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GLOBAL INSIGHTS: PUTIN'S BAKU VISIT HIGHLIGHTS COMPLEX RUSSIA-AZERBAIJAN TIES
World Politics Review
Aug 20 2013
By Richard Weitz, on 20 Aug 2013, Column
On Aug. 13, Vladimir Putin made his first visit to Baku in seven years,
marking only his third trip to Azerbaijan as president of Russia-a
gap reflecting the complex and sometimes strained relationship between
Moscow and Baku. The two have grown apart due to Russia's closer ties
with Armenia as well as Azerbaijan's westward-oriented energy focus.
Azerbaijan's leaders have been trying to leverage their country's
pivotal location, energy resources and other assets to help manage
their volatile neighborhood. Meanwhile, they are pursuing their own
regional objectives, which focus on recovering territories occupied by
Armenia, averting a war with Iran while countering Iranian subversion,
minimizing foreign leverage over Azerbaijan's domestic policies
and establishing Baku, the national capital and a major port city,
as a center for regional commerce. A key element of this effort
is Azerbaijan's pursuit of a balanced foreign policy toward other
countries.
The Azerbaijani government has sought to maintain good relations with
Russia even while developing ties with Western governments. Russia
is Azerbaijan's second-largest trading partner, after Italy, with
Russian-Azerbaijani trade amounting to $3.4 billion last year. The
corresponding figure for January-May of this year showed 50 percent
growth over the same period in 2012. According to Putin, more than 70
Russian regions have close business ties with Azerbaijan, and more
than 500 Russian companies operate in automobiles, energy, finance,
health care and other important sectors of the Azerbaijani economy.
Since 2009, Azerbaijan has been a major natural gas exporter to Russia
through an agreement between the State Oil Company of Azerbaijan
Republic (SOCAR) and Gazprom, Russia's leading energy conglomerate.
In his opening statement on the Baku trip, Putin singled out
humanitarian ties as "the most important aspect" of Azerbaijani-Russian
relations. He praised the Azerbaijani government for promoting Russian
language instruction in schools and welcoming Russian universities to
set up campuses in Azerbaijan. The two countries will continue these
efforts through a new two-year Program for Humanitarian Cooperation
that will run through 2015.
Social ties between the two countries run deep. Many Azerbaijanis
live in Russia and vice versa. Russia's Azerbaijanis have played a
very active role in developing Russia's economy as well as supporting
economic ties between Russia and Azerbaijan. According to Putin, more
than 1 million Azerbaijani citizens work in Russia, while another
million ethnic Azerbaijanis have Russian citizenship. The owner of
Lukoil is an ethnic Azerbaijani, for instance, and another ethnic
Azerbaijani who holds Russian citizenship, Rustam Ibrahimbegov, is
contemplating running in Azerbaijan's upcoming presidential election.
Several hundred thousand ethnic Russians work in Azerbaijan.
Nonetheless, Russian-Azerbaijani economic relations would be even
larger if bilateral energy ties had developed the way Russia planned.
Western companies have a considerably larger role in Azerbaijan's
energy sector than their Russian counterparts. The only Russian
energy company that now has large presence on the ground is privately
held Lukoil, which owns a network of gas stations in Azerbaijan
and is developing the Shah Deniz Caspian Sea gas field. For a while
it appeared that Russia's state gas monopoly, Gazprom, had secured
almost all of Azerbaijan's gas exports, but the deal was only partially
implemented. In 2012, Azerbaijan delivered 1.55 billion cubic meters of
natural gas to Russia, half the desired amount. Meanwhile, Azerbaijan
recently committed to send most of its 1 trillion cubic meters in
gas reserves through a new pipeline to Europe from 2019.
Russia's state-owned Rosneft oil company and SOCAR signed a cooperation
agreement during Putin's visit, but concrete oil and gas deals were
lacking other than an agreement for joint use of certain terminals
and pipelines. In May, Russia ceased importing oil through the
Baku-Novorossiysk pipeline due to Azerbaijan's steady reductions
in oil deliveries, reflecting the country's declining overall oil
production. Russia's state-run oil pipeline operator, Transneft, was
losing money because the pipeline was operating at less than half
its planned capacity. Rosneft has yet to acquire its desired stake
in the Apsheron gas field in the Caspian Sea.
Russia recently confirmed a large arms deal with Azerbaijan, whose
military has many Russian and Soviet weapons systems. Nevertheless,
the two countries recently declined to renew Russia's lease of
Azerbaijan's early warning radar station at Gabala. Meanwhile, the
Russian military has reinforced its main Armenian base in Gyumri,
which is under a decades-long lease, and continues via the Collective
Security Treaty Organization to sell weapons at discounted prices to
Armenia, Azerbaijan's main adversary.
Azerbaijan's location at the crossroads of Iran, Russia, the Middle
East and Europe has constrained Baku's ability to pursue an independent
foreign policy. Azerbaijan and the rest of the Caucasus region were
an object of rivalry between the Persian, Ottoman and Russian empires
for centuries. This competition has continued even after the demise
of these empires as well as the rise and fall of the Soviet Union.
Despite Azerbaijan's impressive economic performance and religious
tolerance, the country is still relatively weak in comparison with its
neighbors, primarily due to its relatively small size-33,000 square
miles and 9 million inhabitants. Today, the interests of Iran, Russia,
Europe and the United States in the South Caucasus and Caspian region
can still clash, confronting the Azerbaijani government with the need
to accommodate the parties as best they can while still advancing
its own interests.
