APPENDIX 6
Memorandum submitted by the Anglo Azeri
Society
INTRODUCTION
The Society was established in November 1997
to support Azerbaijan-British relationships in all spheres and
to assist charitable endeavours in Azerbaijan; to keep members
closely informed on developments in Azerbaijan and to increase
awareness of Azerbaijan in British eyes.
We have widespread corporate and individual
membership. Last year we raised almost £24,000 for charitable
causes in Azerbaijan. This year we have a full programme of meetings
and events including a major participation in British Week in
Baku.
BACKGOUND
Ever since 1992 the FCO, the Department of Trade
and Industry and British business, led by BP, have worked very
closely together to further British national and commercial interests
and promote diplomatic and political ties in Azerbaijan. The UK
was one of the first EU countries to appoint an Ambassador to
Baku. The then Offshore Supplies Office of the DTI was the first
Governmental agency from any country to mount a presence at the
important oil and gas exhibition in Azerbaijan. Since that time,
successive British Energy Ministers have attended that conference
and exhibition, a record unmatched by any other country and UK
supply companies form the largest overseas group at the exhibition.
The commitment by the British Government and commercial companies
has shown through very clearly in orders placed by the Azerbaijan
International Operating Company during the period 1995 to June
1998 where UK owned and based companies received nearly 35 per
cent of all overseas orders (see Annex 1). Over 100 British companies
have registered offices in Baku. The UK can justly feel proud
of the co-operation between the public and private sector in Azerbaijan.
We believe is the best example of such co-operation around the
world.
RESOURCES
The effort so far has been supported by a very
dedicated Ambassador and small staff operating from inadequate
buildings. We very much support the Government's decision to enhance
staffing and to improve the office accommodation. This new staff
level should be maintained despite the current economic slowdown
in Azerbaijan. We hope that the Committee will feel able to recommend
that the Embassy should build an appropriate Chancery in a suitable
location in Baku. The importance of an appropriate Embassy building
should not be underestimated.
The economy of Azerbaijan is largely dependent
on the domestic oil industry and on the level of Western investment—again
predominantly in the oil and gas industry. The recent 40 per cent
decrease in the oil price has led to a difficult economic situation
in Azerbaijan and a less favourable climate for both oil companies
and oil supply companies. This in turn leads to fewer service
and infrastructure company opportunities. However, despite this,
the level of exploration activity will remain high because of
existing contractual obligations and Baku continues to be the
obvious regional hub for businesses seeking to operate throughout
the Caspian Region. Now more than ever there is a need for political
and economic stability within Azerbaijan; and the UK Government
must play a role in helping ensure that stability. Stability is
critical for the development of thriving business relationships.
The Society believes that the UK Government
should play a higher profile role in Azerbaijan and would make
the following recommendations:
1. Aid
The Society is not in a position to judge whether
the current level of bilateral and EU aid is appropriate in the
overall context of the available budgets. Our members have, however,
been impressed by the openness of the EU aid mission in Baku.
2. Scholarships and Training
There is a very high level of education within
Azerbaijan. However, there is a need for greater understanding
of Western business practices and economic systems. We believe
that the current level of scholarships and training grants is
inadequate.
3. Cultural
There is a huge demand for English language
training and for a greater understanding of Western popular music
and fashion. At the present time the British Council funding for
Azerbaijan is extremely limited. We hope the Committee could give
consideration to a recommendation that this is significantly enhanced.
4. E.C.G.D
The facility, unlike others in the Region, has
been well utilised. The current low oil prices have led to deterioration
in Azerbaijan's financial situation, despite an impressive macro-economic
policy. It is important to British business that E.C.G.D. assistance
continues to be available.
5. Political
(a) The major issue facing Azerbaijan in
the Armenian-Azerbaijani conflict. As a result of this conflict
20 per cent of the territory of Azerbaijan is, in effect, occupied
by the Armenian Armed Forces. There are more than 1 million internally
displaced Azerbaijanis and it is estimated that 50,000 Azerbaijanis
were killed and 100,000 injured; economic damage is estimated
in billions of pounds.
A ceasefire was established in May 1994. Negotiations
for finding the settlement to the Armenian-Azerbaijani conflict
are going on under the auspices of the OSCE. A Special OSCE Minsk
Group with three Co-chairs, the U.S.A., Russia and France, was
established for this purpose. The progress made by the Minsk Group
is not impressive.
In addition, supplies of arms by the Russian
Federation to Armenia in 1997; the permanent presence of Russian
military bases on the territory of Armenia and recent supplies
of MIG-29 fighter aircraft and S-300 anti-aircraft missile complexes
to Armenia have made the situation more dangerous. There is, understandably,
concern in Azerbaijan about the impartiality of Russia as one
of the Co-chairs of the OSCE Minsk Group.
As a permanent member of the U.N. Security Council
and leading OSCE member, the Society believes that the UK should
be more actively engaged in the process of finding the solution
to the Armenian-Azerbaijani conflict.
(b) Azerbaijan is facing issues surrounding
delimitation of the Caspian Sea. These issues affect the littoral
states—Azerbaijan, Turkmenistan, Kazahstan, Russia and Iran.
Oil company developments benefit enormously from certainty on
international boundary issues and the UK has extensive experience
in such issues. As we understand it the UK policy has been that
Caspian delimitation matters are the responsibility of the littoral
states.
However, the United States has taken a very high
profile offering, in effect, to broker an agreement. Additionally
the U.S. Government has involved itself, particularly in the case
of Azerbaijan and Turkmenistan, in issues relating to regional
pipelines. The UK Government has not taken an active role in these
issues. We understand that the Azeri Government would welcome
a more active stance from the UK. We hope that the Committee will
consider whether the UK Government should play a more active role
in the Caspian delimitation issue.
(c) Azerbaijan is keen to become a member
of the Council of Europe. There was considerable disappointment
that when Georgia was "admitted", Azerbaijan was not
admitted simultaneously. Membership of the Council of Europe is
important as a sign of integration and political progress towards
democracy within Azerbaijan. We would like to see the UK Government
supporting membership more vigorously.
March 1999
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