12-14 APRIL 2010 - VISIT TO BAKU, AZERBAIDJAN

The Azerbaijani delegation to the NATO PA

Official speakers stressed that Azerbaijan is interested in further developing its relations with NATO, though independent observers suggested that the country needs to balance its foreign and security policy with those of neighbouring Russia and Iran, the delegation was informed.  Azerbaijan’s economy is greatly benefiting from its oil and gas which is driving the impressive improvement of the country’s infrastructure, particularly in Baku.  The delegation was led by the Chairman of the Political Committee’s Sub-Committee on NATO Partnerships, Rainer Stinner (DE) and notably met with the Azerbaijani delegation to the NATO PA, leading members of the Milli Mejlis’ Foreign Affairs and Defence Committees as well as with several senior government officials, including the Ministers of Foreign Affairs and Defence.  The delegation also met with the OSCE representatives in Baku as well with independent experts.  A roundtable discussion organised by the regional office of the Friedrich Naumann Foundation and a visit to the Azerbaijani Peacekeeping Battalion concluded the intense and interesting visit. 

Some Members of the PCNP delegation 

  I.  NAGORNO-KARABAKH

2.  The issue of the occupied territory of Nagorno-Karabakh dominated many of the meetings of the delegation.  Host country speakers reminded the delegation of the huge loss in human life and territory.  The land occupied by Armenia comprises Nagorno-Karabakh and seven districts surrounding the former autonomous region, representing about 20% of Azerbaijan’s territory.  Approximately 20,000 Azerbaijanis were killed, while an estimated 800,000 were forced to flee during the 1992-94 war.  The latter figure represents some 200,000 refugees from Armenia and around 600.000 internally displaced persons from the zone of conflict (including the 50,000 Armenians who had lived in Nagorno-Karabakh).  Up to 300,000 Armenians from Azerbaijan would have been displaced as a result of the conflict. 

3.  The situation remains dangerous and the continuation of the conflict highly increases the risk of war, the delegation learned.  Several host country officials, including Ziyafat Asgarov, Head of the delegation of Azerbaijan to the NATO PA and First Deputy Chairman of the Milli Mejlis, as well as other Members of the Azerbaijani parliament warned that Azerbaijan's only alternative to solve Nagorno-Karabakh would be to use military force, as all other ways to solve the issue peacefully have been exploited.  In a similar vein, a member of the opposition said that Azerbaijan cannot wait much longer for diplomacy to work.  Particularly the young generation among Azerbaijanis is loosing its temper, he added. 

4.  The Defence Minister Safar Abiyev noted that 80% of the country's soldiers “remain in the trenches” because of the conflict.  He stressed that Azerbaijan could hit all areas in NagornoKarabakh and in Armenia proper.  If Armenia decided to attack Azerbaijan's energy production facilities, Azerbaijan would strike Armenia's nuclear facility, he added.  Chairman Stinner and other members of the NATO PA delegation repeatedly stressed that resorting to military means would not solve the situation and strongly encouraged host country officials to continue seeking a diplomatic agreement with Armenia. 

Chairman Rainer Stinner and Minister of Defence  Safar Abiyev

5.  Both official representatives and independent speakers considered a solution of the conflict as the key question for the security and the future development of the region.  In this context, Arastun Orujlu, Azerbaijan Project Advisor for the Friedrich Naumann Foundation, said that the deteriorating situation in the North Caucasus could further increase the risk of war in the South Caucasus.  Other host country interlocutors shared the concern about a negative impact of the deteriorating situation in the North Caucasus, particularly in Dagestan in the Russian Federation, on Azerbaijan.  In this context Ali Shafiyev, Deputy Minister for National Security, pointed out that the flow of radicals from the North Caucasus region to Azerbaijan has increased. 

6.  Host country speakers agreed that Azerbaijan would not compromise on its territory.  However, whatever modern, legal self-government of Nagorno-Karabakh is acceptable to Armenia would be acceptable to Azerbaijan argued Ilgar Mammadov, Co-founder of the Republicanist Alternative (REAL) civic union.  He added that a possible solution could be to provide NagornoKarabakh wide-ranging autonomy, similar to the one Tartarstan enjoys within the Russian Federation. 

