Pipeline Politics in the Caspian Basin Makes for Strange Political Bedfellows

Yushchenko made his first official visit September 7-8 to Azerbaijan. The trip produced seven bilateral cooperation agreements, including a commitment to expand energy cooperation. Yushchenko said his administration's top priority was to forge deals concerning "the extraction, refining and sale of oil," the Trend news agency reported. In talks with Aliyev, he touted Ukraine's Odessa-Brody pipeline as a potentially new energy conduit linking Azerbaijan, and possibly Kazakhstan, to Western European markets. The Yushchenko-proposed route would bypass Russia, as does the already existing Baku-Tbilisi-Ceyhan pipeline. [For background see the Eurasia Insight archive].

Following his discussions with Azerbaijani leaders, the Ukrainian president acknowledged that Kyiv and Baku were not a natural fit as partners. "Our talks were easy-going, but there are problems in our relations that we are ready to resolve," he said.

For much of the past two years, Ukraine and Azerbaijan have been at political odds. Yushchenko, who led the Orange Revolution in Kyiv in late 2004, became the embodiment of the democratization movement in the former Soviet Union. [For background see the Eurasia Insight archive]. Aliyev, meanwhile, drew international criticism in connection with the Azerbaijani government's manipulation of the 2003 presidential and 2005 parliamentary election. [For background see the Eurasia Insight archive]. In short, the two seemed to be polar opposites in terms of political practices.

After Yushchenko's triumph in Ukraine, Azerbaijan was among the authoritarian-minded former Soviet states that took action to prevent the spread of what became known as the Orange Revolution phenomenon. In September 2005, for example, authorities at Baku airport barred an activist of the Ukrainian youth organization Pora, which served as a catalyst for the Orange Revolution, from entering Azerbaijan, prompting a protest from Kyiv. [For background see the Eurasia Insight archive].

The "cold war" between Kyiv and Baku reached a peak in October of last year in a dispute over the fate of Rasul Guliyev, an Azerbaijani opposition leader who is wanted in Baku on embezzlement charges. Guliyev, who denies the allegations against him, was attempting to return to Azerbaijan to take part in the country's parliamentary elections. [For background see the Eurasia Insight archive]. Azerbaijani authorities barred his plane from landing in Baku and he was diverted to a Ukrainian airfield. With an international warrant against him, he was briefly detained in Ukraine, but then released. The decision against keeping Guliyev in custody caused displeasure in Baku, and Aliyev reportedly personally called Yushchenko to complain.

Geopolitical circumstances in the Caspian Basin seem to have forced the Azerbaijani and Ukrainian leaders to set aside their philosophical differences. From Azerbaijan's perspective, Ukrainian political support can reinforce Baku's stance toward a Nagorno-Karabakh settlement. [For background see the Eurasia Insight archive]. In a September 7 statement, Aliyev expressed thanks for "Ukrainian understanding of Azerbaijan's [Karabakh] position."

Addressing students of Baku Slavic University on September 8, Yushchenko placed Ukraine firmly on Azerbaijan's side, saying that "recognition of Azerbaijan's territorial integrity is a necessary condition for settlement of the [Karabakh] conflict."

Yushchenko's Karabakh statement appears linked to Ukraine's desire for Azerbaijani support in the energy sphere. Kyiv's efforts to reduce its energy dependence suffered a considerable blow in early September, when Russia cut a deal with Turkmenistan on gas supplies, thereby denying Ukraine significant access to Ashgabat's abundant energy reserves. The Russian-Turkmen deal will likely require that Ukraine pay a significantly higher price for gas imports. [For background see the Eurasia Insight archive].

Russia also wields considerable influence over Ukraine's oil supplies. The Odessa-Brody pipeline was supposed to reduce that dependence, but the oil route, which is capable of transporting 40 million tons of oil per year, remains underutilized. Yushchenko sought an Azerbaijani commitment to ship a relatively modest amount – about 4.5 million tons – via Odessa-Brody bound for Western markets. Aliyev's did not give a clear response, although he indicated that diversification of Azerbaijan's energy export routes is a basic element of the country's oil strategy. "We have already established three pipelines to export our oil to world markets. However, as oil exploration in Azerbaijan increases we consider new facilities for export," Aliyev said.