Power Games in the Caucasus: Azerbaijan's Foreign and Energy Policy towards the West, Russia and the Middle East 9780755692644, 9781848854260

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To my parents, with love

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LIST OF M APS

Existing and proposed gas pipelines from the Caspian region Existing and proposed oil pipelines from the Caspian region The states of the Caspian Sea and the wider region, and a schematic division of the Sea into national sectors (including disputed areas)

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ACK NOWLEDGEMENTS

Events that have led to the writing of this book date some 15 years back when I was a foreign exchange student at a high school in St. Louis, Missouri. I had just won a prestigious Freedom Support Act scholarship sponsored by US Congress and arrived in the USA full of stereotypes and idealistic expectations. Euphoria began to fade quickly, as I tried to assimilate into a class of seniors whose knowledge of geography and international politics left a little more to be desired. Once in a conversation, a classmate asked why I had such an unusual name. I replied that I was Azerbaijani and the name was not at all uncommon in Azerbaijan. The expression of her face that followed still makes me smile. She said, ‘Aaaziiba . . . what? Wow, what’s that?’ I tried to explain that Azerbaijan was a country close to Russia and Turkey. ‘Turkey’, she repeatedly mechanically; then after a short pause, ‘You mean you are from a bird?’ A year later I went on to study international relations in Paris, and after unforgettable four years, I was accepted to do a post-graduate degree at the University of Oxford. Acceptance into the DPhil programme at Oxford was one of the happiest days of my life – little did I know what I was getting myself into! I chose to study diplomacy and energy as my specialisation, fascinated by the transformation of the global world order since the end of the Cold War and the rapid changes that were taking place across the former Soviet Union. While studying this subject, I have met dozens of people across the world, remarkably knowledgeable about the dynamics shaping political and energy

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developments in Russia and the Caspian region. My more recent work with energy companies has brought me into contact with energy analysts and technical specialists who possess first-hand knowledge and experience of energy-rich states of the former Soviet Union, including Azerbaijan. I feel incredibly privileged to have had a chance to learn from them. This book has benefited tremendously from the conversations I have had with them as well as with analysts, policy-makers and ordinary people in Azerbaijan, Russia, Turkey, the UK, the USA, Belgium, Finland and many other places where my research took me. There is no doubt that the world today knows far more about Azerbaijan than in 1995. Yet knowledge is still often fragmented and limited to groups of people who have either a professional, academic or personal interest in international politics, energy or security. This book, I hope, will be of interest to those who have a professional interest in the diplomacy and energy of the region. But I equally hope that at least parts of this book will appeal to those who have until now had little exposure to the eastern land in the heart of Eurasia. Writing this book has been a deeply personal and emotional experience. It has also been a formative one. Volumes on political psychology that I have read to explain decision-makers’ policy choices have allowed me to gain invaluable insights into the behaviour of ordinary people around me. Understanding the human psyche, with its divergent ways in which we process similar information, has made me a more accepting and tolerant person. I feel truly happy that I have had an opportunity to conduct this research, first, as a doctoral thesis and then, as a book. Many people have contributed to this study. The person who has done the most is my supervisor, Dr Alex Pravda. His encouragement and perceptive guidance throughout the three years of my DPhil (as well as two years of MPhil) have turned some initial thoughts that I had on the subject into a coherent piece of work. He, along with my parents, was also the guiding force that gave me confidence and strength to turn the thesis into a book – an endeavour that only appears to be straightforward!

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Professor Archie Brown, who was one of my examiners, contributed to this book through his valuable comments on the manuscript, which gave me new ideas and insights. His prolific work is an inspiration to me. Dr Andrew Monaghan of NATO Defence College did much to encourage me to write and deepen my research; every chapter, every section of this book has benefited from his vast knowledge of postSoviet politics, military and energy. His astute remarks have been a source of inspiration every step of the long way that this manuscript has travelled from when it was a thesis to when it became a book. Many other friends and colleagues have spent their evenings and weekends reading the chapters and sending me their views, and for that I am most grateful. I’d like particularly to thank Alistair Buchanan, Pauli Järvenpää and Andy Morris. The meticulous work of my copy editor, Michael Taylor, has most certainly improved the flow of the prose. And my editor at I.B.Tauris, Maria Marsh, has been wonderful: she has been both supportive and prompt with her feedback, which I found highly valuable. Finally, my parents have been irreplaceable in their unwavering support, and it is to them that I dedicate this book. Without them, neither the thesis nor the book would have become possible. Thank you very much.

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Existing and proposed gas pipelines from the Caspian region

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Existing and proposed oil pipelines from the Caspian region

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The states of the Caspian Sea and the wider region, and a schematic division of the Sea into national sectors (including disputed areas)

CHAPTER 1 INTRODUCTION: AZER BAIJAN IN GR EAT POWER POLITICS

Azerbaijan is a small country of 8.2 million inhabitants in the heart of the Caucasus. Among its most salient features as a state are its small size and geographical proximity to Russia – a metropolitan power, traditionally dominant and imperial. Its shared frontiers with Russia, Turkey and Iran place it in the centre of a geopolitically sensitive triangle formed by three significantly more powerful neighbours. Its position implies that Azerbaijan’s foreign policy is likely to be highly constrained by the interests and policies of the larger states in its vicinity. Yet Azerbaijan is rich in oil and gas resources, and is part of the wider Caspian region, which has since the end of the Cold War and the dissolution of the Soviet Union become increasingly dynamic and developed diplomatic relations with world states and international organisations. In the 1990s, investing in a hydrocarbons-rich region, previously closed to foreign investors, created an attractive opportunity for the involvement of international oil companies (IOCs). Despite its attractions, however, any investment in Azerbaijan, as in the other former Soviet republics, was highly risky and associated with significant costs. In the case of the Caspian, these costs were raised even higher by the fact that the country’s oil and gas industry required massive investments in new technology before any offshore operations could begin. Bringing that technology into a closed sea (that is, a sea

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that has no connection to the world ocean) and over the objections of Russia, which controls the Volga-Don Canal, the country’s only water link with the outside world, was no easy undertaking. It required a pro-active policy on the part of the Azerbaijani government to assure investors that political risks would be reduced to acceptable levels and an investment formula would be found to accommodate the IOCs’ concerns and risk perceptions. Similarly, from the political point of view, many foreign governments were interested in building relations with a burgeoning state, of which many had known only that it was part of the Tsarist Empire before being incorporated into the Soviet Union. Indeed, policy-makers in some states were better informed than in others, which explained the rapidity with which they reacted to the transformation of the former southern republics of the Soviet Union into independent states. For instance, Turkey, which, in addition to its geographical proximity to Azerbaijan, had cultural and linguistic affinity for it, was first to recognise the country’s independence and establish a diplomatic mission in Baku. The fact that Azerbaijan in the early 1990s attracted the attention of regional and extra-regional powers was a positive development in that it enlarged the small state’s manoeuvring space internationally and gave it hope of breaking away from the ambit of Russia after two centuries of dependence. However, the regional and extra-regional powers that displayed interest in Azerbaijan were often even more enthusiastic about building relations with post-Soviet Russia. Turkey, for instance, was highly interested in promoting economic ties with Russia, particularly in trade, construction and gas. Importantly, the foreign states, even those, which like Turkey, appeared to be Azerbaijan’s ‘natural allies’, were reluctant to antagonise Moscow, with which they had common interests. In other words, the interest that foreign states showed in Azerbaijan was important but it was not what motivated Baku to distance itself from Moscow.

The policy of non-alliance with Russia The primary question examined in this book is how Azerbaijan has behaved internationally after its independence in order not to fall back

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into the sphere of Russian influence, and what factors have enabled it to do so. The main theoretical framework is that of a small state with a history of domination by a traditionally expansionist power, and the options available to it (if any) in crafting an independent foreign policy. The historical comparison, frequently invoked in printed media but generally misplaced, is that of the ‘Great Game’ of the nineteenth century, in which small states are believed to have been reduced to the role of ‘pawns’ by the politically and militarily dominant powers. The highly influential neorealist school of thought in international relations also argues that a small state would prefer to ally with the regional hegemon (although a deeper examination of this claim reveals gaps and inconsistencies in this theory in so far as it applies to small states). So why did the small and weak Azerbaijan decide not to forge alliances with Russia? Despite the historical experience, Russia’s desire to dominate its southern vicinity should not be taken for granted, and this book examines whether Russia in fact sought to re-establish itself as the preponderant regional power in the years following the collapse of the Soviet Union. Crucial to this analysis is not only Russia’s policies towards Azerbaijan (and the former Soviet republics, more generally) but also their interpretation by Azerbaijan as a recipient state and its responses to the perceived intentions of the traditionally dominant neighbour. Thus, policy preferences of Azerbaijani decision-makers must receive special attention, as they were key factors in determining the nascent state’s strategic orientation. These preferences often related to the character traits, personal experiences and beliefs of the leaders rather than any specific policies initiated by Russia. An examination of how Azerbaijan sought to move away from the Russian ambit requires us to look beyond Baku’s relations with Moscow. A major task of this volume is to understand how Azerbaijan’s proactive foreign policy towards Turkey, Great Britain, the USA and Iran advanced its goal of distancing itself from Russia. Conceptually, therefore, the concern is with a small state’s foreign policy towards larger and more powerful states both in its immediate vicinity and beyond. Azerbaijan declared independence a month before the Soviet Union was formally dissolved in December 1991, but its communist leadership

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was loyal to Moscow and was not deposed until June 1992. The coup marked a new era for Azerbaijan as an independent state and, from that point of view, was more significant than the formal secession from the Soviet Union in late October 1991. This book analyses the formulation and development of foreign policy objectives and strategies under the nationalistic Popular Front of Azerbaijan (PFA) government (1992–3) and under a more pragmatic and experienced leader, Heydar Aliyev, who, prior to becoming president of independent Azerbaijan, served as head of the KGB in Azerbaijan, first secretary of the Communist Party in the republic and a Politburo member in Moscow. Many of the decisions that enabled Azerbaijan to escape an alliance with Russia were taken and implemented during Aliyev’s ten-year tenure from 1993 to 2003. This book reveals that, despite profound differences in leadership styles, strategic thinking and tactics, the overarching goals of the PFA and Aliyev governments were remarkably similar. The period since 1992 is significant and deserves close examination because it represents the second attempt in the history of Azerbaijan to become an independent international actor. Azerbaijan’s first experience with self-governance was short-lived and lasted from 1918 to 1920. At its starting point after the collapse of the Soviet Union, Azerbaijan lacked the experience of statehood and any foreign policy tradition. Russia, though itself weakened and engulfed by internal crises, was seen as the main security threat to Azerbaijan, an understanding on which the PFA and the Aliyev governments converged. Importantly, however, the leaders in charge of the two governments assessed the nature of that threat differently, which, combined with their different levels of analytical sophistication and political skill, led them to formulate different strategies to deal with Russia. Their strategies had varying degrees of success and resulted in more antagonistic Russian involvement in the affairs of Azerbaijan under the PFA government than under the Aliyev leadership. To be sure, political relations between Moscow and Baku grew increasingly complex under Aliyev, but they were also characterised by greater stability and enhanced respect for Azerbaijan’s independence, of which autonomy over foreign policy, choice of international partners and use of natural resources on one’s own territory were component parts.

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Azerbaijan’s oil resource: A new oil boom? Oil was a key resource that attracted international attention to Azerbaijan. This is hardly surprising given that Baku was widely known across the oil industry as the place of the first Oil Boom (1885– 1920). For centuries, Baku’s history had been linked to oil, with medieval historical accounts describing local people soaking cloths in oil to be used later as fuel. Baku’s early wells were hand dug, of which some, dating back to the early sixteenth century, were up to 35 metres deep. But it was not until the late nineteenth century, when the industrial and military use of oil widened globally, that Baku acquired its strategic importance. Scientists and businessmen flocked to Baku, eager for discoveries, fame and wealth. Baku’s then very abundant and shallow oil reservoirs did not disappoint. The world’s first commercial well, in Bibi-Heybat, was drilled in 1846, 13 years before the start of US commercial production in Pennsylvania. By the early twentieth century, Azerbaijan was producing an average of 11.5 million tonnes of oil per year – then more than half of the world’s total supply. The world’s first steam-powered oil tanker, Zoroaster, built by the Nobel brothers of Sweden, made its maiden voyage from Baku to Astrakhan in 1878. It is not widely known that the Nobel brothers ran Baku’s largest oil company at the time, and their luxurious residence with a vast park on the coast of the Caspian Sea, known as Villa Petrolea, was a symbol of their success and opulence. Baku attracted businessmen, engineers and geologists from all over the world, with Russian and European scientists working on developing new technologies on the oil-rich Apsheron peninsula. For instance, offshore extraction, using the technique of filling bays with earth, was pioneered by Polish engineer Paweł Potocki in the early twentieth century when offshore drilling was considered impossible. During World War II, Baku’s oil fields made a significant contribution to the Soviet war effort, and they were a prized asset that Hitler’s Germany wanted to get hold of. This brief insight into the history of Azerbaijan’s oil industry gives rise to two conclusions. First, Baku’s richness in oil was well known

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internationally, and Azerbaijan’s emergence as an independent state was an event that the oil industry could not afford to miss. Baku’s history had long been associated with international companies and experts working on its soil, and the dissolution of the Soviet Union presented foreign companies with an opportunity to become involved there once again. In a clear reference to the first Oil Boom and the success of the Nobel brothers in Baku, the modern-day offices of BP Azerbaijan are also known as Villa Petrolea. Second, the Oil Boom of the late nineteenth century led to a brief period of innovation, international communication and wealth acquisition, but was followed by the imposition of Soviet rule and decades of Baku’s isolation from the international oil industry. This meant that at the time of the collapse of the Soviet Union, few experts in foreign oil companies had any accurate idea of how much oil was left in Azerbaijan or the Caspian Sea more generally. This lack of data added to the risks of investing in post-independent Azerbaijan and had to be reflected in the 1994 contract signed between the Aliyev government and the consortium of oil companies, which became known as the ‘Contract of the Century’. The desire of the Azerbaijani leadership to attract foreign capital and the international media hype that was created around Caspian reserves led to vast overestimations, with some comparing the basin’s resources to those of the Middle East. Oil was one of the few assets that the Azerbaijani government had at its disposal to attract the interest of foreign investors and their governments. Investments in oil and, later, proceeds from oil exports were intended to help Azerbaijan survive as a state. However, using oil as an instrument of foreign policy was neither straightforward nor without substantial risk – creating interest and competition among states for the right to invest in its oil industry could provoke diplomatic standoffs or even a military conflict. This was particularly true given that most of Azerbaijan’s onshore fields had already been depleted and the oil which was being offered to foreign investors was located offshore. The unclear status of the Caspian Sea, following the collapse of the Soviet Union, left Azerbaijan operating in a legal vacuum, which it pro-actively used to meet its national interests.

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Allocating offshore stakes to foreign investors put Azerbaijan on a collision course with Russia or, more precisely, certain sections of the Russian policy-making elite. It also antagonised Iran, which found some of its interests in line with those of Russia, creating a very precarious situation for Azerbaijan. Taken too far, this situation risked spinning far beyond the control of the small state. Baku had to manoeuvre skilfully to prevent an alliance between Russia and Iran. It also sought not to alienate Russia to the point of overt hostility. Any political disagreements between Western powers and Russia over Azerbaijani resources had to be carefully managed, with concessions made to all powerful sides, without at the same time compromising key national interests. In other words, avoiding a geopolitical situation in which Azerbaijan would have no say and would be reduced to the status of a ‘pawn’ was one of the policy objectives of the Aliyev government. Yet implementing the apparently conflicting goals of making concessions to Russia and moving away from its influence was easier said than done.

Population and national identity in foreign policy Formulating a coherent and cohesive foreign policy for Azerbaijan was further complicated by the composition of its population, which by virtue of its ethnic non-homogeneity created political linkages to neighbouring states. In the wake of the Soviet collapse, the large Lezghin minority in the north was susceptible to influence from Russia, while the Talysh population in the south – with its ethnic and cultural links to Persia and Shi’a religious background – was receptive to Iranian persuasion. The country’s majority Azeri population, of Turkic stock, had, since the late 1980s, developed a strong affinity for Turkey, which it actively displayed after the collapse of the communist regime. The complexity of the population mix and the geographical proximity of Turkey, Russia and Iran resulted in multiple regional affiliations and identities, making it difficult for the government to conduct a coherent pro-Western foreign policy while maintaining internal cohesion. The Caucasus, the Turkic world, the Caspian region, the Middle East, the Commonwealth of Independent States (CIS) and wider Europe all constituted, to a greater or lesser extent, the self-identification

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anchors of independent Azerbaijan. These political and social identities had a direct and important bearing on the state’s foreign policy direction. Building on them or ignoring them was not a superfluous issue, and the very different ways in which these identities were integrated into foreign policy under the PFA and Aliyev led to vastly different foreign policy outcomes. This book explores how the PFA government sought to build on Azerbaijan’s cultural and ethnic links to Turkey in an attempt to construct a pro-Western foreign policy. This marginalised sections of the Azerbaijani population whose cultural sympathies lay with Iran. More importantly, disenchanted sections of the population represented a potential lever that neighbouring Iran could manipulate to advance its national interests on the territory of Azerbaijan. Aliyev’s approach to the problem was more sophisticated than that of his predecessor, as he sought to emphasise, at least rhetorically, Azerbaijan’s belonging to various regions and political cultures, which stemmed directly from its diverse ethnic and religious heritage. While this tactic went some way in improving Azerbaijan’s diplomatic relations with its neighbours, Aliyev’s control over the situation across the country and enhanced foreign and domestic intelligence helped to keep local grievances at bay and limit foreign states’ influence over Azerbaijan’s internal affairs.

