By Emily Boulter
During the last decade, Azerbaijan has become one of the most strategic post-Soviet states in the field of energy and regional security. Its geographic position, between Europe and Asia, is one of the reasons Azerbaijan has made stability the cornerstone of its foreign policy program. This year started on an impressive note for the South Caucasus state. The country took its seat on the United Nations Security Council, and in May, it joined the Non-Aligned Movement (NAM). With its generous gas and oil reserves, Azerbaijan has worked to balance its foreign policy pursuits, both close to home and abroad. Nevertheless, in line with the country’s 2007 National Security Concept, Azerbaijan intends to contribute to international and regional security. At the UN General Assembly debate in late September, foreign minister Elmar Mammadyarov reiterated Azerbaijan’s commitment to “continue to be in the forefront of international efforts” in working for a “stronger and more effective United Nations.”
Azerbaijan has come along way since it gained independence in 1991. During the early 1990s, Azerbaijan was convulsed by economic and social instability, which was kick-started by the still unresolved conflict with Armenia in and around the area of Nagorno-Karabakh. Many give credit to former president Heydar Aliyev for laying the way for the country’s current prosperity. In 1994, a petrol consortium headed by BP and the Azerbaijani government signed the “contract of the century,” which led to the country’s economic transformation, and engagement with important global players. Azerbaijan is currently the third largest former Soviet oil producer. As a result, it has enjoyed unprecedented growth. According to the World Bank, Azerbaijan’s GDP increased from $5.7 billion in 2001 to $51.1 billion in 2010. In addition, the World Economic Forum’s Global Competitiveness Report for 2012-2013 cites that with the exception of Estonia, Azerbaijan’s economy is the most competitive out of the former Soviet Union.
Much of the country’s success is attributed to its pragmatic foreign policy. Azerbaijan participates as a member of NATO’s Partnership for Peace program (PfP) which has helped the country engage with its Euro-Atlantic partners, while at the same time it is currently chairing GUAM, or the Organization for Democracy and Economic Development, made up of four former Soviet states. In late August, while attending the Non-Aligned Conference in Tehran, foreign minister Mammadyarov noted: “Azerbaijan carries out independent foreign policy [sic] and is not party to any military alliance.”
Azerbaijan was fortunate, when it regained its independence to have strong Turkish support at its side. It is often said that both countries are “one nation, two states.” In addition, to offering both military and humanitarian support throughout the 1990s, Turkey now serves as a strategic route for Azerbaijan’s energy exports. On June 26, both countries agreed to build the $7 billion Trans-Anatolian pipeline (TANAP), which will carry gas from the Caspian Sea through Georgia and Turkey. It is part of the second phase of the Shah Deniz gas project, which according to the Financial Times will triple the country’s gas production to 30 billion cubic meters by 2025. This is in addition to the Tbilisi-Ceyhan-Pipeline (BTC) inaugurated in 2005. This feat of engineering stretching 1,768 kilometres cemented the bonds between Turkey and Azerbaijan both economically and geographically. On August 16, 2010, both countries signed an Agreement on Strategic Partnership and Mutual Support, in order to strengthen bilateral relations in the area of military cooperation, education and trade. In response to the agreement, Turkey’s foreign minister Ahmet Davutoğlu said in an interview on a private Azerbaijani channel: “The entire world knows that Turkey considers the defense of Azerbaijan as Turkey’s defense” and added “It is a sign of our everlasting friendship with Azerbaijan.”
Unlike Turkey, Azerbaijan’s relations with Israel have proven to be more successful. Azerbaijan is home to an estimated 10,000 Jews and is often considered Israel’s closest Muslim ally. At least one third of its oil needs are supplied by Azerbaijan. In 2011, Israel granted a subsidiary of Azerbaijan’s state oil fund SOCAR to drill in Israel’s only viable oil field Med-Ashdod. In February, various news sources reported that Israel and Azerbaijan signed a $1.6 billion arms deal. Both countries are also looking to into greater cooperation in the field of medical and agricultural research. Despite criticism from Iran, Israeli president Shimon Peres visited Baku in June 2009, as part of an Israeli plan to connect with other secular Muslim states. Israel’s Ambassador Arthur Lenk said “relations between Israel and Azerbaijan can be an example for Israel’s relations with the Muslim world.”
