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AZERBAIJAN TREADS A CAUTIOUS DIPLOMATIC PATH
Business New Europe
March 22 2013
Andrew MacDowall in Baku
March 22, 2013
Azerbaijan is in a situation that Poles can sympathise with - wedged
between two powerful and occasionally belligerent neighbours, both
of which have occupied and ruled it in the past. But while it has
in common with Poland a difficult relationship with Russia, on its
other flank lies not liberal democratic Germany, but theocratic and
difficult Iran.
Azerbaijan's foreign policy, therefore, seeks to maintain cordial
relations with both Moscow and Teheran, while resisting the powerful
duo's attempts to exert a baleful influence within its borders. The
third big power on the doorstep is Turkey, with which there are close
linguistic and cultural ties.
Azerbaijan, a country of just 9m people, is in the fortunate position
of having abundant hydrocarbon resources that make it important beyond
its immediate region; growing energy ties with Europe should boost
its external security, while allowing it quietly to build economic
and diplomatic influence in emerging markets.
But ask Azerbaijani officials what their single biggest foreign
policy priority is, and many will say something else: the issue of
Nagorno-Karabakh, a mountainous region internationally recognised as
part of Azerbaijan but occupied by Armenia. The two countries fought
a war over Nagorno-Karabakh between 1988 and 1993 as the Soviet Union
crumbled, and since then this has remained one of the world's most
intractable frozen conflicts: frozen, that is, apart from sporadic
but all-too-frequent fatal cross-border shootings.
The region was majority-Armenian before the war and today, following
ethnic cleansing and flight, even more so. Even so Baku insists on
it being restored to Azerbaijani rule, in line with Soviet-era borders.
Elnur Soltanov, assistant professor at the new Azerbaijan Diplomatic
Academy, which has close links to the government, tells bne that
while Azerbaijan seeks "the end of the military occupation," Baku is
willing to offer "the highest possible autonomy within Azerbaijan... to
reconcile territorial integrity and self-determination" and that its
position is still open to negotiation.
Currently, he says, the suspicion is that Armenia is using the sporadic
peace talks as an excuse to maintain the status quo rather than to
make concrete progress towards a solution.
Internationally, few believe there is much hope of a breakthrough
anytime soon. "Negotiations will continue and will be promising from
time to time, but barren of results," says Charles Fairbanks, an
American academic and Caucasus expert currently based in Tbilisi. "The
side which won is understandably very reluctant to give up its gains,
even if it winds up being isolated; I'd bet very heavily against
any resolution."
Michael Taylor, senior Eastern Europe analyst at Oxford Analytica,
an analysis and advisory firm, points out that the Armenian military
has the advantage of being literally dug in in the forested mountains
of Nagorno-Karabakh, but argues that economics and demographics could
play to Azerbaijan's advantage in the long term.
Baku has not ruled out a military assault to retake its territory. But
while, according to Azerbaijani government sources, Azerbaijan's
annual military spending exceeds Armenia's whole budget, Taylor says
that the army's effectiveness is questionable. "War could break
out by mistake," he tells bne. "But the international community,
and particularly Russia, will do everything they can to prevent it."
Balancing act
Baku's uneasy relationship with both Moscow and Teheran is not
unconnected to their support for Armenia. While the close relationship
between Russia and Armenia is well known, Iran's influence is
significant but often overlooked.
Azerbaijani officials are fairly straightforward about their desire to
maintain independence from Russia, and about their suspicions that the
Kremlin resents this; some claim that it backs opposition movements.
Similar fears are expressed about Iran's support of militant groups.
Iran's religiosity and unpredictability unnerves Azerbaijan, a
secular country that seeks security above all. The substantial Azeri
population in Iran (estimates vary between 12m and 30m, the latter
probably including other Turkic groups) is seen as providing a degree
of insurance against Iranian aggression.
Soltanov says that "two out of three" of Azerbaijan's big neighbours
(the other being Turkey) "have not scored well" on respecting its
sovereignty and territorial integrity. But as both Fairbanks and
Taylor note, Russia's power and importance in the Caucasus and
beyond is a reality. Azerbaijan cannot entirely detach itself from
its former ruler and instead seeks cordial relations, while seeking
allies elsewhere to balance against Moscow's influence.
Turkey has historically been a rival to Russia and Iran in the
Southern Caucasus, and is a natural ally for Azerbaijan, a secular
Muslim country with a mutually intelligible Turkic language.
Azerbaijan has benefitted from Turkey's economic and diplomatic Drang
nach Osten (German for "yearning for the East") since the collapse
of the Soviet Union, and particularly in recent years as Central
Asia's energy wealth and strategic importance have risen. The
Baku-Tbilisi-Ceyhan BTC) oil pipeline in particular has proved
beneficial to both countries and their trading partners.
