerbaijani
economy.
Aliyev's son Ilham has held power since the elder Aliyev's death in
2003, after controversial changes to the constitution allowed Ilham to
accede to the position of president from his post as prime minister.
Presidential term limits were abolished altogether in 2009. Currently,
in the Milli Majlis, the 125-member parliament, 70 of the legislators
belong to the president's New Azerbaijan Party, with much of the media
also under the influence of the presidential administration.
Meanwhile, Azerbaijan's beleaguered political opposition is small and
divided, and the two main opposition parties, Musavat and the Popular
Front, have no representation in parliament.
Azerbaijan's unresolved conflict with Armenia over the
Nagorno-Karabakh region, which dates back to independence, remains a
major driver of Baku's -- and the region's -- international relations.
The May 1994 cease-fire with Armenia left 14 percent of Azerbaijan's
territory under Armenian occupation and some 700,000 internally
displaced Azerbaijanis with unresolved status. Their presence has
meant that even Azerbaijan's strong president cannot make major
territorial concessions without risking serious domestic political
costs. Armenia also physically separates Azerbaijan from its exclave
of Nakhchivan. In the ongoing standoff between the two neighboring
states, Armenia is supported by Iran and Russia, while Azerbaijan
enjoys backing from Turkey, Georgia and Israel.
Although Azerbaijani officials have emphasized they would like to
settle their territorial disputes with Armenia through peaceful means,
they have indicated that they cannot accept Armenian occupation of
Nagorno-Karabakh and neighboring lands indefinitely. The 2008 Georgia
War shows how these supposedly `frozen conflicts' in the former Soviet
Union can abruptly thaw and explode, highlighting the danger
represented by the current impasse over Nagorno-Karabakh.
In addition to its conflict with Armenia, Azerbaijan faces threats
from Iran and disputes over the legal status of the Caspian Sea.
Although Azerbaijan shares extensive historical, ethnic and cultural
ties with Iran, since 1991 these connections have proved to be trouble
for the two countries' relations. Iran is home to a large Azeri
population, and Azerbaijan's independence rekindled Tehran's
historical fears about separatist and independence movements there.
Azerbaijan's strongly secular government, its general orientation
toward the West and, at times, its energy and military policies have
further aroused Iranian hostility. For example, Baku has in the past
bowed to pressure from the United States to exclude Iran from proposed
pipelines. As one of many forms of retaliation, Iran has joined with
Russia in refusing to confirm the legality of proposed trans-Caspian
pipelines to transport oil and gas through Azerbaijan to Europe and
the Mediterranean.
These disputes reflect the major role played by pipeline politics in
shaping Azerbaijan's approach to international relations, with energy
revenue constituting a significant portion of Azerbaijan's GDP. An
estimated 30 trillion cubic feet of proven gas reserves and 7 billion
barrels of proven oil reserves have given the Azerbaijani government a
powerful source of revenue and diplomatic influence. Despite
Azerbaijan's challenging security environment, the country's oil and
gas resources have continued to attract substantial foreign
investment, which has helped to boost the country's economy. In
addition to its natural energy resources, Azerbaijan also gains
diplomatic leverage from its pivotal geographic position for many
energy transport projects.
As a result, U.S. oil companies have invested heavily in Azerbaijan's
oil infrastructure, including the vital Baku-Tbilisi-Ceyhan (BTC)
pipeline, which runs from Baku through Georgia to the Turkish port of
Ceyhan. Since coming online in 2005, BTC has become Azerbaijan's main
oil-export pipeline, and Azerbaijani strategists now view the BTC as a
guarantee of their country's independence, as it makes it impossible
for either Russia or Iran to control its top export commodity.
Conversely, the failure of a European Union-backed consortium to
commit fully to the proposed Nabucco gas pipeline has limited the
European presence in Azerbaijan's economy. As a result, much of
Azerbaijan's growing gas exports now go to Russia.
Azerbaijan was until recently one of the world's fastest-growing
economies, with GDP having grown from $1.2 billion in 1992 to more
than $54 billion today, an astounding 4,533 percent increase. The
country's natural resource riches helped Azerbaijan surmount the
global financial crisis, in sharp contrast to its rival, Armenia,
which is still trying to recover. Coinciding with the rise in global
oil prices in 2006, growing oil production at the
Azeri-Chirag-Guneshli oil field and the discovery of the large Shah
Deniz gas field have provided Azerbaijan with a windfall of energy
revenues. Baku has used this income to finance a major military
buildup. In 2011, Azerbaijan became the second-highest defense spender
in the Commonwealth of Independent States (CIS) -- only Russia has a
bigger defense budget among the former Soviet republics.
Azerbaijan has strived to use its energy resources and diplomatic ties
with major world powers to deal with its challenging neighborhood. So
far it has failed to recover the lands occupied by Armenian troops or
resolve its tensions with Iran, but Baku continues to accrue economic
and diplomatic influence that buffers these tensions.
Foreign Policy
A defining feature of Azerbaijan's foreign policy since independence
has been its territorial dispute with its western neighbor, Armenia.
The two countries fought a brutal war in the early 1990s over the
Nagorno-Karabakh region. The conflict continues to fester, as
Nagorno-Karabakh's status remains uncertain, leaving both nations
locked in a dangerous face-off driven by deep-seated grievances as
well as competing territorial and historical claims.
At the heart of the Nagorno-Karabakh conflict is the issue of control
between ethnic Armenians and Azeris over the landlocked region.
Fighting erupted in 1988 when separatist authorities in
Nagorno-Karabakh, a semi-autonomous enclave located inside Azerbaijan
but with a predominantly ethnic Armenian population, claimed
independence from the Azerbaijan state and then sought to join
Armenia. The Karabakh Armenians have been in full control of the
territory and its surrounding regions since 1994, when the defeated
Azerbaijanis, in political and economic disarray and with inadequate
military capabilities, accepted a cease-fire that left the Armenian
military occupying the entire region as well as additional surrounding
Azerbaijani territory.
Over the years, various international mediators have failed to resolve
the conflict. The Organization for Security and Cooperation in Europe
(OSCE) established what is known as the Minsk Group more than a decade
ago to encourage a negotiated resolution that would culminate in a
peace conference. Co-chaired by France, Russia and the United States,
the group also includes Belarus, Germany, Italy, Sweden, Finland and
Turkey, as well as Armenia, Azerbaijan and, on a rotating basis, the
OSCE Troika.
The Basic Principles for a Peaceful Settlement of the Nagorno-Karabakh
conflict, known as the Madrid principles, were presented to Armenia
and Azerbaijan by the foreign ministers of France and Russia and the
U.S. assistant secretary of state in the Spanish capital in November
2007. The document envisages a stage-by-stage resolution of the
conflict, starting with the gradual liberation of parts of Azerbaijani
territory bordering Nagorno-Karabakh that were occupied by Karabakh
Armenian forces during the 1991-1994 war. In return, Nagorno-Karabakh
would retain a corridor to Armenia and be able to determine its final
status in a future referendum.
The pro-Armenian separatists in Nagorno-Karabakh insist that the
region be recognized either as an independent entity or as part of
Armenia. The Azerbaijani authorities maintain that Nagorno-Karabakh
remains a part of Azerbaijan and must be recognized as such. They also
demand that Armenian forces withdraw from surrounding occupied
regions, and that the hundreds of thousands of ethnic Azeris who fled
Nagorno-Karabakh and the surrounding areas during the fighting be
allowed to return.