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/13175/global-insights-putin-s-baku-visit-highlights-complex-russia-azerbaijan-ties
World Politics Review
Aug 20 2013
By Richard Weitz, on 20 Aug 2013, Column
On Aug. 13, Vladimir Putin made his first visit to Baku in seven years,
marking only his third trip to Azerbaijan as president of Russia-a
gap reflecting the complex and sometimes strained relationship between
Moscow and Baku. The two have grown apart due to Russia's closer ties
with Armenia as well as Azerbaijan's westward-oriented energy focus.
Azerbaijan's leaders have been trying to leverage their country's
pivotal location, energy resources and other assets to help manage
their volatile neighborhood. Meanwhile, they are pursuing their own
regional objectives, which focus on recovering territories occupied by
Armenia, averting a war with Iran while countering Iranian subversion,
minimizing foreign leverage over Azerbaijan's domestic policies
and establishing Baku, the national capital and a major port city,
as a center for regional commerce. A key element of this effort
is Azerbaijan's pursuit of a balanced foreign policy toward other
countries.
The Azerbaijani government has sought to maintain good relations with
Russia even while developing ties with Western governments. Russia
is Azerbaijan's second-largest trading partner, after Italy, with
Russian-Azerbaijani trade amounting to $3.4 billion last year. The
corresponding figure for January-May of this year showed 50 percent
growth over the same period in 2012. According to Putin, more than 70
Russian regions have close business ties with Azerbaijan, and more
than 500 Russian companies operate in automobiles, energy, finance,
health care and other important sectors of the Azerbaijani economy.
Since 2009, Azerbaijan has been a major natural gas exporter to Russia
through an agreement between the State Oil Company of Azerbaijan
Republic (SOCAR) and Gazprom, Russia's leading energy conglomerate.
In his opening statement on the Baku trip, Putin singled out
humanitarian ties as "the most important aspect" of Azerbaijani-Russian
relations. He praised the Azerbaijani government for promoting Russian
language instruction in schools and welcoming Russian universities to
set up campuses in Azerbaijan. The two countries will continue these
efforts through a new two-year Program for Humanitarian Cooperation
that will run through 2015.
Social ties between the two countries run deep. Many Azerbaijanis
live in Russia and vice versa. Russia's Azerbaijanis have played a
very active role in developing Russia's economy as well as supporting
economic ties between Russia and Azerbaijan. According to Putin, more
than 1 million Azerbaijani citizens work in Russia, while another
million ethnic Azerbaijanis have Russian citizenship. The owner of
Lukoil is an ethnic Azerbaijani, for instance, and another ethnic
Azerbaijani who holds Russian citizenship, Rustam Ibrahimbegov, is
contemplating running in Azerbaijan's upcoming presidential election.
Several hundred thousand ethnic Russians work in Azerbaijan.
Nonetheless, Russian-Azerbaijani economic relations would be even
larger if bilateral energy ties had developed the way Russia planned.
Western companies have a considerably larger role in Azerbaijan's
energy sector than their Russian counterparts. The only Russian
energy company that now has large presence on the ground is privately
held Lukoil, which owns a network of gas stations in Azerbaijan
and is developing the Shah Deniz Caspian Sea gas field. For a while
it appeared that Russia's state gas monopoly, Gazprom, had secured
almost all of Azerbaijan's gas exports, but the deal was only partially
implemented. In 2012, Azerbaijan delivered 1.55 billion cubic meters of
natural gas to Russia, half the desired amount. Meanwhile, Azerbaijan
recently committed to send most of its 1 trillion cubic meters in
gas reserves through a new pipeline to Europe from 2019.
Russia's state-owned Rosneft oil company and SOCAR signed a cooperation
agreement during Putin's visit, but concrete oil and gas deals were
lacking other than an agreement for joint use of certain terminals
and pipelines. In May, Russia ceased importing oil through the
Baku-Novorossiysk pipeline due to Azerbaijan's steady reductions
in oil deliveries, reflecting the country's declining overall oil
production. Russia's state-run oil pipeline operator, Transneft, was
losing money because the pipeline was operating at less than half
its planned capacity. Rosneft has yet to acquire its desired stake
in the Apsheron gas field in the Caspian Sea.
Russia recently confirmed a large arms deal with Azerbaijan, whose
military has many Russian and Soviet weapons systems. Nevertheless,
the two countries recently declined to renew Russia's lease of
Azerbaijan's early warning radar station at Gabala. Meanwhile, the
Russian military has reinforced its main Armenian base in Gyumri,
which is under a decades-long lease, and continues via the Collective
Security Treaty Organization to sell weapons at discounted prices to
Armenia, Azerbaijan's main adversary.
Azerbaijan's location at the crossroads of Iran, Russia, the Middle
East and Europe has constrained Baku's ability to pursue an independent
foreign policy. Azerbaijan and the rest of the Caucasus region were
an object of rivalry between the Persian, Ottoman and Russian empires
for centuries. This competition has continued even after the demise
of these empires as well as the rise and fall of the Soviet Union.
Despite Azerbaijan's impressive economic performance and religious
tolerance, the country is still relatively weak in comparison with its
neighbors, primarily due to its relatively small size-33,000 square
miles and 9 million inhabitants. Today, the interests of Iran, Russia,
Europe and the United States in the South Caucasus and Caspian region
can still clash, confronting the Azerbaijani government with the need
to accommodate the parties as best they can while still advancing
its own interests.
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/13175/global-insights-putin-s-baku-visit-highlights-complex-russia-azerbaijan-ties