By Inge Snip
While being the fastest growing economy of the South Caucasus due to its natural resources, Azerbaijan is still struggling with ethnic tensions and experiencing troubles normalizing its ties with neighbor Armenia. In at least nine speeches in 2010 president of Azerbaijan Ilham Aliyev warned that a full blown war over breakaway region Nagorno Karabkah might be inevitable in the near future and Armenia has made clear it is committed to use force too when necessary. Fifteen years after a peace agreement was brokered between Armenia and Azerbaijan over the former Soviet oblast, tensions seemed to have ratcheted up again. However, one should wonder whether a renewed violent conflict over Nagorno Karabakh will favor Azerbaijan’s economic situation.
Hence, the Nagorno Karabakh situation and Azerbaijan’s energy security strategy provide a contemporary and highly relevant case to examine the relationship between economic security and other forms of state security, such as territorial sovereignty. Why do decision-makers, in this case Azerbaijan’s president Ilham Aliyev, make decisions that might seem irrational from an outside perspective?
The region’s ambiguous and complicated intertwined relationships call for a detailed and comprehensive description of the Nagorno Karabakh conflict, Azerbaijan’s energy position, and a quick review of Azerbaijan’s National Security policy. After the fall of the Soviet Union, many of the former Soviet Republics and oblasts called for independence; and the countries in the South Caucasus made a strong case. Therefore, it was no surprise that Nagorno Karabakh, which was mainly inhabited by Armenians, called for independence from Azerbaijan. Currently, Nagorno Karabkah, a territory which has a history of being ruled over by a multitude of groups – the Persians, the Ottomans, the Arabs, the Azeris, the Russians, and the Armenians –- is as intractable as ever.
De facto, Nagorno Karabakh is a lost territory which is officially a part of Azerbaijan but in reality controlled by Armenian proxies after a bloody war between 1988 and 1993. The conflict, which started as an intra-state conflict in 1988 with the Sumgait event, where 32 people were killed and 197 were injured in anti-armenian riots near Azerbaijan’s capital Baku, developed into a full-blown war with an interstate dimension in 1991 when Armenia joined the conflict in favor of Nagorno Karabakh. Ever since the Sumgait events and the war over Nagorno Karabakh -– a war which took more than 30,000 lives and displaced approximately 1 million Azerbaijani – the relations between Azerbaijan and Armenia have been extremely hostile and tense.
However, it should be mentioned that the conflict has a third actor in place which not ought to be forgotten when trying to understand the ambiguity of the current situation. Thomas de Waal, a well known expert regarding the South Caucasus, describes in Black Garden: Armenia and Azerbaijan through peace and war Russia’s involvement in the conflict in 1993 as being the only ‘serious mediator.. Moreover, although Svante E. Cornell, also a well known scholar regarding the South Caucasus, mentions Russia’s confusing support for Azerbaijan in the eve of the conflict, he describes how it soon became clear that Russia supported Armenia, and currently still is in the report The Nagorno Karabakh Conflict, (Uppsala Univeristy: 1999). This immensely troubles Azerbaijan’s position when it comes to energy security, which will be explained in the following paragraphs.
Although Azerbaijan is known for its oil producing capabilities since 1847, and has since then produced over more than 1.65 billion tons of oil, it was not until 2007 that Azerbaijan had established itself as a sufficient gas-exporting country. Besides the fact that the amounts Azerbaijan is currently able to export and the prospects of its reserves are not as large in comparison to neighbors like Turkmenistan, it nevertheless entails an interesting alternative for Europe’s wish to diversify their energy dependency. Moreover, the remote possibility that Turkmenistan could agree to a gas-pipeline through the Caspian sea to Azerbaijan, creating a major new route possibility for gas bypassing Russia to Europe, creates those conditions that Europe wants when it mentions energy diversification and benefits Azerbaijan greatly.
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When it comes to energy, it is important to make the distinction between supply security and demand security. For the European countries it mostly entails supply security, as they have to secure their population with suffice energy, the cut off of energy might well lead to a threat to its population in terms of threats to life and health risks. However, when it regards countries such as Azerbaijan and Russia, it is the demand of energy that entails the security issue, as it is the amount they are able to sell to the buyers that will lead into a increased or decreased economic outcome.
To ensure energy demand, there are several factors Azerbaijan has to take into account. First of all, the gas-route via Russia is exposed to several risks: not only does the possibility exist that Russia might terminate the contract should a violent conflict between Azerbaijan and Armenia over Nagorno karabakh erupt again, as Russia supports Armenia, but Russia is alsoknown for ‘accidental’ explosions of pipelines when they disagree with certain decisions. For instance, the explosion in Turkey on the BTC pipeline (the red and yellow route on the map above) on August 6, 2008. Secondly, any instability in the region, such as the August war in 2008 between Georgia and Russia might (and has) diminished European interest.