Russia's pre-eminent role in the South Caucasus has also strongly
shaped Azerbaijan's strategic posture, with the Azerbaijani government
seeking to develop good ties with the West without overly antagonizing
Russia. Strong economic and social ties between the two countries'
populations have also helped cushion the sometimes tense political
ties between the two governments.
Russia is Azerbaijan's sixth-largest trade partner, with annual
bilateral trade approaching $500 million. Azerbaijan has recently
become a major natural gas exporter to Russia following an agreement
signed in 2009 between the State Oil Company of Azerbaijan (SOCAR) and
Gazprom, Russia's leading energy conglomerate. In 2010, for the first
time, post-Soviet Azerbaijan exported some 0.8 billion cubic meters of
gas to Russia. Last year, gas exports to Russia rose to 1.5 billion
cubic meters a year. In January of this year, the two sides signed an
agreement to double gas purchases to 3 billion cubic meters per year,
allowing Russia to surpass Georgia as Azerbaijan's second-largest
natural gas customer, after Turkey.
Unlike their Western counterparts, Russian officials do not press Baku
to improve its human rights policies. But political-military relations
have been strained due to Moscow's closer ties with Armenia as well as
Baku's suspicions that the Kremlin wants to see the Nagorno-Karabakh
conflict continue indefinitely as a means of ensuring Russia's
continued pre-eminence in the region through arms sales and diplomatic
influence. A major factor constraining Azerbaijan's military options
regarding Nagorno-Karabakh is the possibility of Russian military
intervention on Armenia's behalf.
Another regional challenge for Baku is its tense relations with
Tehran. Azerbaijan has suffered from Iranian threats since it gained
independence in 1991, but these have sharply escalated in recent
months. A large number of ethnic Azeris reside in northern Iran, also
known as "Southern Azerbaijan," constituting one of Iran's largest
ethnic groups. The region's population of around 17 million is
significantly more religious than the secular population of
Azerbaijan. Given these cultural differences, and the fact that
Azerbaijan's current population is only 9 million, the Azerbaijani
government has little interest in reunifying the Azeri nation.
Nevertheless, the Iranian government is engaged in an active effort to
curtail Azerbaijan's influence in the region, such as by banning
education in the Azeri language.
As a result of its deepening ties with Israel, most clearly
illustrated by a $1.6 billion arms deal signed in February, Azerbaijan
has also found itself caught in the middle of Iran and Israel's
escalating cold war. Tehran recently recalled the Iranian ambassador
to Azerbaijan because of a visit to Baku by the Israeli president and
also allegedly tried to orchestrate the assassination of the Israeli
ambassador to Azerbaijan. Iran further claims that Azerbaijan has
served as a transit route for Mossad agents to assassinate several
Iranian nuclear scientists, and in August 2012 began requiring that
Azerbaijanis acquire a visa to enter Iran.
Recent Iranian provocations toward Azerbaijan have ranged from flying
a warplane through Azerbaijani airspace to threatening strikes against
Azerbaijan in the event it allowed the U.S. to use Azerbaijani
territory in an attack on Iran. The Azerbaijani authorities have
responded by arresting a number of alleged Iranian spies over the past
year, while also conducting joint military exercises with Turkish
forces in the aftermath of the violation of its airspace, which
appears to have deterred further Iranian military incursions.
Azerbaijani officials have argued that the Israeli arms purchase was
directed against Armenia not Iran, and that they would never allow
foreign governments to use their territory to launch strikes against
Iran. Moreover, Azerbaijan is unlikely to openly support an Israeli
strike on Iran since it would be vulnerable to a range of Iranian
retaliatory measures. Even so, in addition to drones, air defense
systems and a missile defense radar, Israel is also providing
Azerbaijan with Gabriel anti-ship missiles. Given that Armenia does
not have a navy, these weapons are more likely intended for
contingency plans against Iranian warships in the Caspian, where
Azerbaijan and Iran have a disputed maritime boundary and also
disagree over the legality of trans-Caspian energy pipelines.
In addition to tensions with Tehran in the Caspian, Azerbaijan also
faces competing Caspian claims from Turkmenistan. Baku and Ashgabat
have wrestled over ownership of three Caspian oilfields ever since the
collapse of the Soviet Union. Two of the three fields are now among
Azerbaijan's energy gems: the Azeri field (claimed by Turkmenistan as
Omar) and the Chirag field (claimed by Turkmenistan as Osman), with a
total of 620 million tons in oil reserves, both developed by a BP-led
consortium. The third disputed field, the Kyapaz field controlled by
Turkmenistan and claimed by Baku as Serdar, has about 50 million tons
of oil reserves and is still undeveloped.
Perhaps Azerbaijan's closest regional partner is Turkey, not
surprising given that the Azeris are a Turkic people. The two
countries share cultural, religious and ethnic ties, and are
frequently described as "one nationality and two governments." In
December 2010, Azerbaijan and Turkey signed a mutual defense
agreement, which states that the two countries will support each other
`using all possibilities' in the case of a military attack or
`aggression' against the other. However, it does not allow Turkey, a
NATO member, to establish military bases on Azerbaijan's territory.
Furthermore, Turkey is not required to respond immediately to military
aggression against Azerbaijan, but only after `additional
consultations.' Even so, this bilateral accord is especially important
given Azerbaijan's exclusion from both NATO and the Moscow-led
Collective Security Treaty Organization (CSTO), which includes Armenia
as well as other former Soviet states.
Turkey and Azerbaijan are further bound by extremely strong economic
ties. The two countries are both attractive emerging markets, and
Turkey, an EU member candidate, provides Western Europe with a way to
access to Azerbaijan's coveted energy resources while circumventing
Russia's pipeline networks. The already existing BTC pipeline that
runs from Azerbaijan to Europe, bypassing Russia and Armenia, has
transported more than 1 billion barrels of oil to Europe since it was
completed in 2005. In June 2012, Turkish Prime Minister Recep Tayyip
Erdogan and Aliyev signed an agreement to build a $7 billion
Trans-Anatolian Natural Gas Pipeline (TANAP) that is projected to
bring 10 billion cubic meters of Azerbaijani gas to European markets
starting in 2018. Meanwhile, by 2017, the Azerbaijani national oil
company SOCAR will have about $17 billion worth of investments in
Turkey's economy, making it the single largest foreign direct investor
in the Turkish market.
The most serious source of tension between Azerbaijan and Turkey in
recent years has been Turkish efforts to reconcile with Armenia. In
October 2009, Armenia and Turkey signed protocols for reopening their
border and eliminating other tensions between the two countries, the
first major step they had taken toward improving ties in the previous
16 years. However, Azerbaijani threats to curtail gas shipments to
Turkey along with lobbying by Azerbaijani backers in Turkey have led
the Turkish parliament to condition ratification of the protocol on a
resolution of the Nagorno-Karabakh conflict.
European engagement with Azerbaijan is largely driven by questions of
energy security, with the European Union eager to tap into
Azerbaijan's energy resources, despite reservations about Baku's
record on human rights and democracy. The European Commission has
already sponsored several east-west pipeline projects, the most
important of these being the Nabucco pipeline. Currently, progress has
stalled due to the project's high cost and a tense political situation
between Turkmenistan and Azerbaijan, but Nabucco's supporters remain
hopeful that the project can be realized.