The myth of a New Great Game Azerbaijan is an instance of a small newly independent country, which is geographically placed in the shadow of an incomparably more powerful state – Russia. Its international environment is made even more complex by the presence of another large and potentially hostile neighbour, Iran, in the south. Turkey, which is often considered to be Azerbaijan’s natural ally, had great ambitions in Azerbaijan and Central Asia in the 1990s but found itself constrained both economically and politically. Economic constraints arose primarily from the sheer amount of financial and technical assistance that the southern states of the former Soviet Union required, while political limitations were the result of Turkey’s unwillingness to antagonise Russia over

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an area that, as Ankara gradually realised, Russia still considered its legitimate sphere of influence. This book makes its contribution to the international relations literature because it focuses not on what the large states did or did not achieve in the Caspian and Central Asian region, but on the role that a small regional player, Azerbaijan, has played in shaping its own destiny. The theme that runs through the book is the high degree of autonomy over its foreign policy that Azerbaijan has been able to secure thanks to its clearly formulated national goals, pro-active diplomacy and skilful use of energy resources. The prevalent perception of Russia as the main source of threat was the factor that determined Azerbaijan’s non-alliance with it. This strategic goal helped Baku formulate its foreign policy not only towards Moscow but also towards other states in its vicinity and beyond. It has also enabled Baku to focus its limited national resources more effectively than would have been the case in the absence of a perceived source of threat and without a strategic goal. The vision of Azerbaijan, and, by extension, of other small states, presented in this book is different from the one advocated by modern-day believers in the Great Game. The ‘New Great Game’ theory asserts that large states determine the configuration of regional power through their aggressive, often expansionist foreign policies, and that small states can be no more than passive observers in the making of their destiny. Writing on the New Great Game focuses on the Caspian basin and Central Asia, with some proponents of the theory convinced that although oil motivates large states to compete, the real struggle is for strategic presence in, and eventually control of, the Eurasian heartland.1 Many ‘Great Gamers’, however, believe that oil is a sufficiently strong motive in itself, an explanation that was, in the 1990s and early 2000s, predicated on the assumption that the amount of oil in the Caspian was comparable to the reserves in the Persian Gulf. This frequently led to the exaggeration of the extent to which great regional and extra-regional powers would want to compete for access to Caspian reserves.2 Subsequently, as it became clear that the Caspian held less oil and gas than previously thought, attention shifted to pipeline routes, which some analysts hailed as important prizes in the great power struggle.

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Although there is no doubt that pipelines are very much at the centre of regional politics today, as they were in the 1990s, it would be a gross over-simplification to suggest that the small and mediumsized states play only a minor role in influencing which of the many proposed and contested pipelines will end up being built. The BakuTbilisi-Ceyhan oil pipeline and the Baku-Tbilisi-Erzurum gas pipeline are two vivid examples of the routes that were chosen and implemented because Baku preferred them over lines via Russia, and because it lobbied actively to put and keep them on the agenda of the governments of Turkey and the USA. At the same time, Baku was no less active in its diplomacy towards Russia, which it regarded as a threat and whose territory it wanted to bypass, but without provoking a military conflict. Presently, the region is again at the centre of international attention – this time over the Nabucco gas pipeline, which the EU prefers but Russia opposes. The preferences of Azerbaijan as a key supplier to the pipeline are crucial in deciding whether Nabucco is in fact built or whether those hydrocarbons flow to Russia. Thus, this book argues that comparisons with the Great Game of the nineteenth century do not capture the patterns of inter-state relations that are currently unfolding in the region.3 By reducing the role of the small states to helpless ‘pawns’, theories of the New Great Game misrepresent contemporary regional dynamics and often lead to inaccurate predictions.4 The end of the bipolar world has enlarged the foreign policy manoeuvring space of small and medium-sized states, giving rise to new patterns of relations between great and small powers. The case of the Nabucco pipeline demonstrates that the small states of the Caspian region have recently become very confident in their ability to navigate through great power politics and manipulate larger powers to their advantage. Events in the military sphere reveal that they may have occasionally overestimated their own weight in international politics and their respective importance for the countries whose attention they are seeking to attract. The activism displayed by small Caspian states is unprecedented in the history of the region and deserves to be examined in its own right.5 Previously unmined archives and lengthy interviews with policymakers used in this book suggest that, as a small state, Azerbaijan

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acquired and consolidated a significant degree of control over its external affairs throughout the 1990s and early 2000s. The existence of hydrocarbons helped, as it gave negotiators from the small state tangible stakes to offer to all parties – those perceived as hostile, such as Russia, as well as those perceived as friendly, such as the USA. But policy beliefs and the leadership’s strategic orientation rather than external factors or energy resources per se were the key factors responsible for Azerbaijan’s refusal to ‘bandwagon’ with Russia and its attempts to ally itself with the West. Under the same international circumstances and with the presence of the same hydrocarbon resources, a differently minded leadership could have adopted a set of policies much friendlier to Russia. This book also examines the political environment in which Azerbaijan operated and the external factors to which it responded in its foreign policy. Regional diplomacy, normally complex and subtle, became at times confrontational, as Azerbaijan’s goals clashed with those of Russia and Iran. Baku took a lead in seeking to find a solution to such potentially dangerous situations, and was often successful – for a number of reasons that the book investigates – in achieving its preferred outcomes. Small size is therefore not a fatal flaw that it is usually condemned to be, but astute and pro-active diplomacy are required if a small state is to conduct an independent foreign policy.

Book structure This book does not ask all the interesting – or difficult – questions about Azerbaijan. For example, it does not discuss the country’s rich history and cultural heritage; equally, it does not address any of the increasingly complex religious issues in the region. In the political sphere, too, it avoids any discussion of the origins of the NagornoKarabakh conflict, and of the many facets of the conflict that have developed since the 1990s. The analysis of Nagorno-Karabakh is introduced where it is immediately relevant to advancing our understanding of the main question explored. The main concern of this book is to understand what enabled Azerbaijan to pursue an autonomous foreign policy. Although

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externalities were important, the main policy-shaping factors were the perceptions of threat and opportunity, as well as images of the outside world held by decision-makers of the small state. These come under scrutiny in Chapter 3. The cognitive styles and decision-making patterns of the country’s key leaders were important factors that shaped policy and changed the trajectory of the state’s foreign policy course. Yet institutions and decision-making processes also played a part, and attention is given to Azerbaijan’s notable lack of foreign policy expertise in the early 1990s. Before examining Azerbaijan’s foreign policy through this analytical prism, we need to understand what constitutes a small state, in what ways its foreign policy is different from other states and what options have been traditionally considered to be available to it. Answers to these questions, set out in Chapter 2, are at the very foundation of this book, as they reveal that Azerbaijan’s behaviour did not fit the theoretical template that had been reserved for it. Azerbaijan’s foreign policy towards Russia is crucial to the examination of the central puzzle explored in this book: why Azerbaijan did not align with Russia in its foreign policy, and what factors enabled it to carve out an autonomous course of action. Therefore, two chapters are devoted to the assessment of this relationship. The first of these, Chapter 4, covers the military dimension of Azerbaijani-Russian relations and focuses on the withdrawal of Soviet/Russian troops from Azerbaijan in the early 1990s. It tries to uncover why this issue featured so prominently on Baku’s agenda, and argues that the rigid stance of the Popular Front government throughout the negotiations was the result of its acute threat perceptions. The chapter then explores the evolution of Azerbaijani-Russian military relations throughout the late 1990s and 2000s, seeking to understand changes in perceptions that enabled changes in policy behaviour. Chapter 5 examines the issues of oil pipelines and the legal status of the Caspian Sea, focusing on the era of the two Aliyevs, father and son – that is, the period from 1993 to the present. It suggests that the absence of Russian troops on Azerbaijani soil had enlarged Heydar Aliyev’s room for manoeuvre and enabled him to concentrate on other issues, such as oil. Three sets of factors help explain Azerbaijan’s success

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in dealing with Russia: issue-focus, strategic guidance from the president and a determination to align with Western partners. Chapters 6 and 7 cover Azerbaijan’s other key relationships: with Turkey and with the USA. The period of romantic admiration of Turkey was replaced by a more sober and pragmatic relationship based on cooperation for mutual gain. The hydrocarbons sector is an example of this ongoing partnership. Military cooperation also took place, but was constrained by Turkey’s traditionally inward-looking Kemalist foreign policy, its NATO obligations and the very clear intention not to antagonise Russia. Chapter 7 analyses Azerbaijan’s relations with Western Europe and with the USA. It suggests that Baku has generally valued cooperation with the USA more than with the EU, which explains why more time, energy and resources were spent on fostering relations with Washington. Yet several factors have encumbered the development of what is sometimes hailed as a US-Azerbaijani strategic partnership. Nevertheless, by establishing a dialogue with the USA, Azerbaijan has secured a partial regional counterweight to Russia. Azerbaijan’s relations with Iran are not examined as a separate case study, but Baku’s foreign policy towards Tehran receives attention in other chapters. Relations with Iran rated relatively low on Baku’s list of priorities, and its key objectives were to minimise the damage that Iran could inflict on Azerbaijan in the light of the latter’s policy of aligning with the West. Some key episodes, such as Iran’s chasing of a BP exploration vessel out of the disputed sector of the Caspian Sea and Russia’s episodic rapprochement with Iran in a way that was clearly detrimental to Azerbaijan’s interests, are examined in the context of the legal status of the Caspian Sea. In analysing the littoral states’ policy on the Caspian, the key question considered is how Azerbaijan was able to overcome resistance of the more powerful states that opposed offshore development in what Baku regarded as its national sector. The final chapter considers the likely trajectory of Azerbaijan’s foreign policy in the years to come. Although many of the tenets of the foreign policy course set under Heydar Aliyev have endured, the policy has undergone a degree of readjustment to reflect the changing internal and external constraints as well as the preferences of key policy-makers. Developments around the Nabucco pipeline, which has

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emerged as a key item on Baku’s foreign and energy policy agendas, demonstrate Azerbaijan’s success in retaining initiative and expanding its international profile. These have proven to be the essential components of an independent foreign policy conducted by the small state in Russia’s vicinity. Azerbaijan’s experience is indeed applicable to other small states, notably in the former Soviet space, and many of the traditionally pliant states have begun to experiment with policy options that have become available to them in the new multi-polar world order.

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CHAPTER 2 HOW DO SM ALL STATES SURVIVE?

Speaking at the UN General Assembly in New York in September 2009, Muammar Qaddafi of Libya publicly tore up a copy of the UN Charter in front of his startled audience. The point he tried to press on the representatives from 192 member-states was that they had no real decision-making power, which, he argued, was concentrated in the hands of the five veto-holding permanent members of the Security Council, or ‘terror council’, as he renamed it. The colonel’s speech was six times longer than the allotted slot and reflected his flamboyant style, which many found insulting, but his central concern had been close to the heart of many diplomats from small and medium-sized states for centuries. Twenty-five years earlier, the secretary-general of the Commonwealth, Sir Shridath Ramphal, noted in his opening address to a conference that ‘small is beautiful’ but small is also ‘weak and fragile, vulnerable and relatively powerless’.1 He emphasised that small states operated in a world where ‘the weak are not rewarded for the beauty of their smallness, but are ignored, imposed upon and generally discounted’. This chapter turns to the existing literature on small states to explore the question of whether small states generally feel powerless and demoralised by larger powers. It then analyses what power (if any) is available to small states and what foreign policy strategies can be devised and implemented using their limited power resources. Its

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conclusions run contrary to many commonly made assumptions about the way in which small powers view themselves internationally, the types of power available to them in negotiations with large states and the strategies used by them to achieve their national goals at times when these clash with the preferences of large states in their vicinity. The chapter suggests a typology of foreign policy strategies available to small states in their dealings with great powers, and offers insight on the new patterns of behaviour that have appeared in the post-Cold War era. Most importantly, the chapter lays the theoretical groundwork for assessing Azerbaijan’s foreign policy in the subsequent chapters. Here it asks the question of what types of power Azerbaijan as a small state possessed and what types of foreign policy strategies were open to it in the 1990s and 2000s. However, before undertaking this analysis, it is important to determine what constitutes a small state and what behavioural templates have been most frequently assigned to it.

Definitions of small states The first formalisation of the categories of states according to size took place as a result of the signing of the Treaty of Chaumont in 1817.2 However, the emergence in the 1960s of independent small and very small states gave rise to a debate on whether small states could be clustered into a distinct analytical category.3 Despite decades of study, however, scholars and students of international relations have failed to reach a definitional consensus.4 Early work focused on tangible and quantifiable criteria, such as gross national product (GNP), population size and military power, to come up with an objective definition of the small state. Some scholars have set the ceiling of 10–15 million people on the small state’s population size and $10 billion on its GNP.5 The GNP specification is problematic given that Luxembourg, Belgium, Austria, Switzerland and the Netherlands are among the wealthiest countries in the world. The definition fails to apply outside Europe too. For instance, the population of the Middle Eastern micro-state of Qatar in 2008 reached a total of 824,789 people but its gross domestic product (GDP) stood at

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$102.3 billion (official exchange rate).6 The point is that there are too many exceptions across the various types of small states for that definition to be operational. The conceptual definitions to which scholars turned their attention next were elegant but were criticised for being ‘arbitrary and intellectually difficult to defend’.7 A prominent example of a conceptual definition was Robert Keohane’s classification of small states as ‘system ineffectual states’. By this, he meant states whose resource poverty deprived them of the ability to influence the international system or to solve their security problems without external help.8 However, such definitions clearly showed the tension between parsimony and applicability, leading some authors to question the very notion of small state on the grounds of ‘the insufficiency of the concept as an analytical tool’.9 A solution was found in shifting from defining small states to analysing them in context. In line with Erling Bjøl, this book argues that a state is only small in relation to a greater one and hence needs to be assessed ‘in its relationships with greater states’.10 The state’s geographical parameters may provide a relevant framework for assessment: a state may be surrounded by much larger and more powerful neighbours and be small in comparison to them. From this standpoint, Azerbaijan is defined as a small power because of its relationships with stronger neighbouring states. In this book, the focus is not on a straightforward correlation between measurable material resources and power, but on contingent resources and advantages, such as a limited number of key policy issues on the small state’s agenda and high-quality negotiators, that can and often do sway outcomes in favour of the weak state.11 The perceptual approach is equally important and is given special attention throughout this book. Previously, scholars of international relations have argued that the way in which a state is seen from the outside and the view that it takes of itself from the inside is what categorises it as small. This view, they have argued, conditions certain types of foreign policy behaviour.12 Using this approach, David Vital concludes that weakness is ‘the most common, natural and pervasive view of self in the small state and it afflicts its leaders and influences their behaviour in many ways, fathering a host of ready-made

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judgements on what is and what is not possible in various circumstances’.13 Jacqueline Anne Braveboy-Wagner’s findings show that the small states do indeed self-identify as such in a global context but their decision-makers may adopt attitudes and policies which suggest that they see themselves as more influential than does the rest of the world.14 An examination of the behaviour of Azerbaijan as a state furthers this conclusion. The self-perception factor played a determining role in Azerbaijan’s decision not to bandwagon with Russia: its decision-makers had judged Azerbaijan’s geostrategic and economic value to be of sufficient importance to enable it to it acquire alternative great-power allies. In the light of this, we conclude that a small state is at least partially defined not in terms of what it possesses (or lacks) but ‘by a position it occupies in its own and others’ eyes’.15 This position always affects the small state’s national role conception and its foreign policy behaviour.16

Strategies of small states This section draws on a wealth of theoretical literature to explore what strategies are available to small states in sensitive geopolitical locations. It classifies these strategies into four broad categories: (1) international organisations, (2) self-reliance, (3) alliance-building and (4) strategic manoeuvring. It argues that the fourth category, strategic manoeuvring, is a new phenomenon, which, on the surface, bears resemblance to the strategy traditionally known as neutralism. Yet it is different in a number of defining ways, making its applicability to Azerbaijan of particular interest. In fact, every strategy described here is assessed in order to further our understanding of which foreign policy options were available to Azerbaijan at the time it obtained independence and which of these options were more likely to succeed given the presence of a regional hegemon – Russia.