7.  Ziyafat Asgarov and other host country officials bemoaned that still after almost 20 years,  no diplomatic agreement over Nagorno-Karabakh had been reached.  He and other host country officials underlined that Azerbaijan “has done and is doing a lot to reach a peaceful solution to the conflict”.  In contrast, Armenia continues to “ignore the principles of international law”, they said.  The Vice-President of the Milli Mejlis stressed that Armenia has ignored four resolutions of the United Nations Security Council and one resolution of the Council of Europe which called for the withdrawal of Armenian forces from occupied Azerbaijani territory.  Several host country officials voiced disappointment that the international community, including NATO and NATO member states, have not clearly named Armenia as the “aggressor”.  Mr. Asgarov and Defence Minister Abiyev called upon NATO to do so and stressed that NATO should pressure Armenia to reach an agreement over the issue.  They also suggested that NATO is applying “double standards” to the Nagorno-Karabakh conflict.      

8.  Mr Asgarov and others noted that the OSCE Minsk process, which is conducted by the Minsk Group and is tasked to find a political solution to the conflict Nagorno-Karabakh conflict, has thus far been unable to solve the question.  The Minsk Group is headed by the Co-Chairmanship consisting of France, the Russian Federation and the United States.  Permanent members of the Minsk Group include Belarus, Germany, Italy, Sweden, Finland, Turkey as well as Armenia and Azerbaijan and on a rotating basis the OSCE Troika.  Defence Minister Abiyev and others considered the OSCE Minsk process “ineffective” and said they were disappointed about the lack of progress. 

9.  In contrast, the OSCE Ambassador Bilge Cankorel, Head of the OSCE Office in Baku considered the Minsk process to have produced some tangible progress, reflected, among others, by the meetings between the Presidents of the two countries.  Similar assessments were voiced by several independent observers, although Arastun Orujlu of the Friedrich Naumann Foundation noted that different interests of the co-chairing countries limit the effectiveness of the Group.  Foreign Minister Mammadyarov and other Azerbaijani officials said they fully supported the “Madrid Principles” which were proposed in December 2007 by the three co-chairs of the Minsk Group and provide a vague framework for the future political solution of the conflict.  They have since been the basis for extensive talks between the presidents of Armenia and Azerbaijan, and have reportedly undergone changes in the process.  The Principles include, among others 1) returning the territories surrounding Nagorno-Karabakh to Azerbaijani control; 2) an interim status for Nagorno-Karabakh providing guarantees for security and self-governance; 3) a corridor linking Armenia and Nagorno-Karabakh; 4) a future determination of the final legal status of Nagorno-Karabakh through a legally binding public expression of will through a referendum; 5) the right of all internally displaced persons and refugees to return to their former places of residence; and 6) international security guarantees that would include a peacekeeping operation.  However, several independent speakers added that a referendum in Nagorno-Karabakh would not be allowed by the Azerbaijani constitution (which allows referenda only for all of country).  Thus, a referendum in Nagorno-Karabakh would require a change of the constitution before it could be held. 

10.  Foreign Minister Mammadyarov informed the delegation that an agreement between Armenia and Azerbaijan is still pending as there “is no clarity yet about the details of an understanding.”  While Azerbaijan has in principle accepted the latest proposal for an agreement, Armenia has given “dubious messages”, the Minister said.  There was agreement that Turkey has played a very constructive, positive role in addressing the issue.  In this context, host country speakers noted the recent Turkish initiative to normalise its bilateral relationship with Armenia as potentially very helpful.  Independent speakers said that Azerbaijani government officials had originally criticised the initiative as they considered a rapprochement between Ankara and Yerevan detrimental for Baku.  The relationship between Baku and Ankara has meanwhile been restored.  However, the future of the Turkish-Armenian reconciliation process now appears fragile amid Turkish objections to a decision by Armenia's Constitutional Court on protocols the two countries signed last October.
 
11.  Mr Mammadov considered 2010 to be crucial for finding a peaceful, diplomatic agreement to the conflict and explained that, due to its economic boom, Azerbaijan is becoming increasingly confident and strengthening its military capabilities.  Armenia, on the other hand, is becoming more isolated and weaker.  Therefore, Yerevan has a strong motivation to integrate itself in the region, he commented.  He added that Armenia faces severe economic and financial prospects as it experienced a 14-15% decline in GDP in 2009 and a halving of remittances from approximately US-$ 2 billion in 2008 to one billion in 2009.  Moreover, Armenia is suffering from a severe decline in population as many leave the country to escape the dire economic conditions.   