Following Azerbaijan's post-Soviet independence, the U.S. government
and American companies were eager to develop Azerbaijan's oil and gas
fields through foreign direct investment. The U.S. government also saw
Azerbaijan as an important ally in its efforts to build the
Baku-Tbilisi-Ceyhan pipeline. Nonetheless, in 1992, the United States
Congress banned direct aid to the government of Azerbaijan as a
response to the Azerbaijani blockade during the Nagorno-Karabakh War.
Azerbaijan viewed this as unfair legislation, given that Armenia had
seized and occupied portions of Azerbaijani territory.
It was only in 2002 that Congress authorized the president to waive
the prohibitions against direct U.S. military aid to Azerbaijan on
national security grounds. The move was a response to Azerbaijan's
support in the war on terror following the Sept. 11 attacks.
Azerbaijan was among the first countries to offer the United States
unconditional support in its war against terrorism, opening its
airspace to the U.S.-led Operation Enduring Freedom in Afghanistan and
providing landing and refueling support for U.S. military transports
to Afghanistan since then. Azerbaijan was also the first Muslim nation
to send its troops to serve with U.S. forces in Iraq. The United
States has subsequently sold Azerbaijan surveillance and border
security equipment under the national security waiver to the ban
against military aid.
Nevertheless, the ban on direct aid remains a serious obstacle in
relations between the two countries, especially from the Azerbaijani
perspective, as Baku objects to being discriminated against compared
with Armenia. Azerbaijan does not believe temporary waivers of the ban
are sufficient, as it leaves open the possibility that aid can be cut
off in the future. In the meantime, U.S.-Azerbaijan defense
cooperation remains mostly confined to military training.
Since the early 1990s, Azerbaijan has maintained membership in a wide
range of international organizations, including the United Nations,
the Black Sea Economic Cooperation Organization, the European Bank for
Reconstruction and Development, the Organization of the Islamic
Conference, the International Monetary Fund and the OSCE, as well as
NATO's Euro-Atlantic Partnership Council and its Partnership for Peace
program. Most recently, Azerbaijan joined the Non-Aligned Movement in
May 2011 to garner support in its confrontation with Armenia.
Azerbaijan has consistently sought to balance its foreign policy,
while refraining from committing fully to any one country or
organization. Indeed, in some instances, Azerbaijan has even sought to
cooperate with multiple partners simply to remind its interlocutors
that Azerbaijan will not cater to any one country's demands and does
not want to be beholden to any one state or organization. This
strategy will continue to shape Azerbaijan's foreign policy decisions
in the future.
Defense Policy
In June 2010, the Azerbaijani Parliament approved a military doctrine
that identified the major threats facing the country as Armenia's
occupation of Nagorno-Karabakh and surrounding buffer areas, regional
military imbalances, extremist religious movements and claims of
neighboring states on Azerbaijan's territory. The doctrine affirms
that Azerbaijan will not start a military operation against any
country unless Azerbaijan is the victim of aggression, but it also
affirms Azerbaijan's right to use all necessary means to liberate its
occupied territories. Although the doctrine characterizes Armenia as
an enemy, it did not list any state as an ally. Both Georgia and
especially Turkey have close ties and mutual military and economic
commitments with Azerbaijan, but not a formal military alliance.
The doctrine also does not mention Azerbaijan's desire to integrate
into NATO, despite Azerbaijan having worked consistently with the
alliance for the past two decades to achieve greater integration with
the Euro-Atlantic community and to modernize its armed forces.
Azerbaijan joined NATO's Partnership for Peace program in 1994, which
laid the foundation for future cooperation. Since then, Azerbaijan has
contributed troops and supplies to NATO operations in Kosovo and
Afghanistan, and it has prepared multiple Individual Partnership
Action Plans. About a third of all supplies for the International
Security Assistance Force (ISAF) in Afghanistan are now transported
through Azerbaijan, which is a critical stopover point for ISAF troops
as well. Azerbaijan also currently has almost 100 of its own soldiers
deployed in Afghanistan.
But NATO's failure to intervene to prevent Russia's occupation of
Georgian territory in 2008 served as a reminder that the geography of
the South Caucasus limits the possibilities for Western military
support. Azerbaijan has since stated it has no plans to join NATO, a
stance that seeks to avoid alienating Moscow while also avoiding
NATO's requirements for civilian control of the military, democratic
oversight and other membership obstacles.
This is no coincidence, as Azerbaijan has consistently suffered from
poor civil-military relations. The military overthrew the country's
second president, and the current political leaders see another
military coup as a potential threat. For this reason, political and
familial connections can influence who is appointed to the most senior
military positions.
Despite Azerbaijan's exclusion from any multinational military
alliance, the extraordinarily rapid growth of its economy has allowed
the country to finance a sustained military buildup. Defense spending
rose from $135 million in 2003 to $3.12 billion in 2011. Azerbaijan's
current military budget, which constitutes one-fifth of the national
budget, now stands at $4.4 billion, about 6.2 percent of GDP and a 45
percent increase from 2010. This figure exceeds Armenia's entire
national budget, which in 2011 amounted to only $2.8 billion, with
$386 million, or 4.1 percent of GDP, earmarked for defense.
Azerbaijan has used much of this defense spending to make large-scale
weapons purchases, with its foreign military shopping spree
encompassing many sources, including Ukraine, Belarus, Israel, Russia,
Turkey and South Africa. As noted, Azerbaijan has developed a deep
military partnership with Israel in recent years, covering many
defensive and offensive weapons systems. Its $1.6 billion arms deal
with Israel is Azerbaijan's largest single arms purchase and includes
UAVs, anti-aircraft and missile defense systems. Traditional ally
Turkey also provides weapons and other military assistance.
Azerbaijan's main goal for now is to modernize its military, which
hitherto has relied heavily on outdated Soviet equipment. Between 2005
and 2010, Azerbaijan was second only to Algeria in purchases of T-72
tanks from Russia, Ukraine and Belarus. Azerbaijan also purchased
missile and artillery pieces from Ukraine, anti-tank guns from Belarus
and several S-300 anti-aircraft missile systems from Russia.
Over time, Azerbaijan hopes to reduce its dependence on foreign
military supplies and technologies by developing a national defense
industry, an effort that is led by the Ministry of Defense Industry,
created in 2005. In May 2011, SOCAR President Rovnag Abdullayev
announced that Azerbaijan would begin producing warships in 2013, and
a shipyard for this purpose is already under construction in Baku.
Azerbaijani leaders have repeatedly affirmed that Azerbaijan is in a
position to seize the territories disputed with Armenia if war became
necessary. Nonetheless, it is not certain that Azerbaijan would win a
future war with Armenia. On paper, Azerbaijan has a large military,
consisting of 67,000 active duty members and about 300,000 reserve
personnel. In contrast, Armenia has less than 50,000 troops. The
Azerbaijani military's major weapons systems include 339 tanks (95
T-55s and 244 T-72s), 468 armored combat vehicles (111 AIFVs and 357
APCs), 458 artillery (including Smerch rocket launchers and Tochka
tactical missiles), 187 armored combat vehicles, 41 combat aircraft,
35 helicopters and S-75, S-125/S-200, and S-300 air defense missiles.
But a recent European assessment (.pdf) found Armenia's military
better organized and more ready to fight than Azerbaijan's. Armenian
forces also have the advantage of holding the territory in dispute.