1. International organisations International organisations aim to regulate a power disequilibrium between great and small powers by placing negotiations and disputes

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between states within the framework of international institutions. As a widely accepted systemic approach to international relations, neoliberal institutionalism argues that inter-state cooperation results from the institutionalisation and convergence of norms and rules.17 Despite the understanding that cooperation benefits all states, conventional wisdom in the field is that small states are more enthusiastic in their support of international institutions. This is explained by their inability to act on their own.18 In other words, small states have no choice but to believe in international law and justice. However, the support that small states tend to give to international institutions does not stem from expectations of military assistance in case of attack by a larger state. Rather, their active participation is a way to reassert formal equality, become involved in a broad range of international issues and exercise some restraint on great powers by institutionalising international norms and rules.19 Small states cherish no false hopes with regard to the ability of collective security organisations, of which the UN is a prime example, to provide protection against external pressure or aggression. There is a notable omission in the literature on small states, which rarely mentions that, although small states had placed high hopes in the League of Nations, they welcomed the UN with sober reservations.20 Traditionally neutral states chose to revert to the policy of neutrality and used the UN as a tool to consolidate and reassert their neutral credentials. This policy line stood in stark contrast with prewar thinking, when neutral states had willingly lowered and even renounced their neutral profile, which was considered detrimental to their international image and standing.21 For instance, when debating Luxembourg’s admission status, the League’s Fifth Committee dwelt extensively on the problems posed by its neutral status, which was regarded as being at odds with the international responsibilities of states. In its plea for membership in 1920, an Azerbaijani delegate put it in words that perhaps reflected the aspirations of most small states. He said: ‘The Azerbaidjanis . . . regard it [the League of Nations] as the salvation, which is, above all, necessary to those small peoples who are constantly threatened by the violation or denial of their vital interests,

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both political and economic.’22 Several months later, the Azerbaijani delegation was still struggling to persuade the League of ‘the suffering from the terrible and disastrous results of the Russian Bolshevik invasion’.23 The League’s decision that it was ‘impossible to admit the Republic of Azerbaidjan’ into its ranks was met with resentment and disappointment.24 In the 1990s, it formed part of the historical experience which advised against relying on collective security organisations in circumstances of real danger and threat to independence. Despite a widespread understanding among small powers that collective security institutions would not provide them with an adequate degree of protection, they have consistently viewed UN membership as valuable. In the words of an Estonian foreign minister, the UN is important ‘not because of its status as a forum for international law, but because it is the most efficient way to touch the largest number of foreign states’.25 Azerbaijan’s perception of the UN was very similar to that of Estonia. When attending international summits and conferences, President Heydar Aliyev’s goal was ‘to establish the greatest possible number of personal contacts, strengthen ties with traditional partners and find new political and economic allies’.26 The resource constraints of the small state’s diplomatic machinery have turned multilateral organisations into effective mechanisms that enable them to access distant and marginally important states at minimum cost.27 A study conducted under the aegis of the UN has shown that memberstates are aware that an organisation that was designed to regulate inter-state relations has turned into a locus for ‘bilateral foreign relations’ and is now providing a convenient forum for holding meetings in one place and in the most economical way.28 Recent research also challenges another conventional wisdom, which assumes that small states use international institutions more frequently than non-small states. Jeanne Hey concludes that ‘integration is not solely a policy instrument of small states’ and that international organisations appeal to states of all sizes, even though large states have a greater chance of going it alone.29 Stephen Krasner argues that the initiative to institutionalise ideas has traditionally come from great powers, which seek to legitimise and codify their interests and existing practices.30 He contends that, once institutionalised, these institutions

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(and the ideas embodied in them) may have an autonomous effect on politics and can be successfully used by states of all sizes. Whatever the initial reasons for establishing international institutions, states generally concede that their interests are best served by consistently fulfilling the agreements into which they enter. In his seminal work, Hedley Bull argues that international law is a ‘social reality to the extent that there is a very substantial degree of conformity to its rules’.31 In sum, despite recognising the shortfalls of international institutions, small powers have been active in using them and they have not been alone in doing so.

2. Self-reliance The second strategy – self-reliance – might, at first glance, seem the least feasible option for small states. However, in her study of the behaviour of small states in World War II, Annette Baker Fox argues that small states possess potentially significant resources of strength, including the ability to concentrate on the main goal, the capacity and will to match violence with violence, and good-quality negotiators.32 It then cannot be excluded that, under certain circumstances, small states may choose the strategy of self-reliance. The Danish-Prussian war over Schleswig-Holstein, the war of the German principalities against Prussia, Abyssinia’s resistance to Italy, Finland’s Winter War against Russia, and Vietnam’s wars with France and the USA are all examples of great-small power confrontations, in which the weaker states drew almost exclusively on their own internal resources to fight the aggressor. Diplomatic and military history knows another prominent variety of the strategy of self-reliance – neutrality. It is somewhat ironic that the post-war era witnessed the transformation of neutrality into a foreign policy strategy reserved for small states. The adoption of neutrality as a foreign policy means that a state chooses to rely entirely on its internal resources without drawing on any potential allies. Some states, such as Sweden and Switzerland, have pursued a policy of armed neutrality, which has proven very effective in times of war. Their longpursued – and hence credible – strategies of neutrality, coupled with

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their geographical location and impressive military force, raised the costs of invading them above the expected benefits, thereby successfully deterring aggressors. Neutrality is not to be confused with neutralism – the Cold War non-alignment strategy of many Third World states, which sought to play the world’s two superpowers off against each other. Neutralism obligated the non-aligned state to remain ideologically neutral but envisaged the adoption of ad hoc biased positions in disputes and wars. In contrast, neutrality allows the state to adopt ideological preferences as long as those preferences do not generate a material bias towards any one power or coalition.33 Three reservations must be made with respect to neutrality as a foreign policy strategy for non-traditional neutrals. First, neutrality is a product of European diplomacy, which has so far not proven effective anywhere else.34 Second, the effectiveness of the policy of neutrality depends on its credibility. To be credible, a neutral state must abstain from drawing on external sources of strength for possible ‘quick fixes’ to foreign policy problems in peacetime. Third, a sensitive geostrategic location – for instance, bordering a great power or providing a potential buffer zone for a great power – would preclude the option of permanent neutrality, as the case of Belgium in World War I demonstrates. Indeed, of the three potential drawbacks, geography constitutes by far the greatest handicap for aspiring neutrals.

3. Alliance-building vs. bandwagoning Alliance-building is the third type of foreign policy strategy potentially available to small states. The current literature disagrees on how strong the special tie between the two parties must be in order to be considered an alliance. A hard core view of alliances stipulates the need for ‘an explicit, contractual pledge of military assistance’.35 But other definitions exist. George Modelski, for example, sees alignment as ‘all types of political cooperation’ and alliance as ‘military collaboration’.36 Meanwhile, Glenn Snyder believes that alignment amounts to a set of ‘mutual expectations between two or more states that they will have each

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other’s support in disputes or wars with particular other states’.37 Consequently, alignments may be political, or military, or both, as long as they are not formalised. This book uses Snyder’s definition for alliances and alignments when examining the case of Azerbaijan. It should be emphasised that, although alignments generally precede alliance formation, not all alignments evolve into alliances. This is also shown using the example of Azerbaijan. The existing theoretical literature on alliances argues that a full commitment to a strong ally is not a desirable strategy for small states. It claims that, while a great-small power alliance might protect the allied small state from an immediate threat posed by an opposing great power, it is also likely to result in the weaker state’s loss of real independence and effective sovereignty. These considerations have led Robert Rothstein to argue for the ‘increased utility of alliances composed solely of Small Powers’, although he concedes that ‘the record . . . scarcely justifies optimism’.38 David Vital concludes that for small states, alliances with great powers cannot be ‘an effective unit of foreign policy and strategy’ and are only necessary in exceptional circumstances to ‘marshal great strength’.39 According to this logic, small states should agree to unequal alliances only in circumstances where an imminent military threat is perceived. Empirical evidence contradicts this theoretical conclusion. It reveals that small states do not generally fear for their national sovereignty or national identity when joining an alliance. They seek to secure the effective support of a powerful ally and display no marked apprehension that this arrangement may lead to ‘satellitisation’. For instance, throughout the Cold War, the Netherlands pursued the policy of being what its leadership called a ‘client-state to the United States’.40 Meanwhile, the end of the Cold War witnessed an exponential increase in the number of former Warsaw Pact states and Soviet republics willing to join NATO.41 Instead of shunning unequal alliances, small states often seek to upgrade alignments to alliances because then ‘help would be given sufficiently and at the right time’.42 Speaking off record, Azerbaijani Prime Minister Artur Rasizade once stated that his government would ‘unreservedly accept an invitation to join NATO if such an invitation

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was extended’.43 Meanwhile, small states seldom prefer an alliance with other small states because of the uncertainty (or inadequacy) of gains from such an alliance and the inability (or unwillingness) to harmonise their national interests. Interestingly, however, having entered an alliance with great powers, small states have displayed greater willingness to increase their intra-alliance bargaining position by joining forces to articulate a common goal.44 A question of relevance for this research is whether great-small power alliances serve primarily the small states’ military or political goals. As Chapter 7 will argue, a small state (Azerbaijan) may perceive alliance-building as a strategy aimed not at defeating a great power (Russia) but merely at not falling into its sphere of influence and control. This ties in well with the theoretical literature on the subject, which recognises the extensive political benefits that accrue to allied small states in military coalitions with larger powers. For example, Rothstein states that, ‘from the point of view of Small Powers, alliances have increasingly become instruments designed to achieve non-military goals’.45 In cases when alliance-building is not an option, alignment with a powerful state may be prestigious and carry substantial political and psychological benefits. To be sure, small states see power alliances with large states as desirable only if they enter them willingly. An unequal alliance with a contiguous, imperialistic great power would result in an ‘Al Capone alliance’, in which a weak ally’s faithfulness is conditioned by the necessity of receiving protection from the great power ally itself.46 This type of alliance-building has a rich history and is known in international relations as bandwagoning. Bandwagoning is of special interest throughout this book, as it examines the reasons for which Azerbaijan has continuously refused to ally with Russia. International relations theory boasts a substantial body of literature that analyses the theoretical underpinnings of the strategy of bandwagoning. As it is of crucial importance to this book’s central argument, a separate section is devoted to the assessment of the strengths and weaknesses of the theory of bandwagoning and balancing. In that section, the discussion focuses on the conditions under which a small state may choose one and not the other.

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Here, however, suffice it to say that critical for a small state’s willingness to forge a strategic relationship with a great power – which it knows in advance will not be equal – is the perception that its powerful ally will not impose its will indiscriminately. In exchange for some loss of sovereignty, the small state expects its stronger ally to demonstrate a measure of political wisdom in accounting for the weaker member’s interests and concerns. The small state frequently aspires not just to reap the benefits from the alliance into which it enters but to become a value-creating partner in it. The small state’s behaviour in an alliance is to a large degree conditioned by whether, prior to entering the alliance, it regarded its prospective great power ally as benevolent.

4. Strategic manoeuvring vs. neutralism Under what conditions can a small state’s foreign policy be judged worthy of a state? Scholars have provided diametrically opposite answers to this fundamental question. According to Vital: It is only when acting alone – rather than in concert with other, greater states – that the small power can be said to be pursuing an external policy which is in any sense of a class with the external policies of great powers and capable of being compared with them.47 On the other hand, both the mobilisation of (internal and external) power resources and the manipulation of greater powers could prove effective policies for small states: the second position is very important and highly relevant. This book argues that the main strength of the small states lies in their indirect or derivative power, which ‘depend[s] on their ability to obtain, commit and manipulate more powerful states’.48 While lacking ‘coercive power’, some small states possess ‘attractive power’, which they exploit in ways that enhance their foreign policy success.49 The small state’s ability to discern its attractive power and use it in ways that might enable it to align with a powerful state (or group of states) of its choice without antagonising

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the opposing great power to the point of a military conflict is what can be called strategic manoeuvring. The end of the bipolar world has expanded the applicability and versatility of this strategy for small states. Strategic manoeuvring is not synonymous with neutralism, which was used during the Cold War by small and medium-sized states playing the superpowers off against each other. Strategic manoeuvring is different in several important respects. First, it has the enhancement of sovereignty and autonomy over its domestic and foreign policy as the main goal. Neutralism was not aimed at consolidating the non-aligned state’s sovereignty but at reaping material gains in the form of economic aid, arms exports, subsidies etc. Second, strategic manoeuvring envisages the possibility of the small state assuaging the hostile great power’s security concerns through an ongoing diplomatic dialogue, cooperation and limited concessions, but without bandwagoning with it. It builds on the post-Cold War idea (and rhetoric) of the end of spheres of influence to extend its cooperation with extra-regional large powers, thereby weakening the influence of the neighbouring hostile state. By contrast, neutralism attempts to reap political and economic dividends from the overlapping and competing (perhaps even incompatible) interests of large rival states. As such, neutralism is intrinsically conflictual, while strategic manoeuvring seeks, where possible, to build on areas of mutual interest, thus promoting a more cooperative regional framework. It is not inconceivable that a small state pursuing strategic manoeuvring would use power resources at its disposal to create common strategic interests with the stronger powers – both the ones it opposes and the ones with which it seeks to align. Azerbaijan with its energy resources is a case in point, as the subsequent chapters, which examine this state’s relations with Russia and the West, demonstrate. Strategic manoeuvring can at times take on elements of neutralism: for instance, a small power may successfully ‘blackmail’ one of the large states by offering the competing large state greater presence on its territory. Small states’ success at extracting bargaining terms from more powerful states varies, but the outcome is not predetermined by a small state’s size or overall power resources.

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Strategic manoeuvring requires the small state to be at all times pro-active, vigilant and highly attuned to its external environment. That a small state may consciously choose to maintain a high international profile is contrary to the opinion prevalent in the theoretical literature, which argues that small states situated on the periphery of the international system are in a much better position to survive than those sandwiched between great powers.50 In essence, strategic manoeuvring envisages a partial accommodation of great-power interests without a formal alliance with any of them. However, a firm alignment with the benevolent strong power, accompanied by an implicit understanding that diplomatic and military support would be forthcoming in case of aggression from the hostile state, is a desired outcome of this strategy. At the same time, an important criterion for the assessment of the ultimate success of this strategy is the small state’s ability to use diplomacy to prevent tensions with the hostile great power from escalating into military conflict. In the post-Cold War era, strategic manoeuvring is likely to become increasingly widespread among small states, owing primarily to the new type of relationships between great powers, notably the USA and Russia. The end of open confrontation between the two superpowers has enlarged small states’ manoeuvring space by providing them with opportunities to find complementarity, or at least reconcilability, in great-power interests on their territory. To be sure, for small states located on the periphery of great powers that they perceive as threatening, a full-fledged alliance with a benevolent large state is unlikely to be a realistic option for political and logistical military reasons. However, strategic manoeuvring could be a real possibility that would enable the small state to retain a high level of autonomy over its foreign policy.

Alternatives, commitment and control Strategic manoeuvring challenges the realist assumption that greatsmall power negotiations are predetermined from the outset. Peter Katzenstein has studied the small European states to demonstrate that, despite their weak military capabilities, they have used policy creativity

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to outperform their larger neighbours.51 William Habeeb argues that in strong-weak power negotiations, a small state’s disproportionate bargaining disadvantage should not be assumed a priori because in negotiations ‘the aggregate structural power’ matters less than ‘the issue-specific power’.52 Habeeb distinguishes three variables – alternatives, commitment and control – to determine the issue-specific power of the states. He concludes that the lack of control on the part of the small state can be compensated for by the availability of alternatives and a strong commitment.53 The case of Azerbaijan’s negotiations with Russia over pipeline routes is a notable example of the small state’s issue-specific power. The existence of a viable alternative to the Russia-proposed BakuNovorossiysk pipeline strengthened Baku’s ability to implement its preferred solution of not sending the bulk of its oil via Russia. The alternative it had was the Baku-Supsa pipeline (via Georgia), which, like the Russian route, could take Azeri oil to the international market. Baku’s position in negotiations with Russia – and its commitment to a westward pipeline – was further strengthened when, in late 1995, Turkey offered to finance a 75-mile segment of Baku-Supsa and to purchase all early oil at the terminal.54 Baku’s commitment to diversifying away from Russia and the existence of a viable alternative to the Baku-Novorossiysk route enabled Azerbaijan to build lines that bypass Russia. In fact, it has since seen not one but two western pipelines – Baku-Supsa and, subsequently, Baku-Tbilisi-Ceyhan, which currently export Azeri oil. Moreover, in December 2006, Azerbaijan refused to concede to Gazprom’s demands of doubling the price of gas it imported from Russia and retaliated by halting oil deliveries via the Baku-Novorossiysk pipeline. In the absence of other export options for its oil, such a decision would have hurt Azerbaijan more than Russia, as the country would have lost its access to the international market. However, given the availability of export alternatives, Prime Minister Rasizade downplayed Azerbaijan’s need to switch to fuel oil in power generation as a result of the gas supply cut from Russia. Instead, he linked the decision to suspend oil supplies to the high transportation tariff imposed by Russian state oil company Transneft.55 The announcement came as a shock to Russia’s

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then Prime Minister Mikhail Fradkov who was at the time on a visit to Baku. These developments clearly demonstrate the ability of a small state to capitalise on its issue-specific power even though the structural power asymmetry with the large state remains unchanged. It is important to note that issue-specific power varies with domain and should be analysed within the relevant context. Aggregate structural power alone cannot explain outcomes because to have any significant effect on bargaining, resources must be channelled to create policy frameworks.56 According to Robert Keohane and Joseph Nye, ‘power measured in terms of resources or potential may look different from power measured in terms of influence over outcomes. We must look at the “translation” in the political bargaining process.’57 This type of power, which can be seen as behavioural power, is what is being explored throughout this book. As the name implies, behavioural power is concerned with the ability of the actor to use its resources, both aggregate and issue-specific, to achieve its preferred outcomes. In its dealings with a great power, a small state can effectively use three types of tactics.58 First, it may take advantage of the specificities of the domestic political system of the opponent. Second, in circumstances where it possesses a commodity of particular importance or value to the hostile state, the small state may use it as a bargaining tool. Third, it may have quality negotiators who would come to the table better prepared than their counterparts from the large state and persuade the decision-making leadership of that state that it is in its best interests to make mutual concessions. The last is a non-material instrument of power, which, if skilfully applied, may produce unexpected results in large-small power negotiations. That a small state would send their best negotiators to deal with a threat from a large state is hardly surprising given that the issue would be of utmost importance to it. The same is not true of the large state: the same issue would rank relatively low on the list of its priorities, as its agenda would be typically dominated by relations with other large states, which are more likely than a small state to pose (or be perceived as posing) a threat to its interests. This asymmetry of motives is of definite advantage to the small state. It represents a source of behavioural

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weakness for the large state, which skilful negotiators from a small state can turn to their advantage. This study uses the case of Azerbaijan’s negotiations with Russia to demonstrate that Russia’s far superior aggregate structural power often did not translate into its desired policy outcome. The empirical evidence presented in this book delineates the need to move away from traditional military-strategic definitions of power and towards a more flexible one that will take into account a plethora of crucial but nonquantifiable factors.

