Foreign and Commonwealth Office brief
for Foreign Affairs Committee's visit to Azerbaijan
ENERGY SECURITY
How much of a constraint does Russia represent
on efforts to develop a more independent energy relationship between
the UK and EU and states in Central Asia and the TransCaucasus?
Through significant international investment,
led by BP, the Baku-Tbilisi-Ceyhan (BTC) and Baku-Tbilisi-Ezrum
(BTE) oil and gas pipelines have now come on stream and are supplying
Caspian energy to the European markets, via Turkey. When these
pipelines were still at the concept stage, some 10 years ago,
before the significant rises in energy prices, there were those
who questioned the return on the economic investment. Russia was
one and consequently chose not to be part of the consortium, making
these the first major pipelines from part of the ex-Soviet space
to not run via or be controlled by, Russia.
A major prize for the future would be for these
pipelines to be used to export Central Asian energy resources,
whose reserves dwarf those of Azerbaijan, to the Europe market.
But the Central Asian energy producers appear largely to be tied
into contracts supplying Russia, at least for the short term.
The countries concerned need also to manage their political relationships
with Russia. Russia has recently put a great deal of effort into
courting the new leadership of Turkmenistan, including a visit
by Putin and signature of an agreement on gas and oil supplies
with Kazakhstan and Turkmenistan, including the construction of
a new, onshore Caspian pipeline.
Despite being a net energy supplier, until recently
Azerbaijan still imported gas from Russia. Likewise, despite the
BTC and BTE pipelines transiting their soil, Georgia has historically
been heavily reliant on imports from Russia. 2007 has seen the
start of a re-balancing of traditional import and exports. Georgia
accepted Russia's new terms that saw gas prices more than double,
but sought and agreed terms with Azerbaijan to source a greater
percentage of their demand requirements. Azerbaijan refused the
same Russian terms. Russia subsequently cut off supplies to Azerbaijan
and Azerbaijan responded by cutting off oil supplies to Russia.
REGIONAL SECURITY
What is the state of Russia's relations with Central
Asian and TransCaucasian countries and Ukraine?
The South Caucasus is blighted by unresolved
conflicts. Nagorno Karabakh (NK) is one of these, and the result
is that Azerbaijan remains in a state of war with Armenia some
15 years after the main conflict ceased. Troops remain dug in
on either side of the 1994 cease-fire line (the line of Contact):
there is no international peacekeeping force. People still die
from sniper fire along the line of contact between the two sides,
and from anti-personnel mines. A bitter rhetoric of hatred and
the vast sums of GDP spent on the military forces, including equipment,
of both countries ensures relations are permanently tense and
potential economic growth is stunted.
It is a generally accepted premise amongst Western
states that the conflict cannot be solved without at least Russian
acquiescence, given her considerable political and economic influence
in the region, especially with the Armenians. And that since Russia's
primary objective is to maintain that influence in the region,
her default position is to prefer the status quo to resolution
of the conflict. There are other Russia factors in the mix. Russia
has traditionally been a close ally of Armenia, including at the
time of the NK war. But with the emergence of Azerbaijan as an
alternate energy supplier to the West, Moscow has made a greater
effort to improve Russian-Azerbaijani relations.
Russia is also hugely concerned at Georgia's
drift into the NATO fold. It will not want Azerbaijan to follow
suit. Recent developments suggest they are keen to develop military
structures in line with NATO standards, and Azerbaijan has modest
but significant contributions in the NATO-run International Security
Assistance Force in Afghanistan, and the Multi National Force
in Iraq.
HUMAN RIGHTS
AND DEMOCRACY
Like other ex-Soviet states, Azerbaijan started
from a low baseline on human rights and democracy and in many
respects, has not achieved very much by way of positive reform.
Azerbaijan is traditionally a clan-based society, with control
resting with a few very powerful and immensely wealthy senior
personalities. Now, with Azerbaijan's energy wealth coming to
fruition (the completion of the BTC and BTE oil and gas pipelines
to Turkey, which have been ten years in the building), the stakes
for those in power are even higher.
Azerbaijan has noticeably developed a new level
of confidence and assertiveness in international relations as
her energy has come on stream. Their President avows a Western-orientated
path towards eventual membership of NATO and a closer relationship
with the EU, while at the same time trying to maintain a balance
in Azerbaijan's relationship with Russia and the West. This includes
adopting Russian examples of policy to suit Azerbaijan's leadership
eg in espousing a "managed democracy" or in managing
the freedom of the media though economic and other measures.
The EU discusses human rights and good governance
issues with Azerbaijan through the institutions established (Co-operation
Council and Co-operation Committee) from the EU's Partnership
and Co-operation Agreement with Azerbaijan. Since the adoption
of the European Neighbourhood Policy Action Plan in November 2006,
negotiated between the EU and Azerbaijan, the dialogue should
become more specific. The Action Plan lists a range of priority
areas for reform that will bring Azerbaijan closer to mutually
accepted values and standards, including in human rights and good
governance. Human rights issues are also dealt with in the Council
of Europe and the Organisation for Security and Co-operation in
Europe (OSCE).
TERRORISM
Azerbaijan is a secular Muslim country, a potentially
difficult balance to maintain in stable conditions. And Azerbaijan
faces many pressures. Internal ones—a poor record on human
rights and democratisation, and the unlikely-to-be-fulfilled expectation
that the billions of dollars of energy revenue should significantly
improve the lives of the average Azerbaijani—suggest that
the conditions for extremism to flourish are there. When you add
to the mix Azerbaijan's geopolitical location, sandwiched between
Russia's unstable North Caucasus and Iran on a North-South axis,
and with Central Asia and Orthodox Armenia on an East-West axis,
the risks increase as Azerbaijan's situation leaves her relatively
open to external forces of terrorism.
May 2007
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