Through bilateral and CSTO arrangements, Armenia can also purchase
military equipment from Russia at discounted rates.
Finally, though Armenia's army is smaller than Azerbaijan's, its ranks
are bolstered by about 3,000 Russian-commanded troops on its
territory, and Russia could easily send additional troops to Armenia
in a crisis. In August 2012, Dmitri Medvedev, then president of
Russia, signed an agreement with Armenian President Serzh Sargsyan
extending the Russian military's lease on its Gyumri base in Armenia
until 2044. Clearly, Armenia sees Russia's military presence as a
strong deterrent to Azerbaijani aggression, especially in light of the
Georgia War, where Russian `peacekeeping' forces in Georgia's
breakaway region of South Ossetia intervened to defend the separatists
against the Georgian government.
The military balance seems even less favorable for Azerbaijan
regarding its various disputes in the Caspian. Azerbaijan has
traditionally concentrated on its land capabilities due to the
Nagorno-Karabakh dispute. Of the 67,000 active duty troops in the
country's armed forces, only 2,500 belong to the navy and 7,900 to the
air force. But since a 2008 maritime clash with Turkmenistan,
Azerbaijan has devoted considerable resources to a naval buildup and
dual-use maritime facilities to protect its Caspian oil fields. The
navy now has 39 warships, the second-largest fleet in the Caspian
after that of Russia, and has engaged in increasingly sophisticated
naval exercises.
The United States has also been seeking to build up Azerbaijan's
maritime defense and surveillance capabilities. In 2005, Azerbaijan
began participating in the U.S. European Command's Caspian Guard
Initiative (CGI), an effort to coordinate U.S. activities with
Azerbaijan and Kazakhstan in countering terrorism, nuclear
proliferation and drug and human trafficking. Through the CGI, the
Azerbaijani navy has received training in maritime special operations,
WMD detection, communication, rapid response, border control and naval
infrastructure.
Despite Azerbaijan's military buildup, various constraints limit
Baku's ability to fully exploit its military advantages. These include
uncertainties regarding the quality of Azerbaijan's forces, its lack
of formal military allies and the daunting prospect that Iran or
Russia -- or both countries -- could intervene on Armenia's behalf in
the event of an attempt by Azerbaijan to retake its occupied lands by
force.
Strategic Priorities
Azerbaijan is developing a new economic stake as well as a form of
soft power influence through its growing foreign investments. If in
the 1990s Azerbaijan's economic foreign policy focused on attracting
foreign direct investment to the country, now Azerbaijan is becoming a
major foreign investor in neighboring countries. For example, in 2011,
SOCAR became the largest foreign investor in Georgia. Azerbaijan also
provided Georgia with electricity and gas during its war with Russia
in 2008, leading Georgian President Mikhail Saakashvili to declare in
2011 that the enemy of Azerbaijan is the enemy of Georgia.
Azerbaijan also uses cultural diplomacy to reinforce its relations
with European countries, with Azerbaijani charitable organizations
having donated significant funding for the restoration of various
historical sites in Europe. For example, the Heydar Aliyev Foundation
has funded a project to restore France's Versailles Palace and the
Notre Dame Cathedral in Strasbourg. Azerbaijan has also strengthened
its efforts to boost relations with the United States by mobilizing
the large number of Azeris living there. But so far the Armenian
diaspora in the United States and Europe has been able to blunt these
efforts sufficiently to prevent any major change in current Western
policies that tend to favor Armenia in its conflict with Azerbaijan.
Meanwhile, the Azerbaijani government is seeking to diversify its
energy-based economy. Although Azerbaijan's natural gas reserves
remain plentiful, the country's oil production is peaking and is
expected to decline in the near future. This is a cause for concern,
as the national budget has become increasingly dependent on oil
revenues, with about three-quarters of the 2012 budget coming from the
State Oil Fund of Azerbaijan (SOFAZ) and taxes on oil. Baku is now
trying to strengthen Azerbaijan's status as a transit center beyond
energy, most evidently by the new Baku-Tbilisi-Kars railway. The
Azerbaijani government is also aggressively investing in a variety of
non-energy sectors in an attempt to diversify its economy.
Another concern is Azerbaijan's high levels of corruption, with
Transparency International ranking Azerbaijan 143th out of 180
countries in its 2011 corruption list. The EU and the United States
are pressing Baku to address these problems, which could cramp its
future development.
A related strategic priority for Azerbaijan is to develop its littoral
resources in the Caspian Sea, which contains the world's third-largest
reserves of oil and natural gas as well as considerable quantities of
sturgeon and other fish. But major projects are impeded by the ongoing
disagreements among the littoral states over where to delineate their
boundaries and whether to allow underwater Caspian energy pipelines.
Russia and Iran argue that all the littoral countries must approve
construction of each energy pipeline that would transit any part of
the Caspian. Their stated reason for their stance is that all five
countries could suffer from any environmental damage to the Caspian
Sea caused by future pipelines. But this position also grants them
veto rights over east-west energy pipelines that would bypass their
territory.
Azerbaijan, like the other Muslim-majority former Soviet republics,
has been surprisingly immune to the effects of the Arab Spring. Human
rights advocates argue that the current state of enforced political
and social stability in Azerbaijan may not last for long. Despite
state-enforced secularism, including a controversial ban on
headscarves, religious sentiment in the country is growing, especially
among the youth. Since the government stamps out the legitimate
nonviolent opposition, alienated Azerbaijanis may join the militant
religious opposition, which enjoys some Iranian support and could
present the most serious threat to Azerbaijan's political stability.
Most importantly, Azerbaijan's security will remain precarious until
the Nagorno-Karabakh conflict is resolved. The international outrage
that followed Aliyev's recent pardon of an Azerbaijani officer who had
killed an Armenian when they were both on a training mission in
Hungary shows how raw emotions on both sides remain. Azerbaijan and
Armenia have engaged in a costly arms race, while employing bellicose
rhetoric and expressing their obvious impatience with the Minsk Group
talks. However, a recurrence of conflict in the region would be
disastrous, completely destabilizing the South Caucasus and most
likely beyond.
Richard Weitz is a senior fellow at the Hudson Institute and a World
Politics Review senior editor. His weekly WPR column, Global Insights,
appears every Tuesday.
http://www.worldpoliticsreview.com/articles/12349/strategic-posture-review-azerbaijan
Sept 19 2012
Strategic Posture Review: Azerbaijan
By Richard Weitz, on 19 Sep 2012, Report
Despite its relatively small size, Azerbaijan has frequently been the
focus of foreign attention since it gained independence after the
collapse of the Soviet Union. This is in large part due to
Azerbaijan's sizable energy resources and pivotal location, which
provides the only viable pipeline route for Caspian Basin oil and gas
to reach the West without passing through Russia or Iran. Azerbaijan's
leaders have tried to exploit these geopolitical assets to help manage
the challenges presented by the country's volatile neighborhood, which
include a number of disputes over Caspian energy reserves, heavy
interference by outside powers and the potential for a new war between
Azerbaijan and Armenia over the disputed Nagorno-Karabakh region.
Historically, Azerbaijan and the rest of the Caucasus region were an
object of rivalry between the Persian, Ottoman and Russian empires.
Today, Russia, Iran, the United States and various European
governments continue to seek to influence Azerbaijan's foreign and
domestic policies. Since regaining its independence in 1991,
Azerbaijan has sought to balance and manipulate these rivalries while
pursuing its own regional objectives, which focus on recovering
territories occupied by Armenia, averting a war with Iran, minimizing
foreign leverage over Azerbaijan's domestic policies and establishing
Baku, the nation's capital and a major port city, as a center for
regional commerce.