Small state behaviour: Bandwagoning or balancing? In addressing the main puzzle of why Azerbaijan did not bandwagon with Russia, the argument builds on and challenges Stephen Walt’s prominent work, The Origins of Alliances.59 According to Walt, small states’ very limited military capabilities induce them to bandwagon with rather than balance against security threats. Jack Levy expresses the same conviction when he writes: ‘Great Powers balance against potential hegemons, whereas weaker states in the proximity of stronger states do what is necessary to survive, which often involves bandwagoning with the strong instead of balancing against them.’60 Although the term bandwagoning is modern, the concept has a long tradition and appears in a politico-diplomatic treatise dating to the fifth century BC. In the Arthashastra, Kautilya advised that, ‘in the absence of an [ally], one should ingratiate oneself with one’s neighbouring enemy . . . A powerless king should act as a conquered king towards his enemy.’61 Indeed, throughout ancient and medieval history, the expectation was that smaller kingdoms and principalities would subordinate themselves to the interests of a more powerful neighbour in the hope that their loyalty as tributary or vassal states would enable them to preserve a degree of independence. Bandwagoning, therefore, can be defined as ‘aligning with the strongest or most threatening state, thereby rendering it more powerful but also more benign’.62 In his work, Walt refines the theory of bandwagoning by spelling out the conditions under which small states will bandwagon rather than balance. For bandwagoning to take place, Walt claims, the great

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power should be (1) geographically proximate; (2) threatening; and (3) appeaseable. At the same time, the small state should have no other great power protectors. These specifications make Azerbaijan in the early post-independence years a perfect candidate for bandwagoning. In 1992, Azerbaijan faced Russia, which was geographically proximate and was acutely perceived as being threatening. It appeared appeaseable if judged by Moscow’s rhetoric of wanting to establish normal relations with the CIS states. In addition, Azerbaijan did not have any great power allies to protect it from Russia. Under these circumstances, Walt’s theory would predict bandwagoning with Moscow. However, Azerbaijan chose two fundamentally different strategies in its efforts to neutralise the source of threat: first, it attempted to balance against Russia, and, subsequently, it moved away from that in favour of strategic manoeuvring. It should be mentioned that the problem with Walt’s balance-ofthreat theory, as it applies to small states, is that it is non-falsifiable. If a small state bandwagons, Walt can point to one or a combination of conditions that lead the weak to bandwagon. If, on the other hand, it seeks to balance against the source of threat, then Walt can argue that balancing is always the first choice of any state, large or small, even in circumstances where it is a good candidate for bandwagoning.63 In an attempt to clarify this point, Walt contradicts his earlier conclusions when he writes: ‘Far from claiming that weak states prefer to bandwagon, my writing demonstrates that they are strongly inclined to balance (if not so rigorously as Great Powers) . . . Decisions to bandwagon are made with great reluctance.’64 That any foreign policy action on the part of a small state appears to confirm the theory highlights the ambiguity of neorealism and its frequent failure to explain why small states act as they do. Although other (non-Walt) varieties of realism would predict balancing, their explanations still fail to capture the underlying reason for this behaviour. For instance, according to John Mearsheimer, ‘simple materialist logic’ would induce a small state to balance with the most powerful state in the system.65 If by the system we mean the international community of states, then we will not be wrong in

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suggesting that that state is the USA. This prediction does indeed seem to correspond to reality. However, empirical work demonstrates that Azerbaijan’s early balancing behaviour with the West was not a result of hard-power calculations but a product of perceptual-cognitive factors. Simply put, the views, aspirations and even dreams of decisionmakers were often more influential in shaping foreign policy choices than Mearsheimer’s materialist logic. Eric Labs argues that balancing for small states is more likely than bandwagoning.66 Although his aim is to complement Walt’s theory by arguing that states of all sizes would balance against threats, Labs inadvertently introduces ideational factors into his reasoning. He does not limit his analysis (as does Walt) to a binominal assessment of ally availability – that is, a great-power ally is either available or it is unavailable. Instead, he proceeds to understand what expectations the small states hold of potential allies. In other words, what degree of perceived support from potential allies is necessary for a small state not to bandwagon? Labs concludes that weak states would need only a ‘hope that the aggressor would ultimately be defeated to balance against it’. Despite his claims of working in the neorealist tradition, Labs deepens his analysis by allocating greater weight to perceptions and by probing the process of preference formation. On the latter, he admits that small states may prefer sovereignty to safety. These ‘values’, as he calls them, may come into direct conflict with each other and may lead to a decision to fight for the sovereign rights of territory and governance rather than surrender some or all of these rights in exchange for physical well-being. The strength of Labs’s argument lies in introducing, albeit unsystematically, the effect of beliefs, expectations and desires on small states’ decisions to balance or bandwagon.67 Labs’s contribution is one of very few attempts in international relations theory to challenge the received wisdom that small states would prefer bandwagoning to balancing. Despite the fact that diplomatic history knows plenty of cases of small states’ resistance to menacing great powers in their vicinity, scholars in the field are yet to derive an internally coherent theory that would explain small state behaviour. This book hopes to contribute to the literature on the subject by examining the strategic choices that Azerbaijan made under specific

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internal and external conditions. It will also probe the reasons underlying its foreign policy behaviour. It argues that in the post-Cold War order, strategic manoeuvring can be successfully used by small states, which choose not to bandwagon with a geographically proximate hegemon, but for which full balancing through alliance-building with a distant benevolent power is not an available option.

Structure and perceptions in foreign policy analysis Classical realism treats the state as a single, coherent actor, pursuing clear national interests in a rational manner and in accordance with perfect information about the intentions and capabilities of other actors in the system. It maintains that a country’s foreign policy is formed by its place in the international system, and international structures play a determining role in foreign policy decisions of small states.68 Within the realist tradition, the only notable exception to this mode of thinking is neoclassical realism, which points out that a focus on structural factors leads to failure to explain much of states’ actual foreign policy behaviour. Yet, even the softest strand of realism treats decisionmakers as malleable agents rather than pro-active problem-solvers, who act in accordance with their beliefs, perceptions and world outlooks.69 Foreign policy analysis (FPA) developed in reaction to realism, but its weakness, at least initially, was the excessive emphasis its advocates placed on perceptions and values. In doing so, they did not give sufficient consideration to material and structural factors.70 Their approach failed, in the words of one scholar, to place the revealed perceptions in ‘the contexts of the myriad pressures on decision-making, internal and external, and of historical change’.71 FPA then turned to the examination of domestic bureaucracies that provide paths through which a government pursues and implements national interests. The underlying logic was that all foreign policy decisions, despite being directed at the outside world, are inevitably shaped by a host of ministerial, group and personal interests.72 A liberal approach to foreign policy took this line of reasoning much further by adopting a bottom-up view of the political system and considering individuals and social groups before politics.73 Both of these

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approaches have been faulted with ignoring the role played by the international system in translating domestic imperatives into foreign policy behaviour.74 Domestic structures may well explain some foreign policy situations, but the invariably self-centred, inward-looking nature of FPA places artificial limits on its scope, depth and, ultimately, its ability to explain the foreign policy behaviour of states. Applying the above discussion to small states and to the case of Azerbaijan, more specifically, this book argues that externalities alone do not explain foreign policy choices, but a better understanding of them enables leaders facing a potentially hostile hegemon in their vicinity to manoeuvre more skilfully. For instance, there are grounds to suggest that if the Popular Front of Azerbaijan (PFA) government had survived the coup of 1993, it would have emerged from the experience with a better understanding of external constraints, and its foreign policy would have been modified accordingly. In an interview given in 2003, a former head of state oil company SOCAR under the PFA government admitted to making a political mistake in excluding Russia from the oil consortium.75 Any government that succeeded the PFA was bound to be less anti-Russian than its inexperienced predecessor; yet, it is unlikely that any would have bandwagoned. Each of the theories discussed above explain some aspect of the foreign policy-making process. However, an essential feature of all reallife foreign policy decision-making is the multitude of external and internal opportunities and constraints, which shape policy through interaction at the domestic and international levels. Constructing a multi-causal framework can only be done at the expense of definitional elegance. Moreover, an obvious point should be made that all foreign policy is formulated and implemented by people, who function in a complex bureaucratic and inter-personal environment and who are not devoid of idiosyncrasies, emotions and misperceptions. It is to these that we turn next.

Psychological approaches to FPA Political psychology argues that perceptions are one of the immediate causes of foreign policy behaviour. Perceptions are important because

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decision-makers of all states continuously scrutinise the behaviour of their counterparts, trying to understand their intentions, goals and beliefs.76 Frequently, they act on the basis of the information they have collected and perceptions they have formed of the states they consider hostile or friendly. Yet few decision-makers start with an open mind, and their prior experiences and images heavily influence the way they collect, filter and process information. Consequently, shedding light on the black box of perceptions is important when explaining the foreign policy behaviour of all states. However, in small states, perceptions acquire added importance because of the limited number of key political decision-makers. Unsurprisingly, the more hierarchical the political system of a small state, the greater is the need to understand the perceptions of its leaders, as these then lead to the selection of strategies, as the below discussion demonstrates. Perceptions consist of three analytically distinct levels:77 1. cognitive attributes by which a decision-maker understands a foreign state in an intellectual way. These include the decision-maker’s perceptions of the inherent characteristics of that state (i.e. those independent of his own response to it) and the anticipated characteristics (i.e. those that the state might acquire in response to a changed foreign policy towards it); 2. affective attributes which are primarily emotional and express themselves in liking or disliking a foreign state. Affective attributes are closely linked to values, norms, images and prior experiences of the decision-maker and contribute to a positive or negative assessment of a foreign state; and 3. behavioural attributes which comprise a repertoire of acceptable responses to a foreign state. The portrayal of a foreign state – itself a product of cognitive and affective attributes – suggests the type of strategy that would be most effective in dealing with it and achieving a desired outcome. Strategies range from confrontational to competitive and cooperative, or a mix thereof. Consider the following historical example. On 15 March 1996, the Russian State Duma (lower house of parliament) denounced the

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Belovezhskaya Pushcha agreements, signed on 8 December 1991, between Russia, Ukraine and Belarus to legitimate the dissolution of the Soviet Union.78 A response followed almost immediately from Azerbaijan, which perceived the action as potentially threatening to its independence.79 This was the result of perceptions at three analytically distinct levels: 1. At the cognitive level, Russia was perceived to be powerful, imperialistic and revisionist. 2. At the affective level, Azerbaijan felt antagonism towards Russia and resented its actions. Images of Russia as traditionally hostile, expansionist and dominating came into play here to support the fears of the small state. 3. At the behavioural level, the perception was that a quick, firm and non-compromising stance was required to avert the looming danger. Hesitation or concessions could be mistaken for compliance. On 16 March, less than a day after the denunciation was made public, Aliyev organised a large press conference and, in the presence of international and local media, dismissed the decision of the Duma as an ‘internal affair’ of the Russian state.80 He reiterated Azerbaijan’s determination not to give up its independence – a testimony to the fact that Russia’s action was indeed perceived as threatening and requiring a swift and decisive response. It is important to note that perceptions of Russia under Aliyev differed from those under his predecessor, Abulfaz Elchibey. A more complex and multi-dimensional representation of Russia under Aliyev contrasted with the black-and-white picture that officials in the Elchibey government shared. As the next chapter will argue, Aliyev’s cognitive complexity and individual style, combined with his experience in foreign affairs and the search for first-hand information, created a more sophisticated understanding of Russia than the one that existed under the inexperienced PFA government. This change in perceptions led to the replacement of the confrontational and isolationist policy pursued under Elchibey with the more cooperative and engaging strategies under Aliyev.

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In addition to perceptions, analogical reasoning is frequently used to assess foreign policy situations. Under the PFA, the choice of analogies from a fairly narrow range of historical data, invariably depicting Russia as implacably hostile and expansionist, became the dominant prism through which all Russia’s actions were viewed. The overextended and oversimplified analogies narrowed the PFA’s foreign policy options to confrontational action, while Russia’s antagonistic response to that action served to convince PFA policy-makers of the correctness of their initial diagnosis of the situation and of the necessity to continue with the chosen uncompromising foreign policy course. To be sure, the use of analogies is not in and of itself a sign of a narrow-minded decision-maker. Analogies, like images, are necessary abstractions of reality, which help the human brain process information by fitting new data into pre-existing knowledge structures. Those pieces of information that cannot be readily accommodated are either ignored or manipulated and reinterpreted until they can be added to the initial knowledge structures.81 Information gaps are often filled in with emotions, such as fears or wishful thinking (the affective attributes in our classification), leading to the kind of policy responses that may have been discarded in the presence of more objective information-gathering and processing. Perceptions and analogies tend to persist even in the face of contradictory evidence and after the failures of the decision-makers’ reasoning have been revealed and pointed out to them.82 A data-driven approach is also possible, but it requires a continuous reassessment and modification of images, beliefs and analogies on the part of the decision-maker. It is likely that cognitively complex decision-makers are more capable of performing this mental task because they are more tolerant of information inconsistency and ambiguity. This, in turn, enhances their capacity for processing and storing information that does not fit neatly into the existing knowledge structures. Experimental studies conclude that a moderate level of cognitive inconsistency may be conducive to better reality-orientation, higher receptivity to new information and greater resourcefulness.83 As a result, cognitively complex decision-makers are less prone to stereotyping than their cognitively ‘simplex’ counterparts.

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To conclude, a major advantage of the psychological approach is that it captures the versatility of immaterial factors that shape decision-making and emphasises the need to examine them. This book treats perceptions as ideational factors and contrasts them with material factors, which are at the core of power-based explanations. It argues that external events affect foreign policy-making indirectly, as all information about them has to be processed by decision-makers. Whether a decision-maker conceives of inter-state relations in simple analogical terms or analyses them through a complex mental prism capable of integrating new information has dramatic implications for policy choices and explains much about strategies chosen by states to cope with foreign policy threats.

The FPA model: An integrative approach Although empirical research lends strong support to an integrative view of FPA, this approach has not been readily taken up in the literature. The first prominent attempt to combine numerous factors into a single conceptual framework came from James Rosenau in his famous ‘pre-theories of foreign policy’.84 Rosenau argued that any foreign policy decision involves five sets of factors: idiosyncratic (individual traits, leadership style); role-based (bureaucracy); governmental (relations between government actors); societal (public opinion, national values etc.); and systemic (non-human, external environment). The explanatory weight of these factors varies with the size, level of development and political system of any given state. In Rosenau’s classification, a small developing state with a closed polity will have the following ranking of the variables: individual, systemic, rolebased, governmental and societal. Rosenau’s methodology is helpful in explaining the variables that play a role in policy-making; however, it does not allow the researcher to trace the process of decision formation or explain policy change. Walter Carlsnaes’s three-dimensional model stands out as a rare example that links the structural and perceptual aspects of foreign policy-making.85 His model explains state action in terms of three sets of factors, operating at analytically distinct but logically and empirically

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linked levels. According to him, foreign policy has a dispositional, intentional and structural dimension. Perceptions, values and norms comprise the dispositional dimension, which then shapes state choices and preferences, forming the intentional dimension. The structural dimension affects the process of choice formation by influencing the dispositional dimension. Simply put, it is by affecting the perceptions and values of the decision-maker that the international environment is understood to constrain or enable foreign policy action. The analytical advantages of this model for this book are threefold. First, it easily accommodates the influence of ideational factors on foreign policy action. Second, the model posits that structures do not predetermine the state’s actions; rather, they set the parameters of choice. This model therefore leaves latitude for human choice and action, and eschews the deterministic touch of the realist tradition, for which power is the prevalent factor. Moreover, it sees structure as a framework of activity, which consists not only of material capabilities but also of social relationships.86 Social relationships are sets of conventions, norms and rules that govern inter-state relations at the bilateral and multilateral level and give meaning to material capabilities.87 As such, social relationships can be reinforced or changed, preserving or transforming some part of the structure.88 The ongoing transformation may open new foreign policy options for the states, including small states, that operate within the structure. Third, the dynamic nature of the model helps explain change in foreign policy action over time. It differs from the classical input-output model in that it envisages not only the processes but also structures as dynamic and changing.89

Framework of analysis: Assumptions and arguments Main assumptions This book treats the state as the primary unit of analysis, and in this regard it is statist. It proceeds from the assumptions that: states seek to survive; can have offensive capabilities, which may make others feel insecure; cannot be certain of others’ intentions; and face external

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constraints at the systemic level. These assumptions also comprise the core of every realist analysis. However, in line with the analysis presented above, this approach emphasises that the structure (or international environment) can be changed by transforming social relationships. This can take place without a concomitant change in material capabilities. This book builds on the assumption that small states conduct their foreign policy on a different scale, in a different manner and with the use of different ingredients than great powers.90 This claim differs substantially from the neorealist argument that size and material capabilities determine a state’s foreign policy. The above analysis and historical references have shown that, despite their small size and inferior military capabilities, bandwagoning is far from being the automatic choice of the small states. Rather, as this book shows using the case study of Azerbaijan, a small state’s resource constraints and the size of its diplomatic machinery force it to focus on a limited number of directly relevant issues. Because the stakes are disproportionately high for the small state, it devotes considerably more attention and energy to achieving its preferred outcomes than its larger state opponent. This creates an asymmetry of motives in favour of the small state. If we accept that material capabilities do not predetermine policy outcomes and social relationships can be changed through state interaction, then it follows that the strategies of small states can be viable tools in changing parts of the structure to their advantage. This book assumes that perceptions are paramount when explaining foreign policy choices and outcomes. It argues that different understandings of situations lead decision-makers to make different choices, while even those who see things similarly are still confronted with a range of policy options to choose from. Because of their direct effect on the decision-making process, perceptions are examined in detail throughout the book. This book does not treat national interests as static. Rather, it assumes that a state’s interests are influenced by internal factors as well as interactions with other states, which have an impact on foreign policy behaviour.