But both countries realize that the Baku-Ankara link cannot be so close
as to crowd out other relationships. "Turkey continues to be very
important for Azerbaijan," says Fairbanks. "But it no longer plays
the role of dominant patron. Turkey's reconciliation with Armenia
was ruined in the end, but that fact hat it was even contemplated
shows how independent of Azerbaijani interests the [current Turkish]
AKP government is. Azerbaijan may need Turkey more than Turkey seems
to want Azerbaijan."
Well oiled
The key to Azerbaijan's security and independence arguably lies in
its hydrocarbon resources - and not (just) because they can buy quite
a lot of weaponry.
The country's oil and gas helps secure powerful friends beyond
the Black Sea/Caspian region: the EU and US are well aware of the
country's potential as an alternative source of energy to diversify
Europe's supply and reduce its dependence on Russia. Azerbaijan's state
energy firm Socar is gearing up to supply the EU's planned Southern
Gas Corridor, which would take Azeri gas into the heart of Europe via
the Balkans. If executed, it would provide an alternative to, or at
least supplement, Gazprom's planned huge South Stream pipeline that
will deliver Russian gas to the same markets. The scale of European,
and particularly British, investment interests in Azerbaijan - BP is
the single biggest source of foreign investment - also contributes
to Western support for the country's independence and sovereignty, if
not for massive efforts to resolve Nagorno-Karabakh in Baku's favour.
But it's not only Europe that Azerbaijan can sell energy to. Quietly,
the country has established a remarkably close relationship with
Israel, which sourced 40% of its oil from the Caucasus country via
the BTC pipeline last year. In return, Israel sells arms that some
Western countries are too squeamish to export.
Finally, hydrocarbon cash is helping fund both overseas investments and
"soft power" initiatives. The State Oil Fund of Azerbaijan (Sofaz), a
sovereign wealth fund, has a diversified portfolio worldwide, including
a £180m office block in Mayfair, London, and other government-linked
firms are scoping out opportunities in sectors including tourism.
As for soft power, oil money is helping turn central Baku into
something of a set-piece capital of the Caspian and South Caucasus.
And subtly, or otherwise, Azerbaijan is raising its profile through
charitable projects. In Belgrade, for example, not only has the
city's only remaining Ottoman mosque been restored with Azerbaijani
money, but much to many locals' bemusement a chunky statue of the
late Heydar Aliyev (father of the current president) stands in the
historic Tasmajdan Park, which was renovated thanks to Baku's largesse.
http://www.bne.eu/storyf4701/Azerbaijan_treads_a_cautious_diplomatic_path
From: A. Papazian
Business New Europe
March 22 2013
Andrew MacDowall in Baku
March 22, 2013
Azerbaijan is in a situation that Poles can sympathise with - wedged
between two powerful and occasionally belligerent neighbours, both
of which have occupied and ruled it in the past. But while it has
in common with Poland a difficult relationship with Russia, on its
other flank lies not liberal democratic Germany, but theocratic and
difficult Iran.
Azerbaijan's foreign policy, therefore, seeks to maintain cordial
relations with both Moscow and Teheran, while resisting the powerful
duo's attempts to exert a baleful influence within its borders. The
third big power on the doorstep is Turkey, with which there are close
linguistic and cultural ties.
Azerbaijan, a country of just 9m people, is in the fortunate position
of having abundant hydrocarbon resources that make it important beyond
its immediate region; growing energy ties with Europe should boost
its external security, while allowing it quietly to build economic
and diplomatic influence in emerging markets.
But ask Azerbaijani officials what their single biggest foreign
policy priority is, and many will say something else: the issue of
Nagorno-Karabakh, a mountainous region internationally recognised as
part of Azerbaijan but occupied by Armenia. The two countries fought
a war over Nagorno-Karabakh between 1988 and 1993 as the Soviet Union
crumbled, and since then this has remained one of the world's most
intractable frozen conflicts: frozen, that is, apart from sporadic
but all-too-frequent fatal cross-border shootings.
The region was majority-Armenian before the war and today, following
ethnic cleansing and flight, even more so. Even so Baku insists on
it being restored to Azerbaijani rule, in line with Soviet-era borders.
Elnur Soltanov, assistant professor at the new Azerbaijan Diplomatic
Academy, which has close links to the government, tells bne that
while Azerbaijan seeks "the end of the military occupation," Baku is
willing to offer "the highest possible autonomy within Azerbaijan... to
reconcile territorial integrity and self-determination" and that its
position is still open to negotiation.
Currently, he says, the suspicion is that Armenia is using the sporadic
peace talks as an excuse to maintain the status quo rather than to
make concrete progress towards a solution.
Internationally, few believe there is much hope of a breakthrough
anytime soon. "Negotiations will continue and will be promising from
time to time, but barren of results," says Charles Fairbanks, an
American academic and Caucasus expert currently based in Tbilisi. "The
side which won is understandably very reluctant to give up its gains,
even if it winds up being isolated; I'd bet very heavily against
any resolution."