12.  Other observers suggested that “Armenia is not an independent decision maker”.  In addition to Russia, which has great leverage over Armenia, the country's diaspora, which does not prefer a compromise with Turkey, has significant influence on the politics of Yerevan, speakers commented.  Another observer pointed out that Azerbaijan and Armenia came close to a negotiated settlement in 1998 and again in 1999, but both were prevented by Russia.  He said that Russia is today pursuing a policy which is trying to tighten its grip on the former Soviet republics. 

Chairman Stinner and Minister for Foreign Affairs Mammadyarov

II. IRAN

13.  In addition to Russia in the North, Azerbaijan has a difficult relationship with its southern neighbour Iran with which it shares more than 600 kilometers of land border.  For Azerbaijan, the Islamic Republic of Iran is not just an ordinary country as both countries share values from their mutual past and some elements of a common culture.  Azerbaijan has the second largest Shiah population in the world after Iran.  Although it is difficult to determine the exact number of Azerbaijani Turks in Iran (host country speakers offered different estimates of the number of Azerbaijani Turks living in Iran ranging from 20 to 30 million) their number is significantly higher than the population of Azerbaijan.  The Azerbaijani Turks in Iran constitute a significant part of the population of that country but are deprived of their national rights.

14.  Independent speakers said that Iran pursues a dubious policy towards Azerbaijan as it claims that it is supporting Azerbaijan, but it is clandestinely supporting Armenia  with which is has close political and economic relations. Other suggested that Iran is not interested in finding a solution for the problems in Azerbaijan, particularly with regard to NagornoKarabakh. 
 
15.  Azerbaijan has always felt threatened and continues to feel threatened by Iran from an ideological, economic, and political point of view.  A contentious issue between Azerbaijan and Iran and Russia is the Caspian Sea territorial dispute which remains to be settled.  Both Russia and Iran consider the new oil and gas producers in the Caspian region as a threat to their own economic interests, independent speakers suggested.  Iran and Russia are also concerned over Azerbaijan’s security co-operation with the West, and the US in particular, as well as over increasing western capital investments and the expansion of foreign presence in the region in general. 

16.  Depicting Iran as a totalitarian state, an independent speaker said that Tehran considers a democratic Azerbaijan to pose a serious problem for Iran.  Iran as a nuclear state would significantly confine the security of Azerbaijan. 

17.  Host country officials unanimously considered Armenia as by far the most severe and imminent security threat.  In addition to the conflict with Armenia, terrorism also poses a threat to Azerbaijan.  Deputy Minister for National Security Shafiev stressed that the majority of the terrorist threats are linked to Armenia.  Moreover, terrorist groups remain a severe security threat to the country and seven terrorist groups have been discovered and 30 of their members have been arrested in the last two years, according to the Deputy Minister for National Security.  Main security concerns in this context are al Qaeda in the Caucasus and religiously motivated terrorist groups, he elaborated.  There have been some attacks in the past and he added that most of the attacks by religiously motivated terrorist groups have been against Western energy installations and interests.  In the field of combating terrorism, Azerbaijan co-operates with NATO in the context of the Individual Partnership Action Plan (IPAP), the Minister mentioned.  Director of "Turan" Information Agency Mehman Aliyev reminded the delegation that Azerbaijan is one of the major hub for the transportation of poppy and opium drugs into the Russian and Western markets.  The most immediate transit point is Iran, which is bordering Afghanistan.  200-270 tons of heroin pass through Azerbaijan every year, according to US and Russian intelligence sources, he said.  In this context, the Deputy National Security Minister informed that his country also co-operates with UNDOC and Russia on the illegal trafficking of drugs.  Mr Aliyev also mentioned that Azerbaijan was involved in intercepting clandestine the deliveries of nuclear material from Russia to Iran.  Azerbaijan is also a transit country for the trafficking of human beings, though the Deputy Minister for National Security did not consider this as a main problem.  Responding to a question from the delegation, the Deputy Minister said that there is no parliamentary control of the National Security Ministry.  He added, however, that there is communication between him and parliamentarians on an informal basis.  