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Main arguments This book argues that in the early 1990s, Azerbaijan did not have any great power allies but had a real, yet appeaseable, threatening state on its northern border. Its foreign policy was informed by perceptions of that state and analogies with the past more than by calculations of material power. This produced foreign policy choices that were not necessarily rational or optimal. The PFA’s unambiguous balancing with the West against Russia was informed by four sets of ideational factors. The first was the Russia image that existed in the minds of Azerbaijani decision-makers, depicting Russia as implacably aggressive, expansionist and eager to regain control over its former territories. The second was cultural and ethnic affinity with Turkey, which was regarded as Azerbaijan’s natural ally. Moreover, in the early 1990s, Azerbaijan regarded Turkey as part of the West, and aligning with Ankara was equivalent to balancing with the West. The third factor was the perception of the West as inherently benevolent, protective and liberating. The USA in particular was viewed as a protector state and a comparison was drawn between Azerbaijan and the small states of the Baltic region. The perception of the availability of allies ruled out the strategy of appeasement through bandwagoning. The fourth factor was Azerbaijan’s self-image and the overestimation of the degree of support that the USA was prepared to lend to it in exchange for oil. The PFA’s policy of unambiguous balancing came to an end with the coup d’état that brought Aliyev to power in June 1993. The new set of perceptions brought in by the new ruling elite produced a foreign policy shift at a time when no change had taken place at the structural level. Aliyev’s twin strategy consisted of engaging the West, while at the same time normalising relations with Russia. Aliyev’s strategy was the result of two ideational factors. First, Aliyev was convinced that Russia could be rendered more malleable and benign through partial cooperation. Aliyev did not share the PFA’s belief that to survive the small state had to be firmly placed in a security bloc capable of resisting Russia’s aggression. This fundamental difference meant that Aliyev’s Azerbaijan no longer considered dealing

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with Russia as equivalent to bandwagoning. Nor did it think that improved relations with Russia would preclude it from strengthening ties with the West. Second, Aliyev believed that a more cooperative Russia would make US regional involvement more politically acceptable and therefore more likely. Aliyev understood that the USA was not willing to jeopardise its relations with Russia over smaller interests in the Caucasus. However, he also accurately calculated that the USA would be prepared to back Azerbaijan on specific issues, especially if it was given a stake to defend. Aliyev explicitly linked economic cooperation in the oil sector to Western governments’ political support for Azerbaijan. Oil was instrumental in enabling Aliyev to engage and upgrade Western interest in Azerbaijan, but it was not the factor that in and of itself accounted for its refusal to bandwagon with Russia. The highly centralised nature of the Azerbaijani foreign policy establishment under Aliyev and a top-down rigid approach to decision-making enabled Aliyev to pursue an active, coherent and effective foreign policy. His approach contrasted with that of the PFA, whose foreign policy was characterised by less coherence but broader participation on a range of issues, including the issue of what constituted national interests. With Aliyev’s accession, the president became the single dominant foreign policy actor, who turned foreign policy into his prerogative. He determined the content of national interests and devised strategies to implement them, handing down precise orders to the Ministry of Foreign Affairs. In the light of this, Aliyev’s personal leadership style and his perceptions require separate examination. A comparison with the PFA is also important, as it helps explain the direction and depth of change. It is to the examination of perceptions and decision-making styles that we turn next.

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CHAPTER 3 PER SONALITIES, PROCESSES, INSTITUTIONS: SCULPTING AZER BAIJAN’S FOR EIGN AND ENERGY POLICY

Foreign policy decision-making is a highly complex process. It is, on the one hand, inherently subjective because it builds on the leader’s perceptions of the situation, his prior experience and belief system. But, on the other hand, every decision-making process is embedded in institutional structures, which, at least in principle, seek to make it more objective – or less biased – by using such means as bureaucratic channels to collect and analyse information, and parliamentary oversight to act as checks and balances. But what of the states that emerged after the collapse of the Soviet Union and were obliged to start acting as sovereign entities? Some of them had very limited or no prior experience of statehood, and the majority of them, at the time of the collapse of the Soviet Union, did not have even the most basic institutions, such as a Ministry of Foreign Affairs (MFA), which are crucial in making foreign policy happen but whose existence is often taken for granted. Azerbaijan was one such state. It entered the international scene at a turning point in history, when in order to establish itself regionally and internationally it had to act quickly and pro-actively. Yet it had to do so while building institutions from scratch and hiring personnel

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that were more often than not poorly qualified for the job. In these circumstances, a strong presidency became a pre-requisite for making and implementing any effective decisions. The president, who plays an important role in the foreign policy of any state, became fundamental to the making and conduct of the foreign policy of the new state. As a result, his personal beliefs and preferences received even greater weight in policy formulation than they do under regular circumstances, while his personal leadership style became even more critical to the implementation of the formulated policy. This chapter examines the early institutional context in post-Soviet Azerbaijan and the problems encountered in the early MFA. It looks at the various advocacy processes that emerged within the nascent institutions, which policy proponents used in their efforts to convey ideas to the chief executive. Analysis of the president’s character, belief system and prior experiences is indispensable to understanding the nature of Azerbaijan’s foreign policy in the 1990s, and the chapter examines the individual leadership styles of the country’s two chief policy-makers: Abulfaz Elchibey and Heydar Aliyev. The chapter demonstrates that in small states with underdeveloped institutions and highly centralised decision-making authority, policy success or failure can often be attributed to the individual traits of the president. But what are the conditions that enable a leader to increase his say over foreign policy? The chapter explores how the international context in which leaders operate affects their thinking and policy formulation. Azerbaijan’s international relations come under scrutiny in the next chapters, but the present discussion advances the theoretical argument made earlier in the book: that the international environment alone does not explain the foreign policy of any state, large or small, and that internal factors by themselves are equally insufficient in accounting for the complexity of foreign policy decision-making. A discussion of the different ways in which Elchibey and Aliyev defined and assessed the international situations that required state action sheds light on the differences in the foreign policy that Azerbaijan pursued under their respective leadership. Different policy actions then prompted the larger regional states to respond in different

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ways, providing a vivid demonstration that the actions of a small state matter.

Organisational structure, process and leadership style The period 1991–3 was characterised by political and economic turmoil, resulting from the transition from one system to another. It was clear to the Popular Front of Azerbaijan (PFA) government, headed by Abulfaz Elchibey, what it wanted to move away from – the socialist system with a centrally planned economy. It was much less clear to it what it wanted to move towards: in 1992, for example, Elchibey still seemed to favour a mixed economy with the state retaining a considerable degree of control. This was largely in line with his predecessor’s preferences, and the Law on the Fundamentals of Economic Sovereignty enacted by the Milli Mejlis (parliament) in the summer of 1991. The law abolished centralised planning and devolved responsibility for decision-making to industrial managers. At the same time, however, the law stipulated that land was to be exempt from privatisation; the oil and gas sector was to remain in state ownership; and the state was to retain control over the ‘rational use of labour resources’.1 The institutional vacuum and confusion that had resulted from the collapse of the Soviet Union severely undermined the effectiveness of the new state. Sovereignty was limited by the absence of administrative capacity, and the formulation and implementation of even the smallest tasks, which normally fall within the competence of bureaucracy, necessitated the attention of the most senior government officials.2 In institutional terms, therefore, Azerbaijan, as a new small state with only minimal prior experience of statehood, had to start from scratch in establishing a foreign policy bureaucracy. The challenge was not just to set up a Ministry of Foreign Affairs (MFA), but also to determine whether this ministry would be subordinate to the president or prime minister and whether it would be (or should be) accountable to parliament. Two factors complicated the establishment of the MFA: a severe shortage of diplomatic cadres, and unwillingness to recruit Soviettrained diplomats of Azerbaijani origin. In February 1993, the then

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minister of foreign affairs, Tofik Gasymov, gave the following assessment of the situation: When I became minister, there were 82 people employed in the ministry. I fired one, so we were left with 81. Out of this number, 36 people more or less have a connection to foreign affairs. The rest are technical workers. Out of these 36 people, 10 are more or less competent. And the entire workload rests in reality on the shoulders of these people.3 Indeed, Gasymov himself was a medical doctor, with no background in international relations or diplomacy. The ministry that was put together in the early years consisted of a handful of young professionals and a number of older cadres who were brought in from other ministries, mostly because they spoke some English. Yet Elchibey and his team remained adamant about not employing former Soviet diplomats. Gasymov frequently complained to the heads of foreign missions in Baku that the lack of personnel was due to the Soviet Union’s policy of not training diplomats from what he called the ‘Asian Soviet republics’.4 According to him, this policy had not applied to the ‘European Soviet republics’, resulting in a greater availability of diplomatic cadres in Ukraine, Belarus and the Baltic states than in Azerbaijan and Central Asia. Gasymov seldom spoke of the much more fundamental reason that motivated his government not to invite those (admittedly few) Soviettrained diplomats who were of Azerbaijani or mixed (e.g. AzerbaijaniRussian) origin and may have lived in other parts of the Soviet Union before its collapse. That reason was the PFA leadership’s fear that these diplomats had and could retain connections with Russia’s secret services. This policy continued under Heydar Aliyev.5 There was, however, one professional Soviet-era diplomat in the PFA government – Vafa Guluzade – whose nationalist ideas and personal friendship with Elchibey trumped other considerations. To be precise, Guluzade was appointed presidential foreign policy adviser in 1991, under Ayaz Mutalibov, but was invited to stay on in this capacity under his successor, Elchibey. Nevertheless, he was very much an

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exception to the general rule, that a small state would prefer to suffer through its bureaucratic ineptness than risk undermining its sovereignty by employing cadres trained by its perceived arch-enemy. The lack of qualified personnel to monitor, collect and analyse information meant that Baku had fewer means of gathering and processing information relevant to foreign policy-making than the equally new small state of Armenia, whose MFA by February 1993 was believed to have more than 400 staff.6 A dearth of information meant that there were fewer policy options for the country’s chief executive to consider. To enable the MFA personnel to gain some knowledge of diplomatic practice, the UN conducted training courses, while small groups of recruits were sent to the foreign ministries of friendly states to take crash courses.7 Yet these efforts were undermined by the exodus of the recently trained employees to foreign companies that were beginning to establish themselves in Azerbaijan and paid better than the government. The MFA, therefore, remained heavily underdeveloped, a problem that was compounded by Elchibey’s tardiness in forging personal relations with the world’s leaders. Unlike Aliyev, who from the first days in power explicitly set the goal of dismantling the ‘informational blockade’ around Azerbaijan, Elchibey seemed to assign relatively little value to official visits and foreign trips. As a result, he missed out on personal diplomacy, which, in the words of one statesman, plays a ‘surprising and shocking’ role in decisions that affect the lives of millions of people.8 By contrast, Aliyev viewed contacts with other heads of states as being of paramount importance and frequently accused the previous government of incompetence and failure to provide sufficient information on Azerbaijan to the outside world. During his time in office, the MFA, along with the other branches of the bureaucracy, grew in size and capacity, but this process was accompanied by a significant strengthening of the presidency. Following Aliyev’s accession to power, a constitution was adopted in 1995 to suit his requirements, in effect turning the system into a super-presidentialist one. The constitution, adopted by a national referendum, limited the responsibilities of the cabinet of ministers to

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economic policy, drafting the state budget, implementing social programmes and ‘other issues as delegated by the president to the cabinet’s jurisdiction’. Political decisions, in both the domestic and foreign arena, came to rest firmly with the president. The explicit demarcation of powers in the constitution was in part Aliyev’s response to the domestic situation. In September 1994, Aliyev had to quell the attempted coup by Prime Minister Suret Huseynov, who had helped him into power and whose appointment, Aliyev later admitted, was made for ‘internal political reasons’.9 Aliyev accused Huseynov not only of interfering in domestic politics, but also of taking foreign policy initiatives that contradicted the policy course set by the president. Following Huseynov’s dismissal, Aliyev refused to appoint a prime minister for over eight months, during which time Fuad Kuliyev served as interim prime minister only. When Kuliyev was finally confirmed in May 1995, Aliyev warned the cabinet and the new prime minister against meddling in political affairs. He described the responsibilities of the cabinet as involving ‘the development of the economy, the improvement of social welfare, the conduct of economic reforms and the transition to market economy’.10 The main criteria for the selection of prime minister became the candidate’s technocratic background and absence of political ambitions.11 Foreign policy remained the area of undisputed presidential authority, but the president was faced with the almost impossible task of handling, processing and acting on a vast amount of information at the top strategic level as well as the intermediate bureaucratic level. Institutions remained incipient and fragmented, and their capacity was limited by the lack of cadres, experience and the continued loss of the more qualified staff to the private sector. This translated into a tremendous workload for the president, whose personal interference was often required for the oversight of even mundane tasks that would ordinarily be relegated to the bureaucracy.

President and entourage: the process of advocacy The institutional set-up that has evolved in post-Soviet Azerbaijan since independence has been a super-presidential system, with many

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powers concentrated in the hands of the chief executive. This was the case even under Elchibey, who came to power promising to create a parliamentary republic. To be sure, the Milli Mejlis was at the time too absorbed in the internal power struggle and paid no attention to foreign affairs; one indication of this was Foreign Minister Gasymov’s futile attempts to report to parliament in late 1992. The absence of a legislative check on the executive led to the centralisation of power, which under a more active parliament could have been avoided. Throughout his year in power, Elchibey grew increasingly fond of ruling by decree, although he often did so after listening to his entourage. Elchibey’s decision-making group was not highly centralised, but it nevertheless complied with presidential preferences. The system that emerged under Elchibey resembled what the theoretical literature on the subject refers to as a leader-delegate group. In such a group, the leader is the preponderant and authoritative decision-maker, while the delegates are spokesmen for their ministry or bureau.12 Personal relations play an important role in who gets the ear of the president and whose ideas count in making decisions. The emerging formal structures appear to have played only a secondary role, as demonstrated by the frequent turnover of prime ministers. In 1992–3 alone, Elchibey changed four prime ministers: Feyruz Mustafayev, Ragim Huseynov, Ali Masimov and Panah Huseynov. None was very influential with the president. In foreign policy, two officials who emerged as the frontrunners for the president’s goodwill and favourable hearing were the head of the Azerbaijani State Oil Company (SOCAR), Sabit Bagirov, and the foreign affairs adviser, Guluzade. Both Bagirov and Guluzade were Elchibey’s personal friends and were held in high esteem.13 In 1992, however, the two clashed over the contracts with foreign companies that would regulate the exploration and production of oil deposits in the Caspian Sea off the Azerbaijani shore. Guluzade saw the contracts as a political tool to fend off Russia, and favoured their rapid signing. By contrast, Bagirov argued that the contracts’ value was primarily economic, and they could only be signed after the technical details had been worked out.14 The two converged on the need to attract Western capital and marginalise Russia.

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Diverging perspectives forced both officials to exaggerate the strengths of their respective positions and emphasise the weaknesses of the opposing point of view. Each sought to persuade the president that his position was in the best interests of the state. Nationalistic fervour, which Guluzade and Bagirov largely shared, further radicalised opinions, leading them to propose uncompromising tactics to tackle the perceived Russian threat. Little thought was given to non-conflictual modes of behaviour, such as the consideration of the paths the Azerbaijani government could adopt to normalise relations with Russia. The anti-Russian stance was in part due to the advisers’ own predispositions and policy preferences, but in part it reflected those of the chief executive, on whose favourable hearing they depended to have their policies implemented. If they suggested a course of action that differed dramatically from Elchibey’s preferred policy course, advisers risked jeopardising their standing with the president. Thus, the policy recommendations that the president received came, first and foremost, from like-minded individuals who, moreover, showed preparedness to reinforce his preferences. This translated into a process of persuasion and advocacy in Elchibey’s decision-making group that favoured simplifications, reinforced group thinking and provided psychological comfort to the leader who then continued on his preferred policy course. Aliyev’s personal preferences for government organisation led him to discard the idea of the presidency as a collective personality.15 He preferred to do without a team of analysts and aides who would not take their cues directly from the president. The decision-making unit that he built came to be known as a ‘system of counterbalances’, in which competition and loyalty to the president were the key features. In the theoretical literature, it is closest to the leader-staff group, which is characterised by an authoritative decision-maker acting alone or with little consultation with his staff. In this system, most prominent officials lacked an independent power base and owed their loyalty to the president. They acted less as consultative or advisory agents and more as informational channels, which enabled the president to receive the data he required to respond to domestic and foreign policy situations.