Therefore, when taken the previously described situations into account, it is extremely interesting to quickly review Azerbaijan’s National Security Policy (PDF) adopted in 2007. The placement of energy security within the National Security Policy is interesting, although it mentioned in the paper, it only is mentioned in several minor paragraphs while main attention is being given to territorial sovereignty and the restoration thereof. The clear indication of Armenia and the results of the Nagorno Karabakh conflict are widely stressed as the introduction reads:
In the early years of its independence the young Republic faced the military aggression of Armenia, internal instability, hardships of a transition period and other serious challenges […] The most important and vivid example of such challenges is the aggression committed by neighbouring Armenia against the Republic of Azerbaijan, as a result of which a considerable portion of the country was occupied and approximately one million Azerbaijanis were displaced or became refugees. […] The aggression against the Republic of Azerbaijan is a major determinant of the country’s security environment and is a key factor in the formulation of the National Security Policy.
However, the reason for stability is being labeled as a secure environment for the exploitation of their natural resources and this paragraph follows a paragraph on the possible prosperous situation that ‘rich natural resources’ may bring to Azerbaijan . The policy paper clearly tries to balance between the main state security threats Azerbaijan currently faces, as defined by theorist Barry Buzan in Security: a new framework for analysis: they constitute a military threat, as a war with Armenia might not be inevitable; a political threat, because the legitimacy of the government is being questioned by the breakaway region Nagorno Karabakh; and an economic threat.
Hence, while being labeled as main security threats, one starts to wonder why decision-makers decide certain issues are security threats and certain issues are not and why do leaders make the decision to use force or refrain from it.
The following focus of this analysis will be on the current Nagorno Karabakh situation, the conflict has been called frozen by several analysts; however, as mentioned by Thomas de Waal in recent articles and lectures, the conflict should rather be referred to as ‘smoldering’, as in the past fifteen years almost 3,000 people have died as a result of fighting on the border. And the Minsk group, the supposedly peace-making meetings Armenia and Azerbaijan have on a regular bases, are being seen by both parties according to insiders as a ‘non-aggression pact’ rather than that they believe a forum to bring about an actual solution. Therefore, the current situation offers a highly contemporary case to study the behavior of a decision-maker.
When one looks at Azerbaijan’s National Security Policy the main security threat to Azerbaijan seems to be the “attempts against the independence, territorial integrity and constitutional order of the Republic of Azerbaijan.” The fact that Azerbaijan is not in control of Nagorno Karabakh constitutes a major political threat to the state, making one should wonder what possible actions Aliyev might undertake to eliminate this threat and restore control.
First of all, using the model Alex Mintz has outlined in his 2005 article “Applied Decision Analysis: Utilizing Poliheuristic Theory to Explain and Predict Foreign Policy and National Security Decisions,” I will firstly identify Ilham Aliyev’s decision matrix, which according to the poli-heursitic model consists of the several different alternative options a leaders has, the dimensions on which these options have an effect and the possible result of the adoption of a certain option on each of these different dimensions and the different importance level they might have for the leader. Hereafter, I will weigh the different outcomes and conclude with an overall assessment.
With regards to the Nagorno Karabakh conflict, Aliyev has several alternative options that can be identified: he can either choose to do nothing, choose to use force or apply sanctions. The dimensions on which these are being relevant are political, military, economic and diplomatic.
However, the implications of each of the alternative courses are a bit more complicated: when Aliyev will decide to use force, this will have military consequences as Armenia has made clear multiple times it will not refrain from force when Azerbaijan decides to forcefully incorporate Nagorno Karabakh back into their territory. Armenian president Serzh Sarkisian stated in November 2010: “I have no doubt that if the time comes, we will not only do again what we did in 1992-94, but will go even further and solve the issue once and for all; the issue will be closed for good.”
Moreover, it will have economical consequences too; war itself is costly — even if Azerbaijan would succeed in regaining control over Nagorno Karabakh it will press heavily on Azerbaijan’s budget. However, a short victory in itself is rather unlikely due to Russia’s support for Armenia and Nagorno Karabakh. As seen in the August war in 2008 in Georgia, Russia is very effective in quickly defeating smaller countries in its periphery, although it ought to be mentioned that Azerbaijan’s military spending currently accounts for one fifth of its total budget, growing 50% every year since 2003.
In addition, another economic complication, as mentioned before in this report, is the energy security factor. Not only does the risk exist that Russia will terminate the gas-contract which was established in 2008, leaving Azerbaijan with only two current pipelines to export its gas via. However, those two pipelines are first of all relatively small in its capacity, moreover, all go via Georgia. Although Georgia has not experienced intra-state and interstate conflict since August 2008, after the war the European countries became a bit more hesitant. The implication of the alternative option to use force might lead to even more hesitation from Europe to secure energy via the South Caucasus routes, as all three countries would have experienced violent conflicts in very recent history.
