APPENDIX 20
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)
STATEMENT OF THE OSCE CHAIRMAN-IN-OFFICE
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.
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