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Receiving timely information from subordinates to enable more effective decision-making was a key advantage behind the system of counterbalances. The process of interactions that emerged is perhaps best described as adversarial, in view of its similarity with court proceedings where the judge hears and decides between advocates. This was particularly noticeable at meetings of the Security Council, in which Aliyev invited his ministers to report on the situation and give their opinion prior to giving orders as to which matters were to be ignored and which given priority.16 Adversarialism was different from persuasion under Elchibey in that it allowed for a compromise solution, and the president frequently combined several points of view to reach a decision. Adversarialism was also more formal and the advocates spoke up mostly when invited to do so by the chief executive. The rule applied even to prime ministers, who felt they did not have the right to telephone the president when they considered it necessary. At the same time, if there was any information that Aliyev felt he needed, he reached down directly to the level of deputy ministers and asked them to provide a detailed report on the subject in question. Officially, there were no overlapping spheres of responsibility, but, unofficially, Aliyev encouraged the creation of tracks along which information would rise directly to the president, bypassing the hierarchical channels. This pattern of interaction had two main advantages. First, it increased the personal and institutional power of the president, as all senior and middle-ranking officials in the system felt they owed their loyalty and were accountable to him. Second, it gave him access to more information, which, in turn, increased the number of policy options available. A vast amount of information, which needs to be analysed and turned into policy options, is not an unquestionably positive development given the multitude of policy areas which simultaneously require the president’s attention. Psychological studies in foreign policy show that individual policy-makers deal with the informational workload differently, depending on their level of analytical sophistication. It is to this that we now turn.

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Individual decision-maker: Cognitive style The cognitive style – that is, the characteristic way in which an individual conceptually organises his or her environment – is an important aspect of the decision-maker’s personality, which influences his perception of and responses to the international stimuli.17 It was the cognitive style of Elchibey and his close associates that contributed to the PFA’s relatively simple foreign policy; it was the same variable that accounted for Aliyev’s highly elaborate international strategy. A decision-maker’s cognitive style is characterised by two main components. The first is related to the degree of openness of his or her cognitive system. The cognitive system is said to be closed when a decision-maker believes that his or her knowledge fully, or at least adequately, covers the subject matter. If so, he or she is less likely to collect additional information and a change in attitude is less likely to occur. The example of Gasymov is a case in point. In the course of the 1993 Geneva consultations on ways to settle the Nagorno-Karabakh conflict, the PFA foreign minister refused to hear the position of the then representative of the Russian president to Nagorno-Karabakh, Vladimir Kazimirov. His staunch refusal was influenced by his belief that Russia was a close ally of Armenia and an implacable enemy of Azerbaijan.18 His cognitive system was, therefore, closed to the information emanating from people affiliated with either Russia or Armenia. This should be contrasted with the approach of Aliyev, who regularly held informal discussions with various Russian representatives. Yevgenii Primakov, Russia’s foreign minister in 1996–8 and prime minister in 1998–9, was a regular interlocutor, who met Aliyev regularly and provided him with a wealth of information to consider and act upon.19 Furthermore, as previously discussed, the system of counterbalances created numerous channels along which information rose directly to the president. This system was complicated to maintain and manage, but it underlines Aliyev’s constant quest for first-hand information from multiple sources. People who knew Aliyev personally, regardless of their attitude towards him on other matters, noted

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his remarkable ability to gather and retain new information. This intellectual capacity is indicative of an open cognitive system, and its main advantage is the amount of data on which the decision-maker can potentially draw when solving problems. This leads to the second point on cognitive style, which is that individuals’ cognitive systems have variable levels of complexity, as expressed in the number of dimensions applied to characterise objects or situations. Decision-makers who possess multiple judgment dimensions – and hence have a high level of cognitive complexity – integrate new information better than those who have a low or intermediate level of complexity. People in the latter two categories either take in multiple details but cannot integrate this information into pre-existing cognitive structures, or do not have the capacity to accommodate new information, generating fixed beliefs and attitudes as a result.20 Elchibey’s policy towards the outside world – most notably, Russia, and also Turkey – reveals a low level of cognitive complexity and the existence of rigid political stereotypes and images. These expressed themselves in his deeply hostile, almost demonising, attitude towards Russia and highly idealised attitude towards Turkey. The ‘good Turkey/ evil Russia’ image tended not just to determine Azerbaijan’s foreign policy course but also to justify it retrospectively, despite the evidence that this policy was counter-productive. The centralised nature of the presidential system, which had already emerged under the PFA government, meant that the cognitive style variable gained additional importance in determining the form and substance of foreign policy decisions. The reality as perceived by Elchibey generated a host of threat perceptions from Russia and expectations of support from Turkey. Both failed to materialise, but this – given the closed nature of his cognitive system – did not lead to the dismantlement of the dominant images and stereotypes. These would be reassessed fundamentally only following the overthrow of the PFA government. Aliyev, with his more multi-faceted perception of the situation, aided by his ability to process and integrate large volumes of new information, moved to a more complex relationship with both Russia and Turkey, grounding bilateral relations with both on a very pragmatic foundation.

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State management experience The lack of bureaucratic capacity, particularly in foreign policy, due to the newness of Azerbaijan as a state, spelt in 1991–5 the non-existence of routine role requirements and inertia responses to international stimuli. This translated into a dramatic increase in the workload of the president. The chief executive was obliged to attend to strategic and daily matters in both the domestic and foreign policy domains. He was also forced to assign the implementation of decisions to specific individuals rather than simply pass down the instructions through the established channels of the bureaucracy. The president’s capacity for dealing with the ensuing information and problem overload depended on his level of cognitive complexity as well as on his relevant prior experience. Elchibey’s lack of experience in the administrative domain could not but negatively affect the quality of PFA decisions. He was a former professor at Baku State University and a leading Azerbaijani dissident who could mobilise and inspire large masses of people. It was this quality that accounted for his early popularity, the successful overthrow of Azerbaijan’s first post-independence government headed by the pro-Russian Mutalibov and his subsequent victory in the presidential election of June 1992. Once in power, however, Elchibey found it difficult to set up and coordinate the activities of the bureaucracy, simultaneously solving a myriad of macro and micro problems in a timely and consistent fashion. Hikmet Hajizade, one of the president’s allies and a permanent representative to Russia in 1992–3, gave the following assessment of Elchibey: Elchibey proved to be an administrator of only modest abilities. Some critics suggest that Elchibey preferred to live in a world of ideas, and ponder on the making of history. Because of this preoccupation with the big picture, small problems and day-to-day administrative affairs did not attract his attention.21 Lacking practical experience in administrative or foreign affairs, Elchibey frequently relied on images as ideological and ethical guides

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to foreign policy. His images were in part based on his personal beliefs and life experiences, such as the discrimination he faced in the Soviet Union for his less-than-fluent command of the Russian language and the 18-month prison sentence that he served for dissent in 1975. Significantly, however, they were also based on historical experiences of national importance. The occupation by the Red Army of the newly created Azerbaijani Republic in 1919, followed by its absorption into the Soviet Union, was one such episode, which moulded a powerful image of Russia as hostile and imperialistic. This image was supported by the more recent and highly traumatic Soviet military intervention in Baku in January 1990, a date that went down in Azerbaijani history as Black January. On the night of 19–20 January, 26,000 Soviet troops entered Baku, with the apparent aim of crushing the PFA, which was then in opposition, and upholding Soviet rule in Azerbaijan. They left behind 133 people dead and 744 wounded. They also left an irreparable imprint on the national psyche, which confirmed and strengthened the image of Russia as malevolent and hostile. For many in the Elchibey leadership and certainly for the president himself, the return of a revanchist Russia following the collapse of the Soviet Union was not in question and was only a matter of time. The policy course that this analysis – linked to the image and the use of historical analogies – suggested was the need for Azerbaijan to find allies and to do so promptly, before Russia recommenced its offensive. As an idealist, Elchibey believed that any deviation from a clear and explicitly stated policy course, which reflected end-goals, amounted to a betrayal of national interests and public confidence. Faced with a raging war in Nagorno-Karabakh, and pressed for time and action, Elchibey was unable to gain control of the situation, which led to his ouster from power in June 1993. His successor, Aliyev, represented the type of a highly pragmatic politician, whose strategies zigzagged and evolved in response to circumstances. His policies were neither simple nor clear-cut, but his complex cognitive system supported vast knowledge structures, which he had built up over the years in high administrative jobs, enabling him to pursue complex policies for years without losing sight of end-goals.

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Aliyev had an impressive record of state management. In 1969, after serving as the head of Azerbaijani KGB for two years, Aliyev was appointed first secretary of the Central Committee of the Azerbaijan Communist Party. He held this post for 13 years until 1982, when, on Yurii Andropov’s recommendation, he was elected to the Soviet Communist Party Politburo and appointed first deputy chairman of the USSR Council of Ministers.22 Following his dismissal from the Politburo in 1987 and resignation from the Communist Party in 1990, Aliyev returned to his birthplace of Nakhchivan, where he was elected parliamentary speaker of the Nakhchivan Autonomous Republic in September 1991. In this position, he conducted a foreign policy independent of Baku, much to the embitterment and anger of the PFA government. Blatantly ignoring Elchibey’s foreign policy preferences, Aliyev established close political and economic ties between Nakhchivan and Iran. In fact, he paid two visits to Iran, and each time President Ali Akbar Hashemi Rafsanjani sent the presidential airplane to fetch him. Equally, he held negotiations with Armenian President Levon Ter-Petrosyan and succeeded in maintaining relative stability on the Armenian border with Nakhchivan. Moreover, Aliyev enjoyed good relations with Turkish Prime Minister Suleyman Demirel and even reportedly received humanitarian aid from the USA – all bypassing Baku. By the time he assumed the role of acting president on 24 June 1993, Aliyev had more than just his former Politburo connections and credentials to draw upon.23 It should be noted that Aliyev acquired his first experience in foreign affairs while serving in the Soviet Politburo. In 1982, Aliyev was sent on a mission to Mexico; in 1983, he headed the Soviet delegation in Vietnam; in 1985, he negotiated on behalf of the Soviet government in Angola; and a year later, he signed the bilateral Soviet-Yugoslav treaty in Belgrade.24 He was also entrusted with several high-profile foreign policy tasks in Moscow, such as meeting the head of the Chinese delegation in 1984, and conducting negotiations with the leader of the Nicaraguan National Liberation Movement in 1985. These missions enabled Aliyev to gain experience and make contacts within the Soviet foreign policy establishment. For instance, in the course of his visit to

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Mexico, he met career diplomat Kazimirov, who in 1993 was appointed representative of the Russian president to Nagorno-Karabakh.25 As leader of independent Azerbaijan, Aliyev deftly used these contacts to convey information to high-level Russian officials, notably President Boris Yeltsin, whom he intensely disliked, without making use of the official communication channels. He used his contacts and knowledge of the internal workings of the Soviet and post-Soviet bureaucracy to capitalise on the differences in positions of the Russian ministries. This tactic became central to the successful implementation of his policy of strategic manoeuvring, which is explored in detail in subsequent chapters.

Leadership style In an influential study of the politics of leadership, Richard Neustadt wrote: Not action as an outcome but his impact on the outcome is the measure of the man. His strength or weakness, then, turns on his personal capacity to influence the conduct of the men who make up government. His influence becomes the mark of leadership.26 The need to influence and direct others is undoubtedly an essential political skill and one that all leaders have. The difference is in the degree of influence the leader can exercise over the system, and the degree of influence he wants to exercise over it. The former is about the leader’s ability to shape policy and see through its implementation, overcoming political and bureaucratic obstacles, and ensuring policy coherence. The latter is about what drives a leader to seek and retain power. Elchibey’s values and beliefs gave him a sense of purpose and increased his ability to inspire others, even though foreign policy implementation channels were virtually non-existent. Indeed, Elchibey, whose real surname was Aliyev (no relation to his successor), came to be best known by his adopted pseudonym, which in Azerbaijani

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means ‘noble messenger’. Throughout his political career as the leader of the PFA, Elchibey aspired to be a messenger of the people. And it is through conveying a sense of purpose to his subordinates that he succeeded in giving a degree of coherence to policy decisions, as evident in the withdrawal of Soviet/Russian troops from Azerbaijan. Elchibey found comfort in discussions with his entourage, as it helped him deal with extreme and protracted stress. As the year in power dragged on, he was known to resort to alcohol with increased frequency, unable to control the situation in the country or cope with it psychologically. The president was no longer in charge, which, in a centralised presidential system, exacerbated the situation and deepened the crisis. After Aliyev’s accession to power, it became clear that the new president had a far better understanding of politics than his predecessor. He had a vision of what he wanted to achieve in foreign policy, and, at the same time, he remained at all times closely involved in all aspects of policy-making. He wanted not just to shape policy but to handle its implementation through close oversight and frequent intervention. In the words of one of Aliyev’s long-standing associates, ‘the president learned, or rather taught himself, to work without a team, relying exclusively on his own political instincts and intuition’.27 He viewed politics as an enjoyable and useful game and felt comfortable with intra-elite divisions because they advanced his informational and personal control. His enhanced power needs were in part a response to the events of the past when he received harsh, even contemptuous, treatment in Moscow after his dismissal from the Politburo. This traumatic experience was compounded by the refusal of the Mutalibov government to accept him in Baku following his resignation from the Communist Party. This episode left a profound mark on Aliyev. Much later, in 1995, at a meeting with Azerbaijani émigrés in Sweden, Aliyev revealed his disappointment when he said: It was impossible for me to stay in Moscow and I came to Baku. But a person who had spent 14 years of his life building Baku, [and] Azerbaijan was not allowed to live in Baku. I went to

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Nakhchivan because I was born there and the grave of my father rests there too.28 He then went on to confess: I was hurt, very hurt, and did not want to return to Baku [when the PFA invited him in 1993]. I thought there had been so much injustice towards me; I would not return to Baku . . . I would live in Nakhchivan for the rest of my life.29 When he finally changed his mind and returned to Baku and power, Aliyev chose to consolidate authority in his hands. ‘There is no second person in the state!’ Aliyev is known to have told his prime minister, who refused to disconnect the direct telephone line to Rasul Guliyev, then speaker of parliament.30 Furthermore, the large number of Nakhchivanis appointed to high- and middle-ranking administrative positions was testimony to the psychological distress and sense of hurt experienced in those years, as well as the sense of gratitude he felt towards Nakhchivan and its people. Under Aliyev’s leadership, there was no power vacuum for anyone to fill. For instance, he had only two foreign affairs advisers. A twoperson group can have no majority short of unanimity, as each person is likely to exercise veto power over the other.31 As a result, Aliyev’s advisers presented him with two or more policy options, from which he could choose as supreme arbiter; alternatively, he could combine several policy proposals into one, as was discussed earlier, but the important point is that the decision was invariably his. Aliyev made continuous efforts to demonstrate to the country and the world that he was personally in charge. Even after undergoing heart surgery abroad in February 2002, Aliyev gave an interview to the Azerbaijani TV channel ANS in which he assured his audience: I have always been energetic and let nobody doubt this now either . . . I am working, working all day. I am in touch by telephone, receive information from a number of the Republic’s officials and

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give the necessary orders. I am following all processes in the Republic, I am aware of everything that is happening, I know everything, and I think that everything is going well . . . That is to say that I am always in touch with the Republic.32 Aliyev’s system of governance was an extension of his personality and skills that enabled him to shape, direct and coordinate the myriad of inter-personal relations among his subordinates. The system was capable of delivering high-quality policy outputs, particularly in foreign policy. But it also had several inherent weaknesses. Firstly, officials, including senior policy-makers, were often uncertain what was expected of them and acted only upon presidential orders. Some felt trapped in the president’s larger game, which they could neither see from where they stood nor understand because, in their own words, ‘Aliyev was a political Grandmaster.’ The president dominated foreign policy thinking and formulation, and was singlehandedly involved in supervising policy implementation. Secondly, the system was overwhelmingly dependent on a single individual, which led to the slow development of institutions. The personal guarantees that Aliyev gave to foreign diplomats and investors sent a consistent signal that, to accomplish tasks, they had to work directly with him. Meanwhile, those investors who tried to work their way through the system without engaging presidential attention were generally caught in the bureaucratic quagmire.33 The system functioned to a large extent thanks to Aliyev’s capacity to handle a multitude of problems simultaneously. The number of intellectual and administrative tasks was colossal, and the precision with which orders had to be handed down to ensure coherent policy implementation further increased the workload of the chief executive.34 Aliyev took a close interest in the oil sector, and, on numerous occasions, sought to assure foreign investors that the so-called Contract of the Century was under his personal supervision. At one meeting with oil executives in Baku, he stated: ‘I assure you, on the part of this government and on my part as president, that we will give this contract hourly attention and we will undertake all necessary measures for timely implementation of the [scheduled] works.’35

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That the implementation of Azerbaijan’s foreign and energy policy was consistent and timely was due not only the very high degree of the president’s personal involvement, but also his prior experience in the oil industry. In his years as leader of Soviet Azerbaijan, Aliyev, in his own words, ‘spent literally half of every day solving problems in the energy industry’.36 Aliyev’s experience in managing the oil industry under the Soviets was relevant and applicable to the post-Soviet period, while his intellectual capacity enabled him to formulate policies after analysing facts from competing sources received from different levels of the hierarchy. The above discussion sheds light on why the experience and cognitive style of the chief executive played a determining role in the quality of decisions made. The next section looks at what enabled the leadership to centralise power in a relatively short period of time.

