Baku March

By Arthur Dunn

Dynamism of Azerbaijani foreign policy due to the enhancement of its role within the issues of energy security is the main factor of contemporary international policy.

Some politicians and Mass Media of different countries think that the major event of May Summits in Prague was the presentation of the European Union program “Eastern Partnership”. However even more significant with its results was the meeting of Azerbaijani and Armenian Presidents during these Prague Summits under the patronage of the USA, EU and Russia – the co-chairs of the OSCE Minsk Group on Karabakh conflict regulation. By the way these two states of South Caucasus, struggling with each other, are the participants of “Eastern Partnership”. Armenia today is blocked not only by Azerbaijan, but also by Turkey.

From the beginning of the war phase of Karabakh conflict in 1992 the United Nations Organization introduced a number of resolutions judging the occupation of Azerbaijani territory by Armenian forces. The last detailed resolution (A/62/L.42 of the 14th of March 2008 – “The Situation Within Occupied Azerbaijani Territory”) was supported by 39 UNO member-states.

Ilham-Aliyec-and-Serzh-SargsyanExactly the meeting of Ilham Aliyev and Serzh Sargsyan in the US Embassy in Prague gave a new impulse to the foreign policy activity of Baku, and energy sphere became one of the main instruments of this policy. Today Azerbaijan is often considered to be an informal leader of the region.Especially in the sphere of global energy projects. Mainly these facts have recently resulted into the series of visits in Baku of the heads of states and governments of many European and other states. And if for example the visit of Polish President Kaczynski has been planned for a long time, then the visit of Russian President Dmitry Medvedev in Baku was unexpected. It wasn’t announced.

Russian President Dmitry Medvedev arrived on the 29th of June with a one day visit in Baku to negotiate with Azerbaijani colleague Ilham Aliyev. In the result of talks two joint statements were signed – on Caspian Sea and on the distribution of water sources of border river Samur – and a number of important agreements.  One of them – the agreement on cooperation between Russian “Gazprom” and a State Oil Company of Azerbaijan (SOCAR) that anticipates the supplies of Azerbaijani gas in Russia starting from 2010. During the press-conference in Moscow the head of “Gazprom” Aleksey Miller informed that Russian Group of Companies can offer Azerbaijan very comfortable terms of gas purchase. “We’ve got very good trumps in comparison with any potential rivals striving to buy Azerbaijani gas", - he underlined, however specifying that the case is about relatively small capacities", although further “the capacity can grow”. According to Miller, the agreements first of all refer to the gas of Shakh Deniz – the biggest gas field in Caspian shelf.


> Caspian Pipelines Map

In May the director on foreign investments of Azerbaijani State Company Vagif Aliyev stated, that SOCAR in 2010 will for Gazprom 1 billion cubic meters of gas and not only from the field of Shakh Deniz.

In June Miller and Azerbaijani President Ilham Aliyev held talks on purchasing of Azerbaijani gas for market prices by Russia. Earlier, on March 27th “Gazprom” and SOCAR signed memorandum on supplies of Azerbaijani gas starting from the 1st of January 2010 for European prices to supply Northern Caucasus Republics.

Aliyev-Medvedev The joint statement of Presidents Aliyev and Medvedev on Caspian Sea specified enhancing mutual understanding of pre-Caspian countries on the number of key aspects of the developing Convention on legal status of Caspian Sea, including the issue of delimitation of water area of Caspian Sea and the division of its South bottom, security issues, subsurface use, transit, preservation of biosphere and other ".

Previous Summit on Caspian issue was held on the 16th of October in Teheran, where as experts consider, the first serious move was made to develop the Convention on legal status of Caspian Sea.

Then the Parties came to agreement on many issues, nevertheless, the final Declaration the Parties agreed to proceed “conditioning of the issue on the establishment within the waters of Caspian Sea the zones of agreed width and common water area, and the corresponding legal regimes". Concerning the issue of Caspian bottom distribution, in this document Parties managed to deal with a general comment to do that “considering the sovereign rights and respect each other legal interests”.

As observers note, the unexpected visit of Medvedev to Baku resulted from enhancing anxiety of Moscow on the projects of alternative pipelines to Europe. The participation of Azerbaijan within the projects on the EU energy supplies diversification is observed in Moscow as a direct threat to Russian national interests.


> Caspian Region Map
It’s not an accident that during the visit to Baku Polish President Lech Kaczynski actively lobbied Odessa-Brody project. A curious thing: Baku, that declared that even after recent signing of the gas agreement with Russia it “has enough stocks of hydrocarbons ", but it doesn’t want to invest funds into construction of additional energy communications, and in this case it gains a chance to preserve a politesse. As the creation of a so-called oil-transporting corridor on the ground of Ukrainian pipeline Odessa-Brody with a branch for Ventspils through Belarus isn’t costly. But this will mean the same that was stated by Lech Kaczynski in Baku: “Poland has very important and convincing opportunities in the sphere of promotion of relation of Azerbaijan with the European Union and it uses them".

