Azerbaijani President’s Visit to Moscow: Tough Talks over the Energy Issues

Azerbaijan President Ilham Aliyev and his Russian counterpart Vladimir Putin seem to have engaged in some hard bargaining over energy and security issues when the two met in the Kremlin on November 9. While Russia has used its energy assets as tool of coercion against many former Soviet states, Azerbaijan's own energy abundance and export capability enables it to engage Russia on more of a parity basis.

Aliyev arrived in Moscow for talks with Putin after visiting Brussels, where the Azerbaijani leader signed a memorandum on energy cooperation with the European Union, as well as lobbied EU officials for support on the Nagorno-Karabakh peace talks. [For background see the Eurasia Insight archive]. He also met with top officials of the North Atlantic Treaty Organization. Azerbaijan's ability to act as an independent energy player in Europe is a source of vexation for Russian officials, who have pursued policies aimed at achieving Moscow's lasting dominance as an EU energy supplier. [For background see the Eurasia Insight archive].

Azerbaijani and Russian officials remained tight-lipped on the specifics of the two presidents' discussions. All indicators, however, suggested that Aliyev and Putin jousted over energy and strategic issues. Publicly, Putin lauded the improvement in Azerbaijani-EU energy ties. Behind closed doors, Azerbaijani experts believe the Russian president spared no effort in trying to bind Baku closer to Russia, and thus get Azerbaijan to moderate energy cooperation with the EU and strategic ties with the United States and NATO. Another factor in the discussions likely was Azerbaijan's own purchase of Russian natural gas. The price and amount of Russian gas to be imported by Azerbaijan in 2007 remains up in the air. [For background see the Eurasia Insight archive].

Azerbaijan has long pursued policies that have sought to concurrently strengthen ties with the United States, EU and Russia. Politically, Aliyev favors tight control of the democratization process, generally following Putin's "managed democracy" model, in which the state keeps a lid on dissent and the non-governmental sector. In the energy and security spheres, meanwhile, Azerbaijan leans toward the West.

Aliyev is one of the few regional leaders to have good working relationships with both Putin and US President George W. Bush. [For background see the Eurasia Insight archive].

But balancing US and Russian interests is becoming increasingly difficult for Azerbaijani leaders as they pursue their top policy priorities, namely energy exports and a Karabakh settlement that allows Baku to retain control of the territory.

According to a November 10 analytical report published by Kommersant, Aliyev indicated to Putin that Baku would take Russia's interests into account in Azerbaijani-EU energy matters. "We work together with you, don't we; that's just what I told them [EU officials]," Kommersant quoted Aliyev as telling Putin, citing a Russian official source. At the same time, Aliyev reportedly rebuffed Putin's efforts to get Azerbaijan to go along with Russia's economic blockade of Georgia. [For background see the Eurasia Insight archive]. The Russian energy giant Gazprom recently announced a drastic price increase for its gas exports to Georgia, from $110 per thousand cubic meters (tcm) to $230 tcm, a hike that Georgian officials have denounced as politically motivated. [For background see the Eurasia Insight archive].

Azerbaijan's own vast reserves of oil and gas enable Aliyev to say "no" to Moscow. It also gives Baku the ability to pursue an independent security course. This independence has Russian officials increasingly worried. At present, Azerbaijan is engaging in a rapid military buildup, and officials in Moscow worry that this defense spending binge could be a harbinger of a rapid Azerbaijani move toward NATO integration. The Kommersant analysis also suggested the buildup could be a precursor to the establishment of an American military base in Azerbaijan, although Azerbaijani officials have repeatedly dismissed the possibility.

Lacking an energy trump card to play against Azerbaijan, Putin has few levers at his disposal to influence Azerbaijani decision-making. During their November 9 meeting, Putin reportedly offered significant economic investment and lucrative arms deals, but neither offer seemed appealing from the standpoint of enhancing Azerbaijan's sovereignty.

While Russia may have little that it can offer Baku, distrust of the United States and other Western countries seems to be on the rise not only within Azerbaijani governing circles, but on the grass-roots level as well. Political analyst Arif Yunusov, in an interview with the Russian news agency Regnum, said "disappointment with US policy" was widespread in Azerbaijan, explaining that resentment was growing over what he characterized as a "hypocritical" Bush administration policy toward Baku.

"They [Bush administration officials] keep saying that the only thing they are thinking about is to build democracy in Azerbaijan, but, in fact, the only thing they are thinking about is how to get our oil and how to use our territory against Muslims," Yunusov said. [For background see the Eurasia Insight archive].

Many Azerbaijanis are frustrated by the lack of follow-up on the US democratization rhetoric, while officials in Baku continue to worry about the possibility of Azerbaijani being caught in the middle of a possible US-Iran conflict.

After his visits to Brussels and Moscow, Aliyev will likely have trouble making choices that keep all parties – the United States, the EU, Russia, as well as Georgia – happy. Experts in Baku are reluctant to predict the country's future geopolitical course. "We should follow the situation for the coming few month before we can make clear conclusions. We have to follow Azerbaijan's position in the