Maximising presidential power Occasion for decision What are the conditions that enable a leader to increase his say over foreign policy?37 The first is a situation of crisis. Time constraints place the burden of and the responsibility for making the decision on the shoulders of the chief executive and his closest associates. Case studies show that crisis-formed decision groups tend to be small and have distinct patterns of inter-personal relations.38 In all of them, officials tend to reinforce the president’s preferences, sometimes at the expense of presenting and examining evidence in full.39 Thus, if the president wishes to act as the dominant decision-maker at a time of a crisis, he enhances his influence over the group by merely expressing an opinion on his preferred policy course. The second condition under which the president plays an enhanced role in foreign policy decision-making is the absence of routine procedures in the bureaucracy. In this case, the executive looks to the president for guidance and instructions. Such a situation is particularly relevant for new states, which have no established communication and coordination channels within the incipient bureaucracy. The lack of routine interactions between departments results in a failure to analyse

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information systematically and on time. Under these circumstances, the chief executive’s ability to process information quickly and accurately, and to steer the bureaucracy, becomes crucial. His inability to do so may produce inadequate or delayed responses, which may trigger a crisis. The third condition is widespread public support for the president as a result of victory in democratically held elections. If foreign policy issues figured prominently in the candidate’s campaign, his election to the post would amount to a mandate from the people to implement his foreign policy vision. If, on the other hand, the candidate’s platform avoided foreign affairs, he might still use the post-election honeymoon period to make otherwise unpopular foreign policy decisions with no or little opposition from the constituency. Finally, the fourth condition is situational ambiguity, where the president may decide to act despite unclear, imprecise or conflicting evidence. He could define the situation as critical to national interests and claim institutional authority to make decisions on behalf of the people he represents. He could justify his actions with strategic vision, moral authority or a superior understanding of the situation because of where he stands in the system. By no means exhaustive, these four conditions give an idea of the internal conditions that enhance the presidential role in foreign policy. In the Azerbaijani context, it may be suggested that the members of the Elchibey group underwent continuous and extreme stress as a result of the Armenian offensive in Nagorno-Karabakh and the resultant disintegrating situation in the country, which was coupled with the perception of acute threat and interference from abroad. Prolonged endurance of stress in a small group of like-minded individuals led to the reinforcement of the president’s choices. In a situation where the president held and openly expressed highly principled and rigid views about politics, and surrounded himself with radical and hot-tempered individuals, any expression of preference for a more moderate position and course of action risked falling on deaf ears. Any such dissenting member risked being ostracised from the decision-making group. In this respect, the pattern of conformity that prevailed resembles groupthink: a threatening and stressful environment strengthened the already strong group cohesion around the president.40 It is also likely

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that, during their time in power, the members of the group came to internalise certain ideas and became convinced of the rightfulness of the pursued foreign policy course, which they defended even after being ousted from power. 41 And yet, there was more to Elchibey’s policy than groupthink. The president felt he had a mandate from the people, which he received as a result of the bloodless coup against Mutalibov and subsequent democratic elections. The popularity of the nationalist discourse in the months before the elections acted as a powerful confirmation of the PFA’s – and particularly Elchibey’s – ideas. This encouraged Elchibey to translate his anti-Russian, pan-Azerbaijani and pan-Turkic rhetoric into foreign policy. In other words, the thinking remained unchanged from the time the PFA was a movement to the time it became a government. Lack of political experience blurred the distinction between what was perceived as politically desirable and feasible. This was aggravated by the lack of time, as the PFA movement did not have long to rethink its foreign policy means and goals. In the words of one observer, ‘the lack of experience, both political and administrative, the excitement of the street and the sudden success at the elections must have played a destructive role for his [Elchibey’s] team’.42 The domestic sources of power facilitated the task of the chief executive in determining national goals as well as assigning and implementing the new state’s foreign policy priorities. During the PFA government’s honeymoon period, accountability was deemed to be important, and a press service was organised to inform the public and receive feedback from it through weekly briefings of journalists.43 Yet, when public support dwindled following a series of military defeats in Karabakh, the PFA government introduced a state of emergency (on 2 April 1993), which, among other things, banned public demonstrations and sanctioned censorship. Attempts to hold unsanctioned demonstrations led to the breaking up of at least ten demonstrations, in which protesters were arrested and either imprisoned or forced to pay heavy fines. By distancing itself from the constituency, the PFA undercut its main support base.44 As the domestic situation disintegrated, several loci of power emerged within the PFA government, some of which were not accountable to

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the president. This, together with human rights violations and continuous losses on the Karabakh frontline, damaged the popularity that the PFA had enjoyed as a democratically elected government. Once the tide of public opinion had turned, its main concern became domestic stability, which, it became understood, could come with a greater centralisation of power in the hands of a more experienced politician – Aliyev. The public craving for stability after the PFA’s turbulent year in power gave Aliyev carte blanche to implement a policy course he considered appropriate. This widened the latitude for presidential decisionmaking. In public statements and televised interviews, Aliyev strongly criticised the previous government. He used plain language, accessible to ordinary people, to point out Elchibey’s failures and his ignominious decision to flee to a remote village in Nakhchivan. In one such speech, he stated: President Abulfaz Elchibey . . . had run away from Baku to the village of Keleki . . . I was here alone. No president, no prime minister. As chairman of the Supreme Soviet, I was left in a very difficult situation . . . He betrayed me and his people. And that is why he has no moral right . . . to give weekly interviews or draw conclusions or express views . . . A person who left the state headless and ran away, does he have a right, a moral right to demonstrate political activity again? No, he does not.45 Aliyev used similarly harsh criticism to denounce Mutalibov’s attempts to challenge his policy and warn those who financially supported the former president from Moscow against returning to politics.46 Aliyev’s ability to bring the domestic situation under control and gain international recognition enabled him to widen further his decision-making space. He frequently complained to the domestic and international audiences of being subjected to slander and quoted examples of how the opposition – which he publicly called the ‘dumbest opposition in the world’ – made up stories and wrote articles, which, in his opinion, had nothing to do with reality.47 For instance, in a 2001 television interview to CNN Turk Ozel, Aliyev criticised the

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Yeni Musavat opposition newspaper, which, he said, every day published five to six articles directed against him and one against his son, Ilham. He gave an example of an article that appeared two days before the interview, which claimed that Aliyev’s health problems had led him to reschedule his trip to the USA. Aliyev denied any plans to go to the USA and asserted that the newspaper had invented the story. While it is true that the allegations made by opposition newspapers were frequently groundless, the amount of information made available to the public, especially in what concerned foreign policy matters, was scant. In the early months of his presidency, Aliyev sought to educate the public about Azerbaijan’s foreign policy problems and the ways in which he proposed to resolve them. By 1995, however, he had begun devoting more attention to policy achievements: I have met the heads of the largest states . . . I have met the president of the USA, Bill Clinton . . . When did Azerbaijan have an opportunity like this? When was the head of Azerbaijan honoured with an opportunity to sit and discuss, and consult as equals with the leaders of other states? And not just that! To the present day, I have met and spoken to the leaders of Russia, the USA, France, the UK, Germany and China.48 This excerpt reveals the confidence Aliyev had in handling foreign affairs, but it also shows that in domestic speeches, he sought more to impress his audience than to inform it of policy substance. This scarcity of information in the public domain, coupled with the system of counterbalances that the president used for information gathering, enhanced Aliyev’s decision-making powers. The televised addresses to the nation, his preferred format of communication for domestic use, circumscribed the space for questioning presidential policy by the public or the opposition. The privacy in which key foreign policy decisions were made left space for speculation but not substantive criticism from the opposition. Ministers too were not in a position to question presidential choices, in part because the president felt fully in control of the situation and was not in the habit of divulging details

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to his ministers after meeting foreign officials. The president therefore could and did claim better knowledge and institutional authority to act unconstrained.

Defining the situation and acting on it Conditions can either enlarge or restrict the scope for presidential decision-making. The example of Azerbaijan is not unique: presidents of all newly created post-Soviet states had the latitude to act as they saw fit. This was the combined result of the situational fluidity that prevailed following the disintegration of the Soviet Union, the absence of established bureaucracies through which information could be gathered, analysed and acted upon, and the stress experienced by key decision-makers. The last was in part due to the sheer number of tasks that a new state had to face but also, as the case of Azerbaijan shows, the perception of an external threat. This perception was shared by the small states in Russia’s vicinity – from the Baltic states to Georgia. The presidents of the new states were both helped and hindered by domestic processes. For instance, the democratically elected ones enjoyed a popular mandate but also greater public scrutiny. Meanwhile, those who resorted to more authoritarian methods of governance had to spend more time, energy and resources trying to control the flow of information in order to insulate the public from the decision-making process. Once again, Azerbaijan’s experience is not unique: the period of democracy (and instability) in Russia under President Boris Yeltsin in the 1990s paved the way to ‘managed democracy’ under his successor, Vladimir Putin, in the 2000s. Putin’s very high popularity ratings as president suggest that this style of governance was more palatable to the majority of the Russian public, not least because it was accompanied by greater stability and economic growth. Following his succession, President Dmitrii Medvedev too has adopted the elements of this style and rhetoric, although he has at the same time emphasised the rule of law and the emergence of functioning institutions, and has even embarked on the reform of law enforcement agencies. Yet the tandem with Prime Minister Putin appears to be working, and, with

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many continuing to take their cues from Putin, managed democracy is unlikely to be seriously challenged any time soon. The level of pro-activeness that a president displays while in office affects the conditions in which he operates. Failure to pick up the mantle of leadership may lead to the disintegration of presidential authority, while an over-zealous leadership may lead to the concentration of power in the hands of the chief executive. In conceiving and formulating policy responses, the president’s images, ideas and perceptions matter – and often matter the most. The president plays a determinant role in identifying the occasion for decision. As the chief executive, he often defines a foreign policy situation and decides whether this situation requires a response. Indeed, a decision not to act is also a response but only if it is made consciously (as opposed to a situation slipping unnoticed through the information net). Decision-makers, including presidents, tend to define and assess a situation using four key criteria.49 The first is the psychological relevance of the object. For small states, geographical proximity to a large power would make that power more relevant, especially if it is perceived to be potentially hostile. The implication of a power being seen as relevant is that account will be taken of its existence, and policies will probably be formulated to reflect an awareness of its presence and interests. The second criterion is the effect of external stimuli – that is, actions by other states in the international system – on the goals that the state seeks to achieve. Here again, perceptions are crucial, as the impact of other states’ actions will be assessed differently by different decision-makers. On the basis of this assessment, a decision-maker will proceed to identify whether a situation requires attention. The greater the perceived effect, either positive or negative, on the state, the more likely is the decision-maker to identify an event as a situation that requires attention. The third criterion is problem complexity. The complexity of the challenge that a state will have to take on if it acknowledges a situation as a foreign policy problem needs to be assessed. This assessment will then give way to consideration of the actions required to resolve it and appraisal of the attainability of the task. An early assessment of a

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situation as too complex and beyond the power of the state could lead to decision-making paralysis. Faced with a complex external situation, a decision-maker may not know how to define the problem, break it down into component parts and act upon it. On the other hand, a decision-maker may underestimate the complexity of the situation, leading him to believe that a particular problem can be resolved using relatively limited resources (diplomatic, bureaucratic and military). The decision-maker’s assessment of his and his team’s capacity to solve the problem intellectually and oversee its successful implementation is paramount. An erroneous assessment can have severe foreign policy consequences, particularly for small states, leading to military conflict, international isolation or annexation by a large victorious power. Thus, an accurate assessment of what is feasible is key to defining a foreign policy situation. The fourth criterion is time pressure. The amount of time that is available to a decision-maker to act will play a role in whether he defines an event as an ordinary situation or an emergency. Applied to decision-making in Azerbaijan, this four-dimensional analysis sheds light on how Elchibey’s definition of the situation led his government to refuse to make any compromises towards Russia. A different definition of the situation under Aliyev resulted in a more flexible policy that enabled limited concessions to Russia but did not lead to bandwagoning with it. Applying this four-fold analysis, Elchibey can be assessed to have approached policy towards Russia in the following manner. Firstly, Russia was geographically proximate and therefore relevant, but efforts were made to create psychological distance from it. The rhetoric highlighted the persistent underlying fear that Azerbaijan would lose its independence to Russia. So Russia was relevant after all, and the denial of its relevance had negative policy consequences. This was particularly the case because Elchibey viewed Turkey as a natural ally, partly the result of Azerbaijan’s cultural and linguistic proximity. These two elements combined to lead to a foreign policy that sought to distance Azerbaijan from Russia and ally it with Turkey. Although this policy was aimed at preserving and strengthening Azerbaijan’s independence, its consequences were the exact opposite.

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Secondly, every statement and action on the part of Russia was interpreted through the prism of perceived hostile intentions and was seen as aimed at undermining the achievement of Azerbaijan’s national goals. Elchibey had little understanding of the complexity and incoherence of Russia’s post-Soviet politics. By contrast, signals emanating from Turkey were interpreted as being conducive to the attainment of Azerbaijan’s goals. As such, they were given weight and attention in policy formulation above and beyond what may have been intended by the Turkish leadership. Those bits of information that Turkey tried to communicate to the PFA leadership that did not fit Elchibey’s beliefs and knowledge structure were frequently discarded. Thirdly, Elchibey believed that the two key goals that were at the heart of his foreign policy – preserving independence and allying with Turkey – were hard to attain. Vision and ideals rather than management skills were considered important. Open proclamation of objectives was believed to be the way to conduct diplomacy. Compromises and concessions could be taken for weakness and policy retraction; as such, their use in foreign policy was ruled out. Lastly, Elchibey was convinced that decisive action was needed to thwart Russia’s attempt to reincorporate Azerbaijan into its ambit. Historical analogies suggested that a major effort was required of Azerbaijan to preserve its independence, even if this effort came at a great cost. Aliyev’s definition of the situation differed from that of Elchibey in several fundamental ways. Firstly, Russia was highly relevant, not only because it was a large and geographically proximate power, but also because, following the Soviet collapse, it had retained economic links that were important to the Azerbaijani economy. Cultural ties, as manifested in the widespread use of the Russian language in Azerbaijan, came to be emphasised. However, one did not have to come at the expense of the other, and the West – an expression that expanded to embrace not just Turkey but, critically, the USA and Western Europe – was also seen as relevant. In fact, it was seen as key to offsetting Russia’s potentially hostile intentions towards Azerbaijan, as the subsequent chapters elaborate. This ability to make both Russia and the West psychologically relevant evolved over the years into the

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policy of strategic manoeuvring, which has enabled the small state to enlarge its policy space and not to bandwagon with the hegemon in its vicinity. Secondly, Aliyev perceived and acknowledged that normalising and maintaining good ties with Russia was in the national interests of Azerbaijan. Contrary to his predecessor, Aliyev believed that improved relations with Russia would enhance and strengthen Azerbaijan’s independence. The USA, Western Europe and Turkey would help Azerbaijan strengthen its sovereignty, but their cooperation could only be ensured if they were engaged in the region in a way beneficial to them. This awareness marked a new pragmatic basis for foreign policy. Thirdly, under Aliyev, tactics became complex, to the extent that they became goals in themselves. He built ‘problem hierarchies’ by dividing the main problem into groups of smaller intellectual tasks and subtasks, which was effective and made the overall problem more manageable. A distinguishing trait of Aliyev’s personality, which became a defining characteristic of his style, was the sense of his own effectiveness. He was convinced that he could find solutions to the most daunting tasks. This perception had a profound effect on his definition of situation, as he considered most foreign policy problems to be solvable. Lastly, although time was precious, precipitating events could jeopardise the implementation of foreign policy goals. The pace at which Azerbaijan responded to international stimuli was important, and unambiguous commitment even to a preferred policy course was not always the best decision. Time, therefore, could be an enemy or an accomplice, depending on the situation and the stamina of the decision-maker. This brief assessment shows that both presidents, despite their different styles and levels of experience, viewed Russia as a problem. However, the different ways in which they defined this problem led them to favour different solutions. Elchibey’s definition of the situation suggested that concessions to Russia would not render it more benevolent; rather, they would give way to greater demands that would encroach on Azerbaijani sovereignty.

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Aliyev’s definition, on the other hand, suggested that limited concessions could normalise relations, generate goodwill and create allies within the Russian political and economic establishment. His perception of Russia as a complex, non-monolithic entity with a variety of conflicting interests, some of which could be manipulated to one’s own advantage, underpinned his definition of situations and prompted him to adopt a more accommodating and non-conflictual foreign policy. This stood in stark contrast with the policy stance chosen by Elchibey, who perceived Russia as an insatiable hegemon, which could only be accommodated at the expense of the small state’s autonomy – a cost that he considered unacceptable. The flexibility of response towards Russia was thus inversely related to the acuteness of the threat that it posed, as perceived by the chief decision-maker. Different definitions of the situation led to different policy prescriptions and produced different outcomes.50 Since Azerbaijan’s independence, the president has been the principal foreign policy decision-maker, who has defined the situation and decided whether it required action. He has then formulated policy strategies either single-handedly or following limited consultations with his aides. The ability to channel and direct the work of the incipient bureaucracy required a leader for whom no detail would be too small. However, in the long run, the president’s daily involvement in the minutiae of policy-making was a colossal challenge, and in the absence of precise instructions and directives from above, policy risked being neglected or poorly implemented. Different perceptions, beliefs and prior experiences help explain the divergence in strategies that Azerbaijan’s presidents adopted to implement foreign policy goals, which converged in their desire not to bandwagon with Russia. The sensitivity to data from the external environment also played a part, in that it made a decision-maker more attuned to his external environment. The next chapters examine Azerbaijan’s relations with Russia, Turkey and the West. In doing so, they continue to focus on how the presidents perceived external events (threats, constraints and opportunities) and how they used this information to advance their foreign policy agenda.

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CHAPTER 4 IN THE NA ME OF SOVER EIGNT Y: AZER BAIJAN’S PERCEPTIONS AND STR ATEGIES IN DEALING WITH RUSSIA’S MILITARY MIGHT

The collapse of the Soviet Union moved the tectonic plates of the world order that had prevailed during the Cold War and produced a power reconfiguration on the global scale. Yet it did not change the quintessential fact that Russia remained the largest, strongest and potentially most belligerent state of the region. Power coefficients, skewed disproportionately in favour of Russia, stimulated in the newly independent Azerbaijan perceptions of vulnerability, anxiety and fear for its independence. The legacy of the Tsarist Russian Empire and the Soviet Union incited images of Russia as an implacable threat. Historical memories and images informed by those memories came to constitute fundamental building blocks in the foreign policy of nascent Azerbaijan. To a large extent, they became the pillars of the country’s early foreign policy, on which decision-makers had to rely in the absence of foreign policy institutions and expertise. They therefore had a direct and lasting effect on the formation of Azerbaijan’s foreign policy.