Meetings at the Ministry for National Security

III.  AZERBAIJAN AND NATO

18.  Host country officials said they valued the co-operation with NATO which they viewed as mutually beneficial.  Azerbaijan is benefiting from the Partnership for Peace (PfP) programme by increasing its compatibility with NATO forces as well as by the reform of its armed forces.  Azerbaijan also co-operates with NATO in the IPAP framework.  Members of the Milli Mejlis said that all political forces and approximately 80% of the population are in favour of the country's Euroatlantic integration. 

19.  However, several host country officials bemoaned that NATO is not providing more support over Nagorno-Karabakh.  Defence Minister Abiyev noted that Azerbaijan would not be able to buy modern weaponry from NATO member states and said that 'Azerbaijan is coming closer to NATO, but NATO is not coming closer to us'.  Both official and independent speakers suggested that NATO and NATO member countries should devote more attention to the country and the region.  Mr Aliyev commented that the August 2008 war between Russia and Georgia proved that everything could happen in the region.  Therefore, he NATO should, from the perspective of the three South Caucasus countries, pursue a proactive role in furthering regional security co-operation, he added. 

20.  In contrast to official speakers, who said that NATO needs to do more to deepen the partnership with Azerbaijan, some independent observers commented that foreign factors (pressure from Russia and Iran) and domestic factors (the weak democracy and the centralisation of political and economic power in the hands of a small ruling elite) limit the further development of closer relationship between NATO and Azerbaijan.  One independent speaker said that Azerbaijan lags behind because the government in Baku has delayed pursuing necessary reforms in the military and security realms.  There was unanimity, though, that Azerbaijan is in a difficult situation and needs to balance its relations with NATO with its policy towards Russia and Iran. 

21.  The delegation also paid a visit to Azerbaijan's peacekeeping battalion, located in the outskirts of Baku.  Since the country joined NATO's Partnership for Peace (PfP) programme in 1994, the country has been participating in a number of NATO-led peacekeeping operations and Azerbaijan has gradually expanded its peacekeeping capabilities from company to battalion level.  The first platoon-sized deployment took place 1999 in Kosovo; the size of Azerbaijan's contribution was later increased to 642 soldiers and the deployment ended in April 2008.  Between 2003 and December 2008 150 Azerbaijani forces were also dispatched to Iraq, where they operated with US Marines.  Currently, 90 Azerbaijani soldiers are serving in Afghanistan where they serve under Turkish command in Kabul.  Responding to a question from the member of the delegation, the delegation was informed that the Azerbaijani forces also follow Turkish caveats.  Original deployment began in November 2002 with 22 military soldiers and the main tasks of the Azerbaijani contingent include installation security, and vehicle checkpoints.  Moreover, Azerbaijani soldiers are also involved in training the Afghan National Army (ANA).  In the view of the Azerbaijani soldier, the security situation in Afghanistan remains tight and is currently deteriorating. 

Exercise at the Peacekeeping Battalion

IV. ENERGY

22.  According to Mehman Aliyev, beginning of offshore exploration started pressure on Azerbaijan; Russia and Iran started military build-up.  Russian navy equals the number of all other Caspian Sea states.  Iran has the highest number of soldiers deployed across the Caspian coast.  Legal status of the Caspian has not been agreed upon, presents the main problem.  Some offshore oilfields are disputed.  Energy security must take into consideration these issues as well.  The disputed fields are not commercialised;

23.  In separate meetings, Deputy Energy Minister Gulmammad Javadov and Director of the Oil research Center Ilham Shabam, informed the delegation that oil production in Azerbaijan exceeded 50 million tons in 2009, an increase of 14% over 2008, while gas production increased to 21.6 billion cubic meters in 2009.  With the startup of the Shah Deniz natural gas and condensate field off the coast in 2007, Azerbaijan went from being a net natural gas importer to a net exporter, shipping increasing amounts of natural gas via Turkey to Europe.  To secure future gas exploration, investments totally some US$ 20 billion will be necessary, he explained.  The Deputy Energy Minister and independent observers agreed that Azerbaijan is interested in exporting gas and oil to Europe.  Although Azerbaijan has signed contracts with Iran and Russia over the delivery of gas, neither country would be an answer for a long-term energy delivery contract, Mr Shaban said.  Government officials stressed their country’s willingness to fulfill Europe’s energy needs and criticized that European governments and investors continue to delay a decision about the Nabucco gas pipeline project, designed to lessen Europe’s energy dependence on Russia.  Azerbaijani government officials and parliamentarians stressed that Azerbaijan is ready to start the project, but that important political decisions from Europe are pending.  The Deputy Energy Minister said that there is “too much discussion and too much consultation about the project” which slows down its implementation.  He also called upon the Europeans to be more concrete on the quantity of gas they are interested in. 