By constitutional definition, Azerbaijan is a presidential republic.
Since independence, however, the country's foreign policymaking
process has been largely personalized and connected to the person of
the president. After the turbulent immediate postindependence period,
Heydar Aliyev became Azerbaijan's president in 1993 and pursued a
balanced foreign policy, both regionally and beyond. Aliyev helped
stabilize Azerbaijan's foreign relations, attract foreign direct
investment to develop the country's energy reserves and consolidate
political power in the hands of a strong presidential administration.
He presided over the so-called contract of the century in 1994 with
the Azerbaijani International Operating Company (AIOC), a consortium
that was made up of 11 U.S., European, Saudi and Japanese companies.
In keeping with Aliyev's balanced foreign policy, Russia's Lukoil
company was included in the project. This production-sharing agreement
on the Azeri-Chirag-Guneshli oil fields successfully established the
foundation for using hydrocarbon revenues to develop the Azerbaijani
economy.
Aliyev's son Ilham has held power since the elder Aliyev's death in
2003, after controversial changes to the constitution allowed Ilham to
accede to the position of president from his post as prime minister.
Presidential term limits were abolished altogether in 2009. Currently,
in the Milli Majlis, the 125-member parliament, 70 of the legislators
belong to the president's New Azerbaijan Party, with much of the media
also under the influence of the presidential administration.
Meanwhile, Azerbaijan's beleaguered political opposition is small and
divided, and the two main opposition parties, Musavat and the Popular
Front, have no representation in parliament.
Azerbaijan's unresolved conflict with Armenia over the
Nagorno-Karabakh region, which dates back to independence, remains a
major driver of Baku's -- and the region's -- international relations.
The May 1994 cease-fire with Armenia left 14 percent of Azerbaijan's
territory under Armenian occupation and some 700,000 internally
displaced Azerbaijanis with unresolved status. Their presence has
meant that even Azerbaijan's strong president cannot make major
territorial concessions without risking serious domestic political
costs. Armenia also physically separates Azerbaijan from its exclave
of Nakhchivan. In the ongoing standoff between the two neighboring
states, Armenia is supported by Iran and Russia, while Azerbaijan
enjoys backing from Turkey, Georgia and Israel.
Although Azerbaijani officials have emphasized they would like to
settle their territorial disputes with Armenia through peaceful means,
they have indicated that they cannot accept Armenian occupation of
Nagorno-Karabakh and neighboring lands indefinitely. The 2008 Georgia
War shows how these supposedly `frozen conflicts' in the former Soviet
Union can abruptly thaw and explode, highlighting the danger
represented by the current impasse over Nagorno-Karabakh.
In addition to its conflict with Armenia, Azerbaijan faces threats
from Iran and disputes over the legal status of the Caspian Sea.
Although Azerbaijan shares extensive historical, ethnic and cultural
ties with Iran, since 1991 these connections have proved to be trouble
for the two countries' relations. Iran is home to a large Azeri
population, and Azerbaijan's independence rekindled Tehran's
historical fears about separatist and independence movements there.
Azerbaijan's strongly secular government, its general orientation
toward the West and, at times, its energy and military policies have
further aroused Iranian hostility. For example, Baku has in the past
bowed to pressure from the United States to exclude Iran from proposed
pipelines. As one of many forms of retaliation, Iran has joined with
Russia in refusing to confirm the legality of proposed trans-Caspian
pipelines to transport oil and gas through Azerbaijan to Europe and
the Mediterranean.
These disputes reflect the major role played by pipeline politics in
shaping Azerbaijan's approach to international relations, with energy
revenue constituting a significant portion of Azerbaijan's GDP. An
estimated 30 trillion cubic feet of proven gas reserves and 7 billion
barrels of proven oil reserves have given the Azerbaijani government a
powerful source of revenue and diplomatic influence. Despite
Azerbaijan's challenging security environment, the country's oil and
gas resources have continued to attract substantial foreign
investment, which has helped to boost the country's economy. In
addition to its natural energy resources, Azerbaijan also gains
diplomatic leverage from its pivotal geographic position for many
energy transport projects.
As a result, U.S. oil companies have invested heavily in Azerbaijan's
oil infrastructure, including the vital Baku-Tbilisi-Ceyhan (BTC)
pipeline, which runs from Baku through Georgia to the Turkish port of
Ceyhan. Since coming online in 2005, BTC has become Azerbaijan's main
oil-export pipeline, and Azerbaijani strategists now view the BTC as a
guarantee of their country's independence, as it makes it impossible
for either Russia or Iran to control its top export commodity.
Conversely, the failure of a European Union-backed consortium to
commit fully to the proposed Nabucco gas pipeline has limited the
European presence in Azerbaijan's economy. As a result, much of
Azerbaijan's growing gas exports now go to Russia.
Azerbaijan was until recently one of the world's fastest-growing
economies, with GDP having grown from $1.2 billion in 1992 to more
than $54 billion today, an astounding 4,533 percent increase. The
country's natural resource riches helped Azerbaijan surmount the
global financial crisis, in sharp contrast to its rival, Armenia,
which is still trying to recover. Coinciding with the rise in global
oil prices in 2006, growing oil production at the
Azeri-Chirag-Guneshli oil field and the discovery of the large Shah
Deniz gas field have provided Azerbaijan with a windfall of energy
revenues. Baku has used this income to finance a major military
buildup. In 2011, Azerbaijan became the second-highest defense spender
in the Commonwealth of Independent States (CIS) -- only Russia has a
bigger defense budget among the former Soviet republics.
Azerbaijan has strived to use its energy resources and diplomatic ties
with major world powers to deal with its challenging neighborhood. So
far it has failed to recover the lands occupied by Armenian troops or
resolve its tensions with Iran, but Baku continues to accrue economic
and diplomatic influence that buffers these tensions.
Foreign Policy
A defining feature of Azerbaijan's foreign policy since independence
has been its territorial dispute with its western neighbor, Armenia.
The two countries fought a brutal war in the early 1990s over the
Nagorno-Karabakh region. The conflict continues to fester, as
Nagorno-Karabakh's status remains uncertain, leaving both nations
locked in a dangerous face-off driven by deep-seated grievances as
well as competing territorial and historical claims.
At the heart of the Nagorno-Karabakh conflict is the issue of control
between ethnic Armenians and Azeris over the landlocked region.
Fighting erupted in 1988 when separatist authorities in
Nagorno-Karabakh, a semi-autonomous enclave located inside Azerbaijan
but with a predominantly ethnic Armenian population, claimed
independence from the Azerbaijan state and then sought to join
Armenia. The Karabakh Armenians have been in full control of the
territory and its surrounding regions since 1994, when the defeated
Azerbaijanis, in political and economic disarray and with inadequate
military capabilities, accepted a cease-fire that left the Armenian
military occupying the entire region as well as additional surrounding
Azerbaijani territory.
Over the years, various international mediators have failed to resolve
the conflict. The Organization for Security and Cooperation in Europe
(OSCE) established what is known as the Minsk Group more than a decade
ago to encourage a negotiated resolution that would culminate in a
peace conference. Co-chaired by France, Russia and the United States,
the group also includes Belarus, Germany, Italy, Sweden, Finland and
Turkey, as well as Armenia, Azerbaijan and, on a rotating basis, the
OSCE Troika.