Michael Taylor, senior Eastern Europe analyst at Oxford Analytica,
an analysis and advisory firm, points out that the Armenian military
has the advantage of being literally dug in in the forested mountains
of Nagorno-Karabakh, but argues that economics and demographics could
play to Azerbaijan's advantage in the long term.
Baku has not ruled out a military assault to retake its territory. But
while, according to Azerbaijani government sources, Azerbaijan's
annual military spending exceeds Armenia's whole budget, Taylor says
that the army's effectiveness is questionable. "War could break
out by mistake," he tells bne. "But the international community,
and particularly Russia, will do everything they can to prevent it."
Balancing act
Baku's uneasy relationship with both Moscow and Teheran is not
unconnected to their support for Armenia. While the close relationship
between Russia and Armenia is well known, Iran's influence is
significant but often overlooked.
Azerbaijani officials are fairly straightforward about their desire to
maintain independence from Russia, and about their suspicions that the
Kremlin resents this; some claim that it backs opposition movements.
Similar fears are expressed about Iran's support of militant groups.
Iran's religiosity and unpredictability unnerves Azerbaijan, a
secular country that seeks security above all. The substantial Azeri
population in Iran (estimates vary between 12m and 30m, the latter
probably including other Turkic groups) is seen as providing a degree
of insurance against Iranian aggression.
Soltanov says that "two out of three" of Azerbaijan's big neighbours
(the other being Turkey) "have not scored well" on respecting its
sovereignty and territorial integrity. But as both Fairbanks and
Taylor note, Russia's power and importance in the Caucasus and
beyond is a reality. Azerbaijan cannot entirely detach itself from
its former ruler and instead seeks cordial relations, while seeking
allies elsewhere to balance against Moscow's influence.
Turkey has historically been a rival to Russia and Iran in the
Southern Caucasus, and is a natural ally for Azerbaijan, a secular
Muslim country with a mutually intelligible Turkic language.
Azerbaijan has benefitted from Turkey's economic and diplomatic Drang
nach Osten (German for "yearning for the East") since the collapse
of the Soviet Union, and particularly in recent years as Central
Asia's energy wealth and strategic importance have risen. The
Baku-Tbilisi-Ceyhan BTC) oil pipeline in particular has proved
beneficial to both countries and their trading partners.
But both countries realize that the Baku-Ankara link cannot be so close
as to crowd out other relationships. "Turkey continues to be very
important for Azerbaijan," says Fairbanks. "But it no longer plays
the role of dominant patron. Turkey's reconciliation with Armenia
was ruined in the end, but that fact hat it was even contemplated
shows how independent of Azerbaijani interests the [current Turkish]
AKP government is. Azerbaijan may need Turkey more than Turkey seems
to want Azerbaijan."
Well oiled
The key to Azerbaijan's security and independence arguably lies in
its hydrocarbon resources - and not (just) because they can buy quite
a lot of weaponry.
The country's oil and gas helps secure powerful friends beyond
the Black Sea/Caspian region: the EU and US are well aware of the
country's potential as an alternative source of energy to diversify
Europe's supply and reduce its dependence on Russia. Azerbaijan's state
energy firm Socar is gearing up to supply the EU's planned Southern
Gas Corridor, which would take Azeri gas into the heart of Europe via
the Balkans. If executed, it would provide an alternative to, or at
least supplement, Gazprom's planned huge South Stream pipeline that
will deliver Russian gas to the same markets. The scale of European,
and particularly British, investment interests in Azerbaijan - BP is
the single biggest source of foreign investment - also contributes
to Western support for the country's independence and sovereignty, if
not for massive efforts to resolve Nagorno-Karabakh in Baku's favour.
But it's not only Europe that Azerbaijan can sell energy to. Quietly,
the country has established a remarkably close relationship with
Israel, which sourced 40% of its oil from the Caucasus country via
the BTC pipeline last year. In return, Israel sells arms that some
Western countries are too squeamish to export.
Finally, hydrocarbon cash is helping fund both overseas investments and
"soft power" initiatives. The State Oil Fund of Azerbaijan (Sofaz), a
sovereign wealth fund, has a diversified portfolio worldwide, including
a £180m office block in Mayfair, London, and other government-linked
firms are scoping out opportunities in sectors including tourism.
As for soft power, oil money is helping turn central Baku into
something of a set-piece capital of the Caspian and South Caucasus.
And subtly, or otherwise, Azerbaijan is raising its profile through
charitable projects. In Belgrade, for example, not only has the
city's only remaining Ottoman mosque been restored with Azerbaijani
money, but much to many locals' bemusement a chunky statue of the
late Heydar Aliyev (father of the current president) stands in the
historic Tasmajdan Park, which was renovated thanks to Baku's largesse.
http://www.bne.eu/storyf4701/Azerbaijan_treads_a_cautious_diplomatic_path
From: A. Papazian