Moreover, diplomatically, the use of force would also have negative implications, as in general the use of violence to incorporate a lost territory back into once sovereign borders is not widely being respected by the international community, especially not when peaceful talks are in process, which is believed to be the case with the Minsk group. However, besides military, economic, and diplomatic implications, there are also political consequences. The implication of the optional use of force should be regarded in this particular case as most likely relatively positive. Public opinion and the ruling elite have a common understanding that the ultimate goal is to re-incorporate Nagorno Karabakh into Azerbaijan, not only because of the displacement of more than a fifth of Azerbaijan’s population from the area in and around Nagorno Karabakh during the war in the 1990s, but also because Nagorno Karabakh is widely regarded in Azerbaijan as a vital piece of Azerbaijan’s history and culture.
With regards to Aliyev’s possibility not to use force, the following implication will there be on the several different dimensions. First of all, on the military dimension, there will be no to little impact. Armenia has made clear it will intervene, however, will only do so when Azerbaijan decides to use force. The current situation has given Armenia de facto control over Nagorno Karabakh, so there is little incentive currently from their side to change this situation. With regards to the economic dimension, it will also have little effect. As long as the status quo is being maintained, gas and oil exports will most likely not face any change in terms of the amount that will be sold, nor will it disrupt any future prospects.
Nevertheless, it ought to be noted that the current status quo, the closed border with Armenia and the sensitive ties with Russia do have a negative effect on Azerbaijan in a more general sense, as trade is not fully being optimized due to closed borders and no free markets.
Moreover, the non use of force might well have at one point negative implications on the political dimension. As mentioned above, the importance historically and culturally are deeply embedded in both the population of Azerbaijan, and in its political elite. In that sense, the status quo might lead at one point to cultivate discontent against the regime. However, it ought to be noted that Aliyev’s current position is rather strong.
The implications of sanctions on all of the above mentioned dimensions should be regarded as relatively small. Besides the unavailability of data to support the effectiveness of any sanction in this case, the control Azerbaijan has over Nagorno Karabakh can be regarded so little that it will most likely not have any effect at all. Moreover, the implications on the military, economic and political dimensions will be minor. As it is the only major alternative between not using force and using force, it merely is symbolic politics to perhaps please the population and the political elite.
Therefore, to take all of the above into account, it results into a stalemate for Aliyev as doing nothing will result in a negative implication on the political dimension, whereas using force will lead to negative implications on all the other dimensions. In order to assess which steps Aliyev might take, it is also of importance therefore to realize which dimensions have more weight, which are non-compensatory.
The poli-heuristic approach assumes that there are several dimensions which are critical to the decision-maker, meaning, there exist an asymmetry in the importance of the different dimensions. Mintz argues that the political dimension is always non-compensatory in foreign policy decision-making as leaders first want to satisfy the direct importance of staying in power, whereas after economic or diplomatic dimensions come to mind. Assuming that leaders wish to stay in power, an assumption which is not a very controversial assumption, the political dimension will mainly be concerned with this.
If assuming that the political dimension is more critical than the other dimensions, the possibility that Aliyev decides on using force at some moment in the near future is not extremely unrealistic. Although it is difficult to measure exactly the moment at which he will risk loosing the support of the population or the political elite, there exists a risk and most likely Aliyev is aware of that risk — as the mentioning of a possible war over Nagorno Karabakh in at least 9 speeches last year exemplifies.
The conflict over Nagorno Karabakh after the fall of the Soviet Union left great unresolved tensions between Azerbaijan and Armenia; which on an economical level due to Azerbaijan’s natural resources has halted the maximization of wealth for Azerbaijan. Another complicated factor has been Russia’s influence as well as neighboring Georgia, which had to deal with intra-strate and inter-state conflicts itself. The result has been a hesitant Europe when it comes to their wish to diversify their energy security, which in turn risks a lower demand for Azerbaijan’s natural resources or the South Caucasus as a whole as alternative route energy route from Russia.
However, the stalemate as the situation is currently will perhaps not remain. Using Alex Mintz’ poli-heuristic theory, there exists a risk of renewed violence in the South Caucasus that should not be underestimated. The use of force to incorporate Nagorno Karabakh back into Azerbaijan’s full control is not an irrational decision from Azerbaijan’s perspective, since the loss of Nagorno Karabakh has resulted in a major security threat to Azerbaijan’s political security and the wish to rectify this has nation-wide support. However, while the implications it will have on Azerbaijan’s energy security environment are major, they might be of lesser importance to Aliyev when taking Alex Mintz’ poli-heuristic model as guidance to assess the importance of the different dimensions.