The Basic Principles for a Peaceful Settlement of the Nagorno-Karabakh
conflict, known as the Madrid principles, were presented to Armenia
and Azerbaijan by the foreign ministers of France and Russia and the
U.S. assistant secretary of state in the Spanish capital in November
2007. The document envisages a stage-by-stage resolution of the
conflict, starting with the gradual liberation of parts of Azerbaijani
territory bordering Nagorno-Karabakh that were occupied by Karabakh
Armenian forces during the 1991-1994 war. In return, Nagorno-Karabakh
would retain a corridor to Armenia and be able to determine its final
status in a future referendum.
The pro-Armenian separatists in Nagorno-Karabakh insist that the
region be recognized either as an independent entity or as part of
Armenia. The Azerbaijani authorities maintain that Nagorno-Karabakh
remains a part of Azerbaijan and must be recognized as such. They also
demand that Armenian forces withdraw from surrounding occupied
regions, and that the hundreds of thousands of ethnic Azeris who fled
Nagorno-Karabakh and the surrounding areas during the fighting be
allowed to return.
Russia's pre-eminent role in the South Caucasus has also strongly
shaped Azerbaijan's strategic posture, with the Azerbaijani government
seeking to develop good ties with the West without overly antagonizing
Russia. Strong economic and social ties between the two countries'
populations have also helped cushion the sometimes tense political
ties between the two governments.
Russia is Azerbaijan's sixth-largest trade partner, with annual
bilateral trade approaching $500 million. Azerbaijan has recently
become a major natural gas exporter to Russia following an agreement
signed in 2009 between the State Oil Company of Azerbaijan (SOCAR) and
Gazprom, Russia's leading energy conglomerate. In 2010, for the first
time, post-Soviet Azerbaijan exported some 0.8 billion cubic meters of
gas to Russia. Last year, gas exports to Russia rose to 1.5 billion
cubic meters a year. In January of this year, the two sides signed an
agreement to double gas purchases to 3 billion cubic meters per year,
allowing Russia to surpass Georgia as Azerbaijan's second-largest
natural gas customer, after Turkey.
Unlike their Western counterparts, Russian officials do not press Baku
to improve its human rights policies. But political-military relations
have been strained due to Moscow's closer ties with Armenia as well as
Baku's suspicions that the Kremlin wants to see the Nagorno-Karabakh
conflict continue indefinitely as a means of ensuring Russia's
continued pre-eminence in the region through arms sales and diplomatic
influence. A major factor constraining Azerbaijan's military options
regarding Nagorno-Karabakh is the possibility of Russian military
intervention on Armenia's behalf.
Another regional challenge for Baku is its tense relations with
Tehran. Azerbaijan has suffered from Iranian threats since it gained
independence in 1991, but these have sharply escalated in recent
months. A large number of ethnic Azeris reside in northern Iran, also
known as "Southern Azerbaijan," constituting one of Iran's largest
ethnic groups. The region's population of around 17 million is
significantly more religious than the secular population of
Azerbaijan. Given these cultural differences, and the fact that
Azerbaijan's current population is only 9 million, the Azerbaijani
government has little interest in reunifying the Azeri nation.
Nevertheless, the Iranian government is engaged in an active effort to
curtail Azerbaijan's influence in the region, such as by banning
education in the Azeri language.
As a result of its deepening ties with Israel, most clearly
illustrated by a $1.6 billion arms deal signed in February, Azerbaijan
has also found itself caught in the middle of Iran and Israel's
escalating cold war. Tehran recently recalled the Iranian ambassador
to Azerbaijan because of a visit to Baku by the Israeli president and
also allegedly tried to orchestrate the assassination of the Israeli
ambassador to Azerbaijan. Iran further claims that Azerbaijan has
served as a transit route for Mossad agents to assassinate several
Iranian nuclear scientists, and in August 2012 began requiring that
Azerbaijanis acquire a visa to enter Iran.
Recent Iranian provocations toward Azerbaijan have ranged from flying
a warplane through Azerbaijani airspace to threatening strikes against
Azerbaijan in the event it allowed the U.S. to use Azerbaijani
territory in an attack on Iran. The Azerbaijani authorities have
responded by arresting a number of alleged Iranian spies over the past
year, while also conducting joint military exercises with Turkish
forces in the aftermath of the violation of its airspace, which
appears to have deterred further Iranian military incursions.
Azerbaijani officials have argued that the Israeli arms purchase was
directed against Armenia not Iran, and that they would never allow
foreign governments to use their territory to launch strikes against
Iran. Moreover, Azerbaijan is unlikely to openly support an Israeli
strike on Iran since it would be vulnerable to a range of Iranian
retaliatory measures. Even so, in addition to drones, air defense
systems and a missile defense radar, Israel is also providing
Azerbaijan with Gabriel anti-ship missiles. Given that Armenia does
not have a navy, these weapons are more likely intended for
contingency plans against Iranian warships in the Caspian, where
Azerbaijan and Iran have a disputed maritime boundary and also
disagree over the legality of trans-Caspian energy pipelines.
In addition to tensions with Tehran in the Caspian, Azerbaijan also
faces competing Caspian claims from Turkmenistan. Baku and Ashgabat
have wrestled over ownership of three Caspian oilfields ever since the
collapse of the Soviet Union. Two of the three fields are now among
Azerbaijan's energy gems: the Azeri field (claimed by Turkmenistan as
Omar) and the Chirag field (claimed by Turkmenistan as Osman), with a
total of 620 million tons in oil reserves, both developed by a BP-led
consortium. The third disputed field, the Kyapaz field controlled by
Turkmenistan and claimed by Baku as Serdar, has about 50 million tons
of oil reserves and is still undeveloped.
Perhaps Azerbaijan's closest regional partner is Turkey, not
surprising given that the Azeris are a Turkic people. The two
countries share cultural, religious and ethnic ties, and are
frequently described as "one nationality and two governments." In
December 2010, Azerbaijan and Turkey signed a mutual defense
agreement, which states that the two countries will support each other
`using all possibilities' in the case of a military attack or
`aggression' against the other. However, it does not allow Turkey, a
NATO member, to establish military bases on Azerbaijan's territory.
Furthermore, Turkey is not required to respond immediately to military
aggression against Azerbaijan, but only after `additional
consultations.' Even so, this bilateral accord is especially important
given Azerbaijan's exclusion from both NATO and the Moscow-led
Collective Security Treaty Organization (CSTO), which includes Armenia
as well as other former Soviet states.
Turkey and Azerbaijan are further bound by extremely strong economic
ties. The two countries are both attractive emerging markets, and
Turkey, an EU member candidate, provides Western Europe with a way to
access to Azerbaijan's coveted energy resources while circumventing
Russia's pipeline networks. The already existing BTC pipeline that
runs from Azerbaijan to Europe, bypassing Russia and Armenia, has
transported more than 1 billion barrels of oil to Europe since it was
completed in 2005. In June 2012, Turkish Prime Minister Recep Tayyip
Erdogan and Aliyev signed an agreement to build a $7 billion
Trans-Anatolian Natural Gas Pipeline (TANAP) that is projected to
bring 10 billion cubic meters of Azerbaijani gas to European markets
starting in 2018. Meanwhile, by 2017, the Azerbaijani national oil
company SOCAR will have about $17 billion worth of investments in
Turkey's economy, making it the single largest foreign direct investor
in the Turkish market.