There has been speculation that Israel could use Azerbaijan as a launch pad for attacks against the Islamic Republic; a claim, which was discussed in March’s issue of Foreign Policy magazine. Yet while on a visit to Tehran in the same month, Azerbaijani Defence Minister Safar Abiyev, told the Fars news agency that “The Republic of Azerbaijan, like always in the past, will never permit any country to take advantage of its land, or air, against the Islamic Republic of Iran, which we consider our brother and friend country.” There have been simmering tensions in the past over the demarcation of national boundaries in the Caspian. In 2001 Iran launched military patrol boats in order to threaten Azerbaijani petroleum survey vessels. Also, this year in March twenty two people were arrested on suspicion of plotting terror attacks on western targets on behalf of Iran’s Revolutionary Guards. Nevertheless, Azerbaijan has an intimate connection with its neighbor, given the twenty million Azerbaijanis who live there and share the same cultural and linguistic heritage. Many Iranian Azeris have risen to the highest ranks of the government.
Azerbaijan’s hosting of this year’s Eurovision Song Contest was seen as symbolic of the country’s transformation beyond the remit of the Caucasus. The European Union has for years regarded Azerbaijan as a crucial oil and gas hub. In 2011, imports from Azerbaijan amounted to $19.16 billion, and the majority consisted of oil and gas products. Since 2006, Europe has focused its efforts to diversifying its energy exports away from Russia. Three years ago, Azerbaijan entered into the Eastern Partnership, which aims to deepen political and trade relations, by offering financial and technical assistance. The European Commission’s President José Manuel Barroso and the High Representative for foreign affairs Baroness Catherine Ashton have both visited Baku. The EU has earmarked $158.8 million to Azerbaijan to address priority areas such as democratic structures, good governance, socio-economic reform, trade, sustainable development, as well as holding discussions on human rights.
In Washington, the Obama Administration acknowledges Azerbaijan as a strategic Eurasian partner. On July 20, Richard L. Morningstar was appointed US Ambassador to Azerbaijan. He has ample experience of working in the Caucasus, given he was previously appointed by President Clinton as Secretary of State for Caspian Basin Energy. On September 19, Morningstar met with Energy Minister Natig Aliyev to discuss prospects for energy cooperation. Ties between the two countries have improved substantially over the last ten years, after the US government turned to Azerbaijan for support in the War on Terror. Along with Kazakhstan, Azerbaijan was the only Muslim country to send troops to Iraq and Afghanistan. There are currently 94 soldiers taking part in NATO ISAF missions. Given the current instability that has emerged in North Africa, in particular Libya, the United States is likely to view Azerbaijan as a reliable energy producer. It has also been instrumental in pushing for Azerbaijan’s access to the World Trade Organization.
Azerbaijan’s self-assured approach to its foreign policy has been instrumental in its burgeoning ties with the Gulf Cooperation Council. During the summer, Azerbaijan stood firmly with Arab states in favor of the suspension of Syria from the Organization of Islamic Cooperation. In June Saudi Arabia’s deputy foreign minister Prince Khaled Bin Saud Bin Khaled expressed his belief that Azerbaijan will play an important role in the international arena: “It is a bridge between the east and the west.” Investment between these two countries is expected to rise after they signed a series of agreements on investment promotion and protection. An agreement with Qatar has been proposed in relation to security cooperation. It is in Qatar that the International Bank of Azerbaijan (IBA) plans to open an Islamic banking subsidiary by the end of the year. The IBA already has a representative office in Dubai. Recently Azerbaijan’s Ministry of Tourism launched a promotion in the summer to attract high spending tourists from the GCC. It is clear that Baku understands that increased cooperation throughout the Middle East and the Gulf will enable Azerbaijan to build on its geopolitical assets.
In March, the Azeri state oil company SOCAR and the Swiss commodity trading house AURORA launched operations at a new oil terminal in the emirate of Fujairah. The second phase of construction began in June, and once complete will have the capacity to hold 641,000 cubic meters of oil products. The cost of both the second and third stage is estimated to reach $110 million and is financed by the Arab Petroleum Investments Corporation APICORP and the National Bank of Fujairah. The terminal will act as an independent storage facility for third parties, and not for Azerbaijani oil exports.
It is due to Azerbaijan’s strategic location, between Europe and Asia, as well as its rich energy resources that will enable it to maintain an independent or balanced foreign policy for the foreseeable future. And so far, this approach seems to be working.
Emily Boulter, Non-Resident Associate, INEGMA