Select Committee on Foreign Affairs Appendices to the Minutes of Evidence - Sixth Report


Memorandum submitted by HE Mr Mahmud Mamed-Kuliyev, Ambassador of the Azerbaijan Republic

  In October 1991, shortly before the collapse of the Soviet Union, the Supreme Soviet (Parliament) of Azerbaijan adopted a declaration "On the Restoration of the Independence of the Azerbaijani Republic". On the basis of this Declaration the Supreme Soviet passed the Constitutional Act on Independence of the Azerbaijan Republic, re-establishing its independence for the first time since 1920.

  One of the most complicated and painful problems that Azerbaijan has faced since independence is the Armenian-Azerbaijani conflict.

  In 1988, three years prior to Azerbaijan's Declaration of Independence and the collapse of the Soviet Union, Armenian separatists of the Mountainous part of Karabakh (an Autonomous Region of Azerbaijan), backed by the Republic of Armenia and by the Soviet leadership, began a secessionist campaign. The campaign soon escalated into military conflict. The Armenian goal was to tear off Nagorno Karabakh from Azerbaijan and to annex it to the Armenian Republic. Beginning from 1989 the Parliament of the Armenian Republic adopted several documents on joining of Nagorno Karabakh to Armenia.

  As a result of the aggression of the Republic of Armenia against Azerbaijan, 20 per cent of the territory of Azerbaijan is occupied by the Armenian Armed Forces, more than one million refugees and displaced Azerbaijanis have been expelled from Armenia and the occupied Azerbaijani territories; 50,000 Azerbaijanis have been killed and 100,000 injured; and economic costs are estimated to run to billions of dollars.

  In May 1994 a ceasefire was negotiated under the auspices of the OSCE Minsk Group, the organization charged with pursuing a negotiated settlement of the Armenian-Azerbaijani conflict. At present, the Minsk Group is headed by three Co-Chairs—the USA, Russia and France. In 1996 the OSCE Lisbon Summit adopted three principles which should underpin settlement of the conflict (see Annex). 53 OSCE member states accepted these principles; only one, Armenia, was against. Later, in 1997, the Co-Chairs of the Minsk Group proposed a two-staged solution to the conflict based on the principles adopted in Lisbon. Armenia also rejected this proposal. In 1998 the Co-Chairs put forward new proposals for a "common state", which amounts to de facto independence for Nagorno Karabakh and which breaches all princples of the International Law, and also, the three principles adopted by the OSCE Lisbon Summit. Azerbaijan therefore rejected the latest proposal of the Minsk Group Co-Chairs.

  Unforunately, negotiations have not brought desired results, yet, as Armenia still tries to block them.

  In 1997, the Russian Duma announced details of illegal arms supplies from the Russian Federation to Armenia. It has been revealed that Russia supplied Armenia with an array of weapons worth more than $1 billion. At present Russia keeps permanent military bases on the territory of Armenia and recently it supplied Armenia with MIG-29 fighter aircraft and S-300 anti-aircraft missile complexes. Taking into consideration the tense situation in the region and the fact that the Russian Federation is one of the Co-Chairs in negotiations on the settlement of the Armenian-Azerbaijani conflict, these Russian actions are arousing suspicion and fears.

  We believe that the United Kingdon—being one of the leading UN and OSCE member states, and having serious economic and political interests in the region—could more actively participate in seeking a solution of the Armenian-Azerbaijani conflict. We would welcome any initiative taken by the UK intended to move the OSCE Minsk Group negotiations forward in a positive direction. Solution of the conflict would bring lasting peace and stability for foreign investors, of which a considerable proportion are British.

  The end of the 19th Century and the beginning of the 20th Century was known as a time of economic boom, when active exploitation of oil resources began in Azerbaijan. It is worth noting that Azerbaijan was the first country to extract oil industrially. At this time many Western—including British—businesses set up joint enterprises with local businessmen.

  In general, the Azerbaijani economy has been developed as a balanced and integrally interconnected complex based on domestic raw materials and energy resources, together with active foreign trade.

  After Azerbaijan re-established its independence it began transformation from a system of Soviet central planning to a free market economy. Several important Laws were adopted for this purpose.

  British business has been actively involved in Azerbaijan since the early 1990s, with more than 300 British companies operating there at present. Those companies range across the oil and gas sector, engineering and construction, transport and communication, banking and insurance; and many other sectors. There is further strong interest of British companies in power generation and distribution, gas utilisation and distribution, food processing, textile industry, privatisation of "blue chips", healthcare, etc. British business has invested over $600 million in the economy of Azerbaijan and, furthermore, is committed to investing more than $10 billion over the next 30 years.

  The central, but not the only, element of Azerbaijan's economy is the oil industry. It served as an impetus to other industries—for the building of oil-refining and petro-chemical installations and engineering projects, for instance. The first oil contract, with a consortium led by BP—the "Contract of the Century"—was signed in September 1994. According to this contract, over half a billion tons of oil will be developed. It is important to stress that, to date, British companies alone have been awarded orders for the amount of $500 million from the "Contract of the Century". At present 17 oil contracts have been signed with different oil companies. BP/Amoco alone has a greater than quarter stake in the overall energy sector.

  The British business community is by far one of the largest and most active in Azerbaijan. Taking into consideration the above mentioned, and despite the depressed global oil price, prospects for increased UK private sector investment are favourable.

  In 1994, the President of Azerbaijan, Mr Heydar Aliyev, made an official visit to the UK; this was followed in 1998 with a second official visit. A number of important bilateral documents were signed during these visits, as well as oil contracts. These documents became a framework and a guideline for further co-operative ventures between Azerbaijan and the UK in all spheres.

  There have also been a number of visits of British officials to Azerbaijan. President Aliyev officially invited Prime Minister Blair to visit Azerbaijan, and we hope that Mr Blair will be able to take up the offer in the near future.

  The Government of Azerbaijan takes great pleasure in pointing to the extremely cordial relations that have existed between the United Kingdom and Azerbaijan since Azerbaijan achieved independence in 1991. Azerbaijan looks on the decision by the Foreign and Commonwealth Office to increase diplomatic representation in Baku as a very positive step, which can only give a further positive impetus to our two countries' developing relations.

March 1999

Annex to the Lisbon Summit Declaration (1996)


  You all know that no progress has been achieved in the last two years to resolve the Nagorno-Karabakh conflict and the issue of the territorial integrity of the Republic of Azerbaijan. I regret that the efforts of the Co-Chairmen of the Minsk Conference to reconcile the views of the parties on the principles for a settlement have been unsuccessful.

  Three principles which should form part of the settlement of the Nagorno-Karabakh conflict were recommended by the Co-Chairmen of the Minsk Group. These principles are supported by all member States of the Minsk Group. They are:

    —  territorial integrity of the Republic of Armenia and the Azerbaijan Republic;

    —  legal status of Nagorno-Karabakh defined in an agreement based on self-determination which confers on Nagorno-Karabakh the highest degree of self-rule within Azerbaijan;

    —  guaranteed security for Nagorno-Karabakh and its whole population, including mutual obligations to ensure compliance by all the Parties with the provisions of the settlement.

  I regret that Armenia could not accept this. These principles have the support of all other participating States.

  This statement will be included in the Lisbon Summit documents.

previous page contents next page

House of Commons home page Parliament home page House of Lords home page search page enquiries

© Parliamentary copyright 1999
Prepared 27 July 1999