In fact, the inclusion of Belarus in this oil-transporting corridor can have a pretty real prospect. Evidently President Aliyev and his Prime Minister could also discuss this issue during the recent short visit of the Head of Belarusian Government Sergey Sidorski in Baku. It’s noteworthy, that Belarus is also a participant of “Eastern Partnership”, that is still treated by Russian Government with caution, and negatively in general.

Recep-Tayyip-ErdoğanIn the background of a series of visits of high-ranking guests in Baku, that took place after Prague Summits in May, special attention should be given to the foreign political activity of Turkish Prime Minister Recep Tayyip Erdoğan. The curve of his visits Baku-Warsaw-Sochi once again proves the enhancing role of Turkey as a regional state. Special strategic relations between Ankara and Baku are widely known. Many experts think that Turkey pushes Russia out of South Caucasus and Caspian Sea. And if today Azerbaijan is a participant of the EU project of “Eastern Partnership”, then Turkey leading long-term negotiations strives to be a full member of the European Union. Together with that, the EU tries to reduce the energy dependence from Russia, and Turkey on the contrary promotes the cooperation with Moscow in this sphere. Moscow tries to use Turkish territory for gas transit and reduction if its dependence from Belarus and Ukraine. The importance of Turkish direction has especially enhanced after the last gas conflict between Russia and Ukraine when it became obvious that it will be hard for Moscow to agree with Kiev on the usage of Ukrainian territorial waters of Black Sea for the accomplishment of the project “South Stream”.

Moscow lay its greatest hopes and optimism on fact that before Sochi negotiations Kazakhstan, Uzbekistan and Turkmenistan refused to sign declaration in Prague, that anticipated their participation within the NABUCCO project lobbied by the USA and the EU. And Azerbaijan decided to act within NABUCCO project only as a transit state. Objectively, Russia benefited from the disagreements between Baku and Ankara.


> Nabucco Pipeline Map

Baku has supplied its gas to Turkey since 2007 through the gas pipeline Baku-Tbilisi-Erzurum. The price of exporting gas was a political – 80-120 dollars per cubic meter, that much lower of the Turkish energy carriers supplied to Russia. However, with improvement of Turkish-Armenian relations from the summer of 2007 Baku started to demand the review of prices. Russian Government even thought that Turkish Prime Minister had only one card left in his bag of initiatives – Russian card. But these thoughts haven’t realized.

Addressing Azerbaijani Parliament Prime Minister Erdogan called Azerbaijani people to believe his words but not the speculations of the press. 'Some messages stated as if Turkey refused of its position on Nagorny Karabakh to improve its relations with Armenia. This is a total lie. And now I want to refute it one more time', - claimed Erdogan to the members of Parliament. His speech, full of citations of Turkish and Azerbaijani poetry, was often interrupted with applause. According to Erdogan, Turkey and Azerbaijan - are “two states, but one people, and their interconnection is unbreakable”. He views the resolution of Karabakh problem on the ground of territorial integrity of Azerbaijan. “We have never and still don’t make any steps able to harm national interests of Azerbaijan. Until occupation of Azerbaijani territory isn’t over, there will be no improvement” – noted Erdogan.

Aliyev refused to participate in April meeting of “Alliance of Civilizations” in Istambul in a protest against steps to reconciliation Turkey and Azerbaijan, expressed Erdogan his gratitude for this statement: “This is a completely clear answer. There are no doubts any more”.

Aliyev-ErdoganIn Baku they also discussed the issue on changing prices on Azerbaijani gas for Turkey. Currently, Turkey purchases from Azerbaijan 6,5 billion cubic meters of natural gas a year (i.e. one sixth of the consumed “blue fuel”) at a beneficial price of 120 dollars for a thousand of cubic meters. Other suppliers pay in the average 250 dollars for a thousand cubic meters. A part of this gas is re-exported to Greece. Turkey intends to deal with Azerbaijan on the supply of additional 8 billion cubic meters. “I can’t say that this price is fair, - noted Erdogan during a joint press-conference with Alieyev. – We’ll hold negotiations to set a fair price”.

And on the 15th of July in Ankara Prime Ministers of Turkey and four EU states – Hungary, Romania, Bulgaria and Austria – signed intergovernmental agreements of NABUCCO pipeline construction, that will transport Caspian gas to Europe round Russia. Among the countries proved their intention to start the project, Turkey is the biggest energy partner of Russia.

The participants of the project costing 7,9 billion euro on construction of NABUCCO pipeline, called to reduce gas dependence of Europe from Russia, want to fill this pipe with Azerbaijani gas. In the end of construction in 2013 NABUCCO should transport about 30 billion cubic meters of pre-Caspian and Middle East gas a year, covering up to 5% of European consumption.

NАBUCCO and “South Stream” are severe rivals as according to experts the intensification of one of these projects will cross the accomplishment of the second. Reminding that the construction of NABUCCO gas pipeline is estimated in 8 billion euro and anticipates the transportation of 31 billion cubic meters to the EU states round Russia. “South Stream” designed for the transit capacity of 63 billion cubic meters a year, should lay in the bottom the Black Sea from Novorossiysk to Bulgarian seaport of Varna and than through Balkan Peninsula to Italy and Austria. The total amount of investments into this project is 25 billion euro.

