Azerbaijan looks westward
By Karl Rahder for ISN Security Watch (22/02/07)
The geopolitical landscape in the South Caucasus appears to be shifting in a fundamentally westward direction, a change triggered by the Russian announcement in December that Gazprom, Russia's massive state-owned energy consortium, would dramatically raise the price of natural gas exports to Azerbaijan. The shift, which is being described by analysts in Baku as a reorientation of Azerbaijan's foreign policy "towards the West" and a "unique opportunity," was spelled out in a strongly worded Wall Street Journal opinion-editorial on 19 January written by Foreign Minister Elmar Mammadyarov.
In unusually frank terms, the foreign minister - known for his careful use of language - spoke of a "defining moment for Azerbaijan and the South Caucasus as a whole," and in comments aimed at Russia, complained of "market bullies" and emphasized that Azerbaijan must be guided by its national interest.
What may now be changing is President Ilham Aliyev's policy of maintaining a special relationship with Russia as he balances US and Iranian ambitions. Even his opponents often admit that Aliyev, inaugurated as Azerbaijan's president in 2003, has inherited the skills of his late father, Heydar. The elder Aliyev was a cagey politico and former KGB general who deftly balanced his country's powerful neighbors, Russia and Iran, as well as the distant US superpower, in a way that benefited Azerbaijan's national interest.
Keeping US bases out of Azerbaijan while accepting US assistance in modernizing its military; refusing to denounce Iran's nuclear program but keeping a watchful eye on Iranian influence in the region; and maintaining cordial ties with Russia have been hallmarks of Ilham Aliyev's foreign policy.
But the Russian announcement that it would more than double the price of natural gas to Azerbaijan was interpreted as "more than just a market message" by the foreign minister, who reminded readers of similar actions by Gazprom in Ukraine last year, as well as in Georgia and Belarus.
"In response," he wrote, "we have decided to stop buying Russian gas as well as to stop using the Russian pipeline to export Azerbaijani oil to Europe"- an apparent reference to the Baku-Novorossiisk pipeline that has been utilized for many years. The timing of Gazprom's - and Russian President Vladimir Putin's - actions has not been clearly explained, although it is widely assumed in Baku that the origins stem from the breakdown in relations between Russia and its South Caucasus neighbor Georgia.
The Georgian genesis
While Russia is rarely accused of subtlety in its foreign policy, the Georgians cast subtlety aside when they arrested four Russian military officers and 10 Georgians on charges of espionage in late September - a move that touched off a war of words with the Kremlin and led to the evacuation of Russian diplomatic personnel from Tbilisi and suspension of air service to Moscow.
This episode was the capstone to a continuing struggle with Russia over Georgia's difficulties with breakaway South Ossetia and Abkhazia - two pro-Russian regions nominally a part of Georgia where Russian peacekeeping troops operate. It is a continuing reminder that Georgia is militarily weak and has limited room for maneuver, even when its own territorial integrity is involved. In November, the self-proclaimed Republic of South Ossetia held elections in which Eduard Kokoity, the de facto president, won a landslide victory. A simultaneous referendum for independence garnered similar results, although neither the referendum nor the presidential vote has been recognized by the international community. In December, non-binding measures in Russia's lower house of parliament - the State Duma - called for recognition of both South Ossetia and Abkhazia. The measures passed unanimously.
The spy scandal and the South Ossetian vote were preceded in March by Russia's ban on Georgian wine and spring water imports, major sources of export revenue in Georgia, as well as the cutoff of gas deliveries to Georgia after a pipeline explosion in January - an event that Russia insisted was beyond its control, but that Georgian President Mikhail Saakashvili charged was an act of "serious sabotage from the side of the Russian Federation."
South Caucasus analysts almost unanimously agree that the real reason for the sanctions, if not the explosion, has been Georgia's embrace of EU and NATO integration, in part to counteract continuing Russian military influence in the two breakaway regions.
Amid the unraveling of relations between Russia and Georgia and despite the successful color revolution in Tbilisi - which was dead on arrival in Baku in 2005 - Azerbaijan continues to integrate its economy with Georgia's and has discussed the sale of Azerbaijani natural gas to Georgia via Azerbaijan's Shah Deniz field in the Caspian Sea. The Shah Deniz is not yet fully developed, although the Azerbaijani Foreign Ministry estimates that eventually it could produce up to 16 billion cubic meters of gas a year, although export to Georgia has been delayed in part by Azerbaijan's domestic needs now that it has refused to purchase natural gas from Gazprom.
Thus, Putin has witnessed for some time the growing ties between Azerbaijan and Georgia despite his policy of isolating Georgia and punishing it for a variety of geopolitical sins.
Gazprom's lopsided price structure is an oddity, at least on the surface, given its argument that it seeks only fair market rates for natural gas. Ukraine pays US$130 per 1,000 cubic meters, the result of intensive negotiations during the 2005 gas crisis there, and even Kremlin-friendly Belarus was recently subjected to a drastic spike in gas charges that was negotiated down to US$110 per 1,000 cubic meters at the beginning of this year. But Tbilisi has something new in common with Baku: both are being charged a crippling US$230, in line with European market prices but a hardship especially for resource-poor Georgia. Armenia's price of US$110 is also the subject of recrimination in Azerbaijan, still in a technical state of war with Armenia over separatist Nagorno-Karabakh.
The issue of Karabakh hangs like a shroud over almost any discussion of Azerbaijan's relations with its neighbors, and when Mammadyarov wrote in his article that the "frozen conflicts in the region" should be resolved "in adherence to the principle of territorial integrity of all three South Caucasus states," this was a clear message to Moscow that not only does Azerbaijan feel that Russia has given undue support to Armenia, but that Baku endorses the Georgian position on retaining sovereignty over South Ossetia and Abkhazia.
Possible Azerbaijani retaliation
Read on... 