The most serious source of tension between Azerbaijan and Turkey in
recent years has been Turkish efforts to reconcile with Armenia. In
October 2009, Armenia and Turkey signed protocols for reopening their
border and eliminating other tensions between the two countries, the
first major step they had taken toward improving ties in the previous
16 years. However, Azerbaijani threats to curtail gas shipments to
Turkey along with lobbying by Azerbaijani backers in Turkey have led
the Turkish parliament to condition ratification of the protocol on a
resolution of the Nagorno-Karabakh conflict.
European engagement with Azerbaijan is largely driven by questions of
energy security, with the European Union eager to tap into
Azerbaijan's energy resources, despite reservations about Baku's
record on human rights and democracy. The European Commission has
already sponsored several east-west pipeline projects, the most
important of these being the Nabucco pipeline. Currently, progress has
stalled due to the project's high cost and a tense political situation
between Turkmenistan and Azerbaijan, but Nabucco's supporters remain
hopeful that the project can be realized.
Following Azerbaijan's post-Soviet independence, the U.S. government
and American companies were eager to develop Azerbaijan's oil and gas
fields through foreign direct investment. The U.S. government also saw
Azerbaijan as an important ally in its efforts to build the
Baku-Tbilisi-Ceyhan pipeline. Nonetheless, in 1992, the United States
Congress banned direct aid to the government of Azerbaijan as a
response to the Azerbaijani blockade during the Nagorno-Karabakh War.
Azerbaijan viewed this as unfair legislation, given that Armenia had
seized and occupied portions of Azerbaijani territory.
It was only in 2002 that Congress authorized the president to waive
the prohibitions against direct U.S. military aid to Azerbaijan on
national security grounds. The move was a response to Azerbaijan's
support in the war on terror following the Sept. 11 attacks.
Azerbaijan was among the first countries to offer the United States
unconditional support in its war against terrorism, opening its
airspace to the U.S.-led Operation Enduring Freedom in Afghanistan and
providing landing and refueling support for U.S. military transports
to Afghanistan since then. Azerbaijan was also the first Muslim nation
to send its troops to serve with U.S. forces in Iraq. The United
States has subsequently sold Azerbaijan surveillance and border
security equipment under the national security waiver to the ban
against military aid.
Nevertheless, the ban on direct aid remains a serious obstacle in
relations between the two countries, especially from the Azerbaijani
perspective, as Baku objects to being discriminated against compared
with Armenia. Azerbaijan does not believe temporary waivers of the ban
are sufficient, as it leaves open the possibility that aid can be cut
off in the future. In the meantime, U.S.-Azerbaijan defense
cooperation remains mostly confined to military training.
Since the early 1990s, Azerbaijan has maintained membership in a wide
range of international organizations, including the United Nations,
the Black Sea Economic Cooperation Organization, the European Bank for
Reconstruction and Development, the Organization of the Islamic
Conference, the International Monetary Fund and the OSCE, as well as
NATO's Euro-Atlantic Partnership Council and its Partnership for Peace
program. Most recently, Azerbaijan joined the Non-Aligned Movement in
May 2011 to garner support in its confrontation with Armenia.
Azerbaijan has consistently sought to balance its foreign policy,
while refraining from committing fully to any one country or
organization. Indeed, in some instances, Azerbaijan has even sought to
cooperate with multiple partners simply to remind its interlocutors
that Azerbaijan will not cater to any one country's demands and does
not want to be beholden to any one state or organization. This
strategy will continue to shape Azerbaijan's foreign policy decisions
in the future.
Defense Policy
In June 2010, the Azerbaijani Parliament approved a military doctrine
that identified the major threats facing the country as Armenia's
occupation of Nagorno-Karabakh and surrounding buffer areas, regional
military imbalances, extremist religious movements and claims of
neighboring states on Azerbaijan's territory. The doctrine affirms
that Azerbaijan will not start a military operation against any
country unless Azerbaijan is the victim of aggression, but it also
affirms Azerbaijan's right to use all necessary means to liberate its
occupied territories. Although the doctrine characterizes Armenia as
an enemy, it did not list any state as an ally. Both Georgia and
especially Turkey have close ties and mutual military and economic
commitments with Azerbaijan, but not a formal military alliance.
The doctrine also does not mention Azerbaijan's desire to integrate
into NATO, despite Azerbaijan having worked consistently with the
alliance for the past two decades to achieve greater integration with
the Euro-Atlantic community and to modernize its armed forces.
Azerbaijan joined NATO's Partnership for Peace program in 1994, which
laid the foundation for future cooperation. Since then, Azerbaijan has
contributed troops and supplies to NATO operations in Kosovo and
Afghanistan, and it has prepared multiple Individual Partnership
Action Plans. About a third of all supplies for the International
Security Assistance Force (ISAF) in Afghanistan are now transported
through Azerbaijan, which is a critical stopover point for ISAF troops
as well. Azerbaijan also currently has almost 100 of its own soldiers
deployed in Afghanistan.
But NATO's failure to intervene to prevent Russia's occupation of
Georgian territory in 2008 served as a reminder that the geography of
the South Caucasus limits the possibilities for Western military
support. Azerbaijan has since stated it has no plans to join NATO, a
stance that seeks to avoid alienating Moscow while also avoiding
NATO's requirements for civilian control of the military, democratic
oversight and other membership obstacles.
This is no coincidence, as Azerbaijan has consistently suffered from
poor civil-military relations. The military overthrew the country's
second president, and the current political leaders see another
military coup as a potential threat. For this reason, political and
familial connections can influence who is appointed to the most senior
military positions.
Despite Azerbaijan's exclusion from any multinational military
alliance, the extraordinarily rapid growth of its economy has allowed
the country to finance a sustained military buildup. Defense spending
rose from $135 million in 2003 to $3.12 billion in 2011. Azerbaijan's
current military budget, which constitutes one-fifth of the national
budget, now stands at $4.4 billion, about 6.2 percent of GDP and a 45
percent increase from 2010. This figure exceeds Armenia's entire
national budget, which in 2011 amounted to only $2.8 billion, with
$386 million, or 4.1 percent of GDP, earmarked for defense.
Azerbaijan has used much of this defense spending to make large-scale
weapons purchases, with its foreign military shopping spree
encompassing many sources, including Ukraine, Belarus, Israel, Russia,
Turkey and South Africa. As noted, Azerbaijan has developed a deep
military partnership with Israel in recent years, covering many
defensive and offensive weapons systems. Its $1.6 billion arms deal
with Israel is Azerbaijan's largest single arms purchase and includes
UAVs, anti-aircraft and missile defense systems. Traditional ally
Turkey also provides weapons and other military assistance.
Azerbaijan's main goal for now is to modernize its military, which
hitherto has relied heavily on outdated Soviet equipment. Between 2005
and 2010, Azerbaijan was second only to Algeria in purchases of T-72
tanks from Russia, Ukraine and Belarus. Azerbaijan also purchased
missile and artillery pieces from Ukraine, anti-tank guns from Belarus
and several S-300 anti-aircraft missile systems from Russia.
Over time, Azerbaijan hopes to reduce its dependence on foreign
military supplies and technologies by developing a national defense
industry, an effort that is led by the Ministry of Defense Industry,
created in 2005. In May 2011, SOCAR President Rovnag Abdullayev
announced that Azerbaijan would begin producing warships in 2013, and
a shipyard for this purpose is already under construction in Baku.