24.  However, discussions in Baku revealed a general consensus that Azerbaijan alone would be unable to supply a sufficient quantity of natural gas.  Several other countries, e.g., Turkmenistan, Iraq, and Iran, have been mentioned in the past as additional suppliers.  Even if construction for the project would begin next year, it appears unlikely that the first gas could be delivered in 2014 Shaban commented. 

25.  Independent experts added that Baku has a self interest in selling its energy resources to the West but its energy infrastructure investments are lagging behind and that it lacks long-term strategy to develop and commercialise its oil and gas.  Mr Shaban said that the government had hoped to export at least 20 billion cubic metres of gas to Europe by 2010.  However, due to the economic crisis only 6 billion tons of gas are likely to be delivered, and no European country was among the buyers.  As far as crude oil is concerned Azerbaijan is planning to sell an aggregate of 500 million tons of crude oil until 2020.  The estimated net profit would be between US$ 135-145 billion, i.e. 15 billion US$ per year (based on average price of 70 US$ per barrel), he suggested. 

Meetings at the Ministry of Energy

V. DOMESTIC ISSUES

26.  Azerbaijan's economy is booming and the government is investing a considerable amount in the infrastructure development, primarily in the capital Baku.  In addition, Azerbaijan's reserve account, which has increased from US$ 2 billion to US$ 20 billion within the last five years, reflects the remarkable economic and financial improvements the country has encountered because of its significant natural resources.  Both official and independent speakers acknowledged the positive effects of economic reforms for revenues stemming from oil and gas production, which makes the country attractive for international investments.  However, while Azerbaijan is very transparent on the revenue side, there is no competition for infrastructure projects and the prices are highly inflated, sometimes by 400 to 500%, the independent speaker said.  As a result, corruption is widespread and the size of the unofficial economy equals the official one, several others said.  Business structures need to be privatised, but government wants to maintain its grip on that (in the future the oligarchs would have economic leverage). 

27.  The economic boom also helps to limit the negative impact the unresolved NagornoKarabakh issue has on Azerbaijan’s domestic issues.  The conflict has a heavy toll on the economy and according to Ilham Shaban the government spent about three of the 12-15 billion US$ of oil revenues that were allocated to the state budget on Internally Displaced Persons (IDPs) and refugees.  In addition, the occupation of Nagorno-Karabakh and the seven surrounding regions separates the Nakhichevan region from the rest of Azerbaijan.  Direct rail and road links to Nakhichevan remain severed and the region suffers economically. 

28.  Independent speakers also mentioned that the continuing conflict provides a pretext for the government to delay necessary reforms; others maintained that the ruling elite is not really interested in solving the Nagorno-Karabakh conflict.  They argued that democratisation would help addressing and solving the conflict and underlined the need for democratic reform.  A member of the diplomatic community nuanced this view by stressing that what is needed in Azerbaijan is not so much stronger democratic institutions but a market economy which is lacking. 

29.  Civil liberties had deteriorated in the last decade and society enjoyed less freedom now, suggested one independent speaker.  Media freedom, has now “practically disappeared”, he continued.  Another speaker said that 90% of the printed media and all of the electronic media are under government control.  TV stations are not accessible to the opposition.  The government can direct public opinion quite easily, as was demonstrated in the negative public reaction towards Turkey after it offered normalisation of relations to Armenia.  Azerbaijani TV stations are, however, not very popular and Azerbaijanis prefer to watch Turkish TV channels.  In contrast, use of the internet is not censored and Azerbaijanis are very internet-savvy people, the independent speaker said.  On the positive side, both official and independent speakers noted that Azerbaijan has a historic track record of ethnic and religious tolerance.