Intergovernmental agreement serves as a pretty powerful argument in favor of NАBUCCO, which is faster than “South Stream” although in its documentary finishing.

As experts note relations between Russia and Turkey are not that clear. The intention of Turkey to become not only a transiting state, but also to purchase a part of Russian or Central Asia states gas to re-sell it to Europe faces serious contraction of Moscow. Russia is also irritated by the fact that Ankara signed the agreement on NABUCCO project. This behavior reminds the mistaken decision of Moscow to block the participation of LUKOIL within the project of Baku-Tbilisi-Ceyhan in 2002, when the company could actually gain 7.5% of assets. There are hopes that the oncoming visit of Vladimir Putin in Turkey can change energy policy of Moscow as well as of Ankara and finally Russia probably will participate within NABUCCO project. The upholders of this project are convinced that all participating states will benefit from the accomplishment of the project. Particularly Turkey can speed up the process of the integration into the EU as a full member.

It’s noteworthy that the USA and European Union give special meaning to Azerbaijan, that is able to reduce energy dependence of Europe from Russia which is a key to success of any related projects, that should guarantee energy security of the European Union.

Valdis-ZatlersWe are talking about integration into Krakow initiative announced in October 2007 during the Summit in Vilnius. Presidents of Latvia and Romania, representatives of the European Commission, the USA and 10 more states have also joint this initiative. Its key idea is the establishment of “Baltic-Black Sea-Caspian Energy Transit Area”. Then it was announced that Azerbaijan is the only real energy source. Today it’s stated, that almost all obstacles existed earlier on the way of transportation of Caspian oil from Baku to Venstpils (Latvia) are vanishing. The case was about resumption of Caspian oil supplies to Venstpils through Georgia via existing pipeline Baku-Supsa, then with tankers to Odessa, and then again via a pipeline to Belarus and then to Latvia.

Current state of Baltic situation should be clear after the oncoming visit of Latvian President Valdis Zatlers in Baku. Most likely it will take place in the first half of August 2009.

Latvian President plans to visit Baku together with few ministers. It’s planned to sign a number of documents on economic cooperation. However, it is assumed that the agenda of oncoming negotiations in Baku will still include political issues. And this is not accidentally.

After recent official visit of Aliyev in London and his last meeting in Moscow with Armenian President, experts think more often that probably Baku is getting ready to a so-called “Kosovo scenario”, when peacekeepers located within interdivision boundary can act as a decisive force. Exactly then squadrons of peacekeepers will be needed in the conflict zone. Riga has hinted Baku about them many times. So Latvian President Valdis Zatlers should prepare for serious talks in Baku.

One shouldn’t forget that Latvia is included into a so-called pro-American group of the European Union. That’s why we should also remind about the activity of the USA that have established more than partner relations with Azerbaijan. However, it’s noteworthy that relations between Baku and other devoted allies of the USA London also develop intensively. Especially in the sphere of global energy projects accomplishment. Great Britain invested a few billion dollars into development of energy sources of Caspian Sea. It always extends its financial presence in other branches of Azerbaijani economy, supports the cooperation of Azerbaijan with NATO within the program of “Partnership for Peace” and doesn’t hide that it’s the most active lobbyist of the interest of Azerbaijan.

In this respect we should underline the fact that almost one fifth of American aid, that the USA plan to grant Azerbaijan this year, is for military purposes.

Philip-Gordon During a visit of the US deputy secretary of state Philip Gordon to Baku in June energy policy issues gained greatest attention. “The USA support diversification of energy sources in Europe”, - stated American diplomat. At the same time (meaning actively lobbied NABUCCO project) Gordon claimed: “We support not some definite projects but the necessity of diversification of energy sources in general”.

Recently, there was a conference in Brookings institute “Russia and Turkey: Regional Strategy in the Sphere of Energy”, during which American and Russian analysts and former diplomats discussed the issues of cooperation between Russia and Turkey in the branch of energy.

In is speech the Special Representative of the US State Department on Energy in Eurasia Richard Morningstar noted that Moscow should understand that energy policy of the USA in the region, and particularly, project NABUCCO supported by the USA are not designed against Moscow: “We have more common than contradictions with Russia. We are for cooperation and call Moscow to take part in this project”, said Morningstar. Another speaker Mark Parris former American Ambassador in Turkey during 1998-2000, when the destiny of “Baku-Tbilisi-Ceyhan” project was discussed, underlined that political situation in the region has changed since then and nevertheless, “there is a real chance to repeat the success achieved once within political and business diplomacy on interregional projects accomplishment”.

Despite all existing difficulties of Moscow to understand the sense of processes in Caucasus, in any case the USA won’t leave South Caucasus. Everybody will have to consider this fact. The wisest politicians and experts in Russia and other states assume that considering the reality we should develop ways for cooperation and civilize competition.