Azerbaijani leaders have repeatedly affirmed that Azerbaijan is in a
position to seize the territories disputed with Armenia if war became
necessary. Nonetheless, it is not certain that Azerbaijan would win a
future war with Armenia. On paper, Azerbaijan has a large military,
consisting of 67,000 active duty members and about 300,000 reserve
personnel. In contrast, Armenia has less than 50,000 troops. The
Azerbaijani military's major weapons systems include 339 tanks (95
T-55s and 244 T-72s), 468 armored combat vehicles (111 AIFVs and 357
APCs), 458 artillery (including Smerch rocket launchers and Tochka
tactical missiles), 187 armored combat vehicles, 41 combat aircraft,
35 helicopters and S-75, S-125/S-200, and S-300 air defense missiles.
But a recent European assessment (.pdf) found Armenia's military
better organized and more ready to fight than Azerbaijan's. Armenian
forces also have the advantage of holding the territory in dispute.
Through bilateral and CSTO arrangements, Armenia can also purchase
military equipment from Russia at discounted rates.
Finally, though Armenia's army is smaller than Azerbaijan's, its ranks
are bolstered by about 3,000 Russian-commanded troops on its
territory, and Russia could easily send additional troops to Armenia
in a crisis. In August 2012, Dmitri Medvedev, then president of
Russia, signed an agreement with Armenian President Serzh Sargsyan
extending the Russian military's lease on its Gyumri base in Armenia
until 2044. Clearly, Armenia sees Russia's military presence as a
strong deterrent to Azerbaijani aggression, especially in light of the
Georgia War, where Russian `peacekeeping' forces in Georgia's
breakaway region of South Ossetia intervened to defend the separatists
against the Georgian government.
The military balance seems even less favorable for Azerbaijan
regarding its various disputes in the Caspian. Azerbaijan has
traditionally concentrated on its land capabilities due to the
Nagorno-Karabakh dispute. Of the 67,000 active duty troops in the
country's armed forces, only 2,500 belong to the navy and 7,900 to the
air force. But since a 2008 maritime clash with Turkmenistan,
Azerbaijan has devoted considerable resources to a naval buildup and
dual-use maritime facilities to protect its Caspian oil fields. The
navy now has 39 warships, the second-largest fleet in the Caspian
after that of Russia, and has engaged in increasingly sophisticated
naval exercises.
The United States has also been seeking to build up Azerbaijan's
maritime defense and surveillance capabilities. In 2005, Azerbaijan
began participating in the U.S. European Command's Caspian Guard
Initiative (CGI), an effort to coordinate U.S. activities with
Azerbaijan and Kazakhstan in countering terrorism, nuclear
proliferation and drug and human trafficking. Through the CGI, the
Azerbaijani navy has received training in maritime special operations,
WMD detection, communication, rapid response, border control and naval
infrastructure.
Despite Azerbaijan's military buildup, various constraints limit
Baku's ability to fully exploit its military advantages. These include
uncertainties regarding the quality of Azerbaijan's forces, its lack
of formal military allies and the daunting prospect that Iran or
Russia -- or both countries -- could intervene on Armenia's behalf in
the event of an attempt by Azerbaijan to retake its occupied lands by
force.
Strategic Priorities
Azerbaijan is developing a new economic stake as well as a form of
soft power influence through its growing foreign investments. If in
the 1990s Azerbaijan's economic foreign policy focused on attracting
foreign direct investment to the country, now Azerbaijan is becoming a
major foreign investor in neighboring countries. For example, in 2011,
SOCAR became the largest foreign investor in Georgia. Azerbaijan also
provided Georgia with electricity and gas during its war with Russia
in 2008, leading Georgian President Mikhail Saakashvili to declare in
2011 that the enemy of Azerbaijan is the enemy of Georgia.
Azerbaijan also uses cultural diplomacy to reinforce its relations
with European countries, with Azerbaijani charitable organizations
having donated significant funding for the restoration of various
historical sites in Europe. For example, the Heydar Aliyev Foundation
has funded a project to restore France's Versailles Palace and the
Notre Dame Cathedral in Strasbourg. Azerbaijan has also strengthened
its efforts to boost relations with the United States by mobilizing
the large number of Azeris living there. But so far the Armenian
diaspora in the United States and Europe has been able to blunt these
efforts sufficiently to prevent any major change in current Western
policies that tend to favor Armenia in its conflict with Azerbaijan.
Meanwhile, the Azerbaijani government is seeking to diversify its
energy-based economy. Although Azerbaijan's natural gas reserves
remain plentiful, the country's oil production is peaking and is
expected to decline in the near future. This is a cause for concern,
as the national budget has become increasingly dependent on oil
revenues, with about three-quarters of the 2012 budget coming from the
State Oil Fund of Azerbaijan (SOFAZ) and taxes on oil. Baku is now
trying to strengthen Azerbaijan's status as a transit center beyond
energy, most evidently by the new Baku-Tbilisi-Kars railway. The
Azerbaijani government is also aggressively investing in a variety of
non-energy sectors in an attempt to diversify its economy.
Another concern is Azerbaijan's high levels of corruption, with
Transparency International ranking Azerbaijan 143th out of 180
countries in its 2011 corruption list. The EU and the United States
are pressing Baku to address these problems, which could cramp its
future development.
A related strategic priority for Azerbaijan is to develop its littoral
resources in the Caspian Sea, which contains the world's third-largest
reserves of oil and natural gas as well as considerable quantities of
sturgeon and other fish. But major projects are impeded by the ongoing
disagreements among the littoral states over where to delineate their
boundaries and whether to allow underwater Caspian energy pipelines.
Russia and Iran argue that all the littoral countries must approve
construction of each energy pipeline that would transit any part of
the Caspian. Their stated reason for their stance is that all five
countries could suffer from any environmental damage to the Caspian
Sea caused by future pipelines. But this position also grants them
veto rights over east-west energy pipelines that would bypass their
territory.
Azerbaijan, like the other Muslim-majority former Soviet republics,
has been surprisingly immune to the effects of the Arab Spring. Human
rights advocates argue that the current state of enforced political
and social stability in Azerbaijan may not last for long. Despite
state-enforced secularism, including a controversial ban on
headscarves, religious sentiment in the country is growing, especially
among the youth. Since the government stamps out the legitimate
nonviolent opposition, alienated Azerbaijanis may join the militant
religious opposition, which enjoys some Iranian support and could
present the most serious threat to Azerbaijan's political stability.
Most importantly, Azerbaijan's security will remain precarious until
the Nagorno-Karabakh conflict is resolved. The international outrage
that followed Aliyev's recent pardon of an Azerbaijani officer who had
killed an Armenian when they were both on a training mission in
Hungary shows how raw emotions on both sides remain. Azerbaijan and
Armenia have engaged in a costly arms race, while employing bellicose
rhetoric and expressing their obvious impatience with the Minsk Group
talks. However, a recurrence of conflict in the region would be
disastrous, completely destabilizing the South Caucasus and most
likely beyond.
Richard Weitz is a senior fellow at the Hudson Institute and a World
Politics Review senior editor. His weekly WPR column, Global Insights,
appears every Tuesday.
http://www.worldpoliticsreview.com/articles/12349/strategic-posture-review-azerbaijan