Azerbaijan: Is Iran Trying to Make End Run via Baku?

Azerbaijan President Ilham Aliyev (right) meets Iranian President Mahmoud Ahmadinejad in Istanbul, Turkey, in June 2010 during a summit of several heads of state. While the United States is heading the pressure of enforcing new sanctions against Iran, Azerbaijan is caught in a delicate balance of appeasing its Western ally and maintaining close relations with its southern neighbor. (Photo: Presidential Press Service, Azerbaijan)

Amid the ongoing controversy surrounding Iran’s nuclear program, Azerbaijan appears caught in a delicate balancing act between cooperation with the United States in implementing sanctions against Tehran and the reality of its own longstanding ties to its southern neighbor.

Roughly a month after a visit to Baku by US Undersecretary for Terrorism and Financial Intelligence Stuart Levey to make the case for Azerbaijan upholding sanctions against Iran, Azerbaijani officials remain cautious about discussing their position on the Iranian nuclear issue.

A spokesperson for the Azerbaijani Ministry of Foreign Affairs declined to comment about the specifics of Washington’s requests while the discussions continue. “As a member of the United Nations, Azerbaijan respects its resolutions and decisions,” ministry spokesman Elkhan Polukhov said.

Azerbaijan, however, did not sign the UN Security Council Resolution 1929 this past June, a measure that imposed additional sanctions on Iran for failing to demonstrate the peaceful nature of its nuclear research program.

Azerbaijan and Iran share strong historical and cultural ties that, conceivably, would complicate any Azerbaijani decision to adopt a more aggressive approach toward its southern neighbor. Northern Iran, which borders on Azerbaijan, is populated predominantly by ethnic Azeris.

Elkhan Shahinoglu, head of Baku’s Atlas research center, believes that the Azerbaijani government will continue to maintain a low profile about its talks with Washington on sanctions against Iran, aiming to avoid a direct confrontation with Tehran.

Iranian President Mahmoud Ahmadinejad is scheduled to visit Baku on November 18-20 for a summit of Caspian Sea littoral states, which will include meetings with President Ilham Aliyev and other top officials in Baku. Whether those talks will touch on concrete proposals for economic cooperation remains uncertain.

Shahinoglu underlined that no grounds exist to assume the United States is twisting Baku’s arm to help pinpoint what Levey described as “sources of risk” for the violation of UN sanctions against Iran. “It is consultations, an exchange of information and both countries are indeed interested in it,” Shahinoglu said, referring to Azerbaijan’s dialogue with Washington about Iran.

In an October 21 interview with online television station Obyektiv.tv, US embassy spokesperson Keith Bean said that Washington has encouraged Azerbaijan to observe international sanctions against Iran, but added that the United States has not given Azerbaijan a specific list of Iranian companies that, under the sanctions, must be blocked from activities with or in Azerbaijan. “Only one [Iranian] company, which is under sanctions and cooperation with it banned, was named,” Bean said. “Mr. Levey provided Baku with technical information in order to prevent the violation of sanctions, especially in the banking and investment sectors.”

Iran’s largest private bank, Bank Melli Iran, which has operated in Azerbaijan since the mid-1990s, could appear to be the company in question. Suspicions that the bank is financing Iran’s nuclear program led to its placement on the list of Iranian companies targeted by sanctions. All of Bank Melli Iran’s branches and subsidiaries in Europe have since been closed. Representatives of Bank Melli Iran declined to talk with EurasiaNet.org. The Central Bank of Azerbaijan has made no announcement about canceling the bank’s license.

The Iranian embassy refused to comment about the US push for Azerbaijan to observe financial sanctions against Iran.

One Baku-based political analyst believes, though, that with its accounts frozen in European banks, Tehran may try to safeguard its financial resources in neighboring Azerbaijan, Armenia and Georgia.

“The frequent recent visits of high-ranking Iranian officials to Baku, Yerevan and Tbilisi confirm it,” said Gabil Huseynli.

High-ranking Iranian government delegations have visited Baku since September to talk about economic cooperation, including in the banking and alternative energy sectors. Iran’s defense minister, Ahmad Vahidi, came to town roughly one week before Levey’s arrival to discuss working with Azerbaijan’s defense industry.

No other details have been released about the status of the discussions.

But analyst Shahinoglu argues that Azerbaijan has little interest in taking economic cooperation with Iran that far. With a trade volume of roughly $1 billion, “Iran is not on Azerbaijan’s list of top-five trade partner countries,” observed Zohrab Ismayil, head of the Baku think-tank Assistance to a Free Economy. “Thus, Azerbaijan does not risk serious economic difficulties” because of Iran.

Shahinoglu agrees. “In reality, Baku is … not seeking closer economic ties with Iran and is irritated with Tehran’s close cooperation with Armenia,” he commented. “Azerbaijani officials even openly said that to the Iranians.”

The Azerbaijani Ministry of Defense claims that Defense Minister Safar Abiyev complained to Iranian Defense Minister Vahidi that “while Iran orally always talks about brotherly relations with Azerbaijan, in reality, it’s actively developing friendship and cooperation with Armenia.”

In the long run, the desirability of maintaining Azerbaijan’s image as a dependable UN partner will outweigh any advantage to be gained from increased economic ties with Iran, concluded analyst Huseynli. “Baku should fulfill the UN sanctions in order to not become a country in which Iran conducts illegal financial operations,” Huseynli said.