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In the early 1990s, perceptions of Russia as a threat were not limited to Azerbaijan; rather, they extended to most newly independent republics. The fears of the republican leaders were manifest in their unwillingness to compromise even on seemingly rhetorical matters. For instance, in December 1991, a prolonged and heated debate took place over the name to be given to the new institutional arrangement that would succeed the disintegrating Soviet Union. All participants agreed that the new arrangement would provide member-states with a forum for interactions but would not infringe their sovereignty and independence. To emphasise their newly gained independence, several republican leaders proposed calling the emerging structure the Commonwealth of Independent States (CIS). This was disputed by Russia’s future foreign minister Andrei Kozyrev, who pointed out that the expression ‘independent state’ restated the obvious, that ‘nowhere in the world was a state called independent’, and that being a state carried the intrinsic meaning of being sovereign.1 His objections were overruled, and the rapidly forming consensus in favour of adopting the initial proposal revealed just how much the majority of participants feared for their newly gained status. In international relations, the refusal of a small state to comply in its foreign policy behaviour with the wishes of a larger state, which it perceives as dominant and dangerous, is known as non-bandwagoning. In its effort not to bandwagon with the hegemon, the small state may choose to align openly with another great power. But this is a risky strategy, which can prove counter-productive: it may fail to win great power allies but will almost certainly antagonise the threatening state. The recent strategy of Georgia is a case in point. The efforts undertaken by the country’s leadership under President Mikheil Saakashvili to join NATO did not bring about the desired outcome (in so far as accession to the alliance is concerned), but they did, directly and indirectly, contribute to the escalation of hostilities with Russia, leading to the eruption of war in August 2008. By contrast, Azerbaijan did not choose a policy of open alliancebuilding against Russia, opting instead for strategic manoeuvring. This strategy was adopted in military and energy policy alike. This chapter focuses on the diplomatic-military aspect of Azerbaijan’s foreign policy, tracing its evolution between 1992 and 2010. By focusing on the

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military dimension, the chapter demonstrates the influence of perceptions on policy formation, first, under the Popular Front (PFA) and, later, under the Aliyevs. It argues that the policy of Russian troop withdrawal from Azerbaijan, assigned paramount importance by the PFA, was the result of the hostile images that its leadership had of Russia. Baku adopted an uncompromising stance at a time when the conditions seemed conducive for a policy of bandwagoning. On his accession, Heydar Aliyev brought in a new set of perceptions of Russia (and the world), which differed significantly in the level of complexity and sophistication from those of his predecessor. These perceptions led him to introduce the strategy of manoeuvring. Aliyev’s strategy encouraged continuous engagement with the hegemonic state (Russia continued to be perceived as threatening throughout the 1990s), but it did not reverse the non-bandwagoning element of Azerbaijan’s foreign policy. The strategy of manoeuvring has stood the test of time and is pursued, with some variations, by the Azerbaijani leadership to the present day.

A candidate for bandwagoning? After the collapse of the Soviet Union, Azerbaijan found itself in a position that, according to international relations literature, made bandwagoning extremely likely. It faced Russia, which, in view of its geographical proximity, posed a perennial threat to Azerbaijan. Historical images underpinned this perception. The lack of great power allies, due in part to their geographical absence, should have reinforced the notion that balancing against the traditional hegemon was not feasible. Bandwagoning, on the other hand, appeared as a realistic policy choice: Azerbaijan could seek to conduct a heavily proRussian foreign policy in return for Russia’s (relative) non-interference in its internal affairs. Arguably, this is the strategy that Turkmenistan pursued throughout the 1990s: the regime of Saparmurat Niyazov received Moscow’s support; in exchange Ashgabat limited its foreign relations with other foreign powers and exported almost all of its gas to Russia. So why did Azerbaijan choose a different policy? Bandwagoning seemed almost desirable given Russia’s ‘appeasability’ in the 1990s. This has long been considered a criterion for

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preferring the strategy of submission to the hegemonic power. An appeasable power, the theory has it, may be satisfied through the small state’s efforts to renounce partially its independence; once satisfied, the great power will not seek to invade the neighbouring small state and demand its capitulation. That post-Soviet Russia was appeasable can be inferred from the promises of the early Yeltsin government not to violate the sovereignty of the newly independent states. These promises were paralleled by appeals, even demands, to re-establish economic links within the former Soviet space and coordinate the foreign policy of the CIS in order to exert greater influence in world affairs. These fell on deaf ears, and in 1992, the PFA took Azerbaijan out of the CIS. Azerbaijan’s non-bandwagoning in 1992–3 was all the more notable because it reversed the policy of compliance towards Moscow pursued by Azerbaijan’s first president and Abulfaz Elchibey’s predecessor, Ayaz Mutalibov. As the first president of independent Azerbaijan (1991–2), Mutalibov aligned Baku with Moscow because he did not believe in the long-term viability of Azerbaijan as an independent state. The intensity with which the new government pushed the antiRussian policy line was in part a reaction to Mutalibov’s bandwagoning between January 1990 and March 1992. The deeply rooted images and perceptions of Russia as a threat and its support of Armenia had a major effect on Azerbaijan’s foreign policy choices. The crystallisation of Russia’s image as a dominant state explains the perception prevalent throughout the 1990s that Russia was ‘the greatest enemy of Azerbaijan and the most significant barrier on the way to its complete independence’.2 The image of an irreversibly antagonistic Russia, coupled with the determination to preserve and enhance Azerbaijan’s independence, made bandwagoning with the source of threat an unacceptable policy course.3 Given their view of Russia, it is not surprising that the political leadership assigned the highest priority to the withdrawal of Soviet/Russian troops from Azerbaijan.

The Russia threat: perceived or real? It has occasionally been argued that post-Soviet Russia represented neither an economic nor a military threat to the former Union republics.

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Some argue that with the collapse of the central planning system, inter-republican production and trade links, the size of the Russian economy was less than that of the Netherlands. In comparison, however, Russia was stronger than many newly independent states, which many analysts believed to be stillborn. For instance, in Azerbaijan, real GDP fell by 36.2 per cent in 1992 alone, with a cumulative output decline over 1990–4 of 62.2 per cent. In the words of one author, ‘one must go back to the Black Death in the middle of the fourteenth century to find a comparable output collapse’.4 Another line of critique, generally from the Russian side, dismisses the fears of Russia violating the sovereignty of the newly independent states as ‘elementary mystification’.5 Yevgenii Primakov, for example, claims that already in 1989, during the discussion of Nicolae Ceausescu’s request for military interference in Romania, not one of the Politburo’s members spoke in favour.6 This, however, was no reassurance to the former Soviet republics, whose elites and publics alike vividly remembered a succession of decisions to introduce Soviet OMON troops in Tbilisi in April 1989, Baku in January 1990, and Vilnius and Riga in January 1991. For Azerbaijan, the collective trauma of what became known as Black January reinforced the image of Russia as a perennial historical threat to the independence of geographically proximate small states. Moreover, the rise of nationalism after the collapse of the Soviet Union increased resentment of what Azerbaijanis frequently referred to as Great Russian chauvinism, deepening their fears of subjugation and ruling out bandwagoning as a viable strategy. Indeed, the events of January 1990 became a defining experience that impressed itself upon an entire generation of policy-makers.7 Former PFA Minister of Internal Affairs Iskander Hamidov stated that Azerbaijan was in ‘a state of war’ with Russia, which had been ripping parts of its territory – beginning with Irevan (archaic for Yerevan) – since the reign of Catherine the Great.8 He accused ‘Russian’ leaders of massacring Azerbaijani civilians in January 1990 and suggested strongly that Moscow’s actions, in view of their historical continuity, left the PFA government no choice but to resist its aggression through an alliance with Turkey.9 In a 1994 presidential decree, Aliyev noted ‘the great political importance of the January tragedy’ and ordered the

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creation of a memorial complex Shahidler Hiyabani [The Cemetery of Martyrs] in the centre of Baku.10 On the president’s recommendation, the Milli Mejlis condemned the Soviet actions as aiming to ‘suppress the rising national-liberation movement in Azerbaijan, humiliate national dignity, and destroy the faith and will of the people who stood up for the creation of the democratic, sovereign state’.11 Addressing the Milli Mejlis in 2001, Aliyev again turned to history, emphasising that Russia’s past treatment of Azerbaijan continued to figure prominently even in the perceptions of the country’s most experienced decision-maker. Aliyev provided his interpretation of history: After Tsarist Russia conquered northern Azerbaijan . . . it implemented the ruling methods used by the Romanov dynasty for years, and this part of Russia was divided into guberniias and uezds . . . I mean there were no boundaries . . . At the same time, we have our history. We know the territory that Azerbaijan used to cover. We know this well . . . Azerbaijan’s territory was much bigger than it is now. But at different stages of history some parts of this territory were given to Armenians – once, twice, three times . . . A democratic republic was established in Azerbaijan for the first time in 1918 . . . But [it] collapsed quickly and the Azerbaijani Soviet Socialist Republic was established . . . If we remember the past today, we can state with full truthfulness that Azerbaijani [territorial] integrity was violated again, [and] a part of Azerbaijan’s lands was given to Armenia.12 Historical recollections and analogies played a powerful role in informing Azerbaijan’s decision not to bandwagon. Key episodes here were the establishment of Azerbaijan as an independent state in 1918 and the Red Army’s occupation of the Azerbaijani province of Nakhchivan in 1920. The creation of the Transcaucasian Federated Republic (TSFSR), composed of Azerbaijan, Armenia and Georgia, followed a year later, on Moscow’s orders. The individual republics ceded their powers over foreign policy, finances, trade and transportation to the Moscow-controlled authority of the TSFSR. In 1936, the ‘Stalin constitution’ abolished the TSFSR, and

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its three constituent parts formally became separate Soviet republics. This historical recollection suggested that gradual renunciation of powers led to the complete loss of sovereignty. This ruled out bandwagoning in the 1990s. The insights provided by historical experiences, albeit simplified and stripped of detail, informed foreign policy choices, suggesting a union with Turkey and alignment with the West as a viable course to restrain what were widely perceived as Russia’s imperialist ambitions. Images and beliefs acted as powerful motivational forces behind some of the most important foreign policy decisions of the PFA government. The image of Russia based on the analysis of past experiences suggested continued expansionism at the expense of the smaller states on its borders. In his analysis, Vafa Guluzade, then Elchibey’s foreign affairs advisor, reasoned: Russia is an expansionist state; Peter I dreamt of world domination. Russia settled Armenians in our territories in order to create a Christian outpost here to advance to Turkey and beyond . . . Russia’s policy is hostile to all peoples of the Caucasus and Central Asia.13 Guluzade was not alone in his appraisal of Russia. Large sections of the Azerbaijani intelligentsia shared this understanding of Russia’s expansionist ambitions in the Caucasus. Typical of this threat perception was, for example, an article published in the journal of the Azerbaijani Ministry of Foreign Affairs (MFA), in which a professor of history at Baku State University argued that Russia’s occupation of Astrakhan in 1556 marked the beginning of a hostile policy towards the ‘states and peoples of the Caspian’. He wrote: Russia of Peter the Great tried to gain full control of the Caspian area, in order to reverse all European-Asian trade from the Turkish-Mediterranean direction to the Baltic-Volga-Caspian route. Russian conquests on the Caspian aimed at becoming a geopolitical extension of Peter’s conquests in the Baltics. It is in this period that Peter I had formulated Russia’s main geopolitical goal in the region – not to allow any other power approach the coasts of the Caspian.14

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Russia’s image as a threat therefore had historical underpinnings that provided a prism through which decision-makers processed incoming information about the hegemon’s present and future course of actions. The experiences of 1920 and 1990 added depth to the perception of Russia as a historically continuous threat to Azerbaijani independence. Guluzade made a connection between these two major episodes in Azerbaijani history when he spoke of Azerbaijan’s ‘deep-seated feeling of offence towards Russia’. He claimed that, despite their forcible incorporation into the Russian empire and the Soviet Union, the Azerbaijanis were among Russia’s ‘most loyal subjects’, who, in World War II extracted ‘over 1.5 billion tonnes of oil to fight the Nazi Germany’. In his words: In a ‘thankful’ return gesture, in January 1990, the Soviet Army entered Baku and started shooting in all directions, killing civilians. And then, the Russian Army helped Armenia occupy and annex our territories. We were simply shaken by this attitude . . . This psychological factor lives to the present day.15 The above insight shows unequivocally that apart from historical analogies, Russia was seen as a threat because of its affiliation with Armenia, which, by the early 1990s, was at war with Azerbaijan over the enclave of Nagorno-Karabakh. The consistent use of historical recollections and memories by Azerbaijani leaders was unmistakable and deeply influential in so far as they created a consistent behavioural pattern of nonbandwagoning. But Aliyev used historical inferences primarily to set the context for further analysis. This contrasted with the approach of the PFA leaders, for whom images appeared to predetermine policy choices. Even in public, Aliyev emphasised the need to distance oneself from the past and focus on the achievement of policy goals: ‘I am asking people . . . not to touch upon history or accuse anyone and say that someone is to blame or not to blame. We do not need all this. What we need is to know how to achieve our task [of regaining Nagorno-Karabakh].’16 Russia’s image as Armenia’s historical ally turned Russian-Armenian relations into a source of great concern. The Russian-Armenian Treaty of Friendship, Cooperation and Mutual Security signed on 29 December

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1991 was widely seen in the PFA government as the first step towards a military alliance.17 Chapter 3 of the Treaty ‘On close bilateral cooperation in national defence and military build-up (oboronnoye stroitel’stvo)’ reinforced those fears.18 On 21 August 1992, Russia signed an agreement providing for ‘political consultations with the Republic of Armenia on international problems of common interest’.19 To politicians in Baku, this clause signalled cooperation over Nagorno-Karabakh. On 15 May 1992, Armenia joined the Collective Security Treaty (CST) at a CIS meeting in Tashkent, attended also by an Azerbaijani delegation, which refused to sign the treaty or any other military cooperation document with Russia.20 In a 1998 speech, Aliyev explained the PFA’s refusal to enter the CIS in terms of historical experiences, which undermined trust.21 He invoked the ‘military aggression’ of the Soviet Union against Azerbaijan in Black January 1990 and the ‘genocide’ of Azerbaijani civilians by ethnic Armenian armed forces and the 366th Soviet/Russian Motor Rifle Regiment stationed in NagornoKarabakh in February 1992. ‘All of this,’ he concluded, ‘left a deep scar in the heart of every Azerbaijani and the Azerbaijani people as a whole.’22 Thus, Aliyev shared with the previous leadership the understanding that Russia was a serious threat both in itself and because of its military support for Armenia. Subsequent events lent credibility to Azerbaijan’s fears that Russia was helping Armenia build ‘the strongest army in the South Caucasus’.23 Aleksei Arbatov, former deputy chairman of the Russian State Duma’s Defence Committee, defined Russian-Armenian relations in the following way: Armenia is our only classic military-political ally . . . Armenia will not survive without Russia, while, without Armenia, Russia will lose all its important positions in the Caucasus . . . Even though Armenia is a small country, it is our forepost in the South Caucasus. I would say that Armenia is more important to us than Israel is to the Americans.24 Statements such as this substantiated suspicions in Baku that Russia was ‘using Armenia to occupy Azerbaijani territories’ in order to create

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an ‘artificial enclave’ in Nagorno-Karabakh.25 The belief that the Nagorno-Karabakh conflict ‘is not a conflict between Azerbaijan and Armenia, but one between Azerbaijan and the Russian-Armenian alliance’ implied that even if Armenia could be persuaded to withdraw from the occupied territories, Russia would not allow it to do so.26 The assassinations in the Armenian parliament in 1999 several days prior to the expected signing of a compromise peace agreement between Aliyev and Armenian President Robert Kocharyan under Organisation for Security and Cooperation in Europe (OSCE) auspices convinced Azerbaijani decision-makers that their perceptions were accurate.27 In the words of Guluzade: The blow to the peace agreement was dealt by those who had organised the shootings in the Armenian parliament of Prime Minister [Vazgen] Sargsyan and Parliamentary Speaker [Karen] Demirchyan. The peace deal had also been agreed to by the president of the unrecognised NKR [Nagorno-Karabakh Republic], Arkadii Gukasyan, who took part in the negotiations. But later the opponents of this agreement received instructions. Kocharyan, afraid to become a victim of the next assassination attempt, now avoids the signing of a peace agreement. The Russian MoD behaves like the MID. The highest echelons of the Russian Army do not need peace.28 The degree to which Armenia was sovereign to make policy decisions independent of Russia was put in doubt by the presence of ‘50,000 Russian troops at four Russian military bases stationed in Armenia’.29 The revelation of Russia’s transfers to Armenia in 1994–6 of weapons worth $1 billion inflamed fears, as did the signing of the RussianArmenian Treaty of Friendship, Cooperation and Mutual Security on 29 August 1997,30 and the deployment of MiG-29 fighters and S-300 missiles in Armenia.31 Finally, by 1997, Russia had formally increased the Conventional Armed Forces in Europe (CFE) Treaty’s flank quotas, adding to the concerns of the small state, which feared that it was more at war with the regional hegemon than with the neighbouring small state.

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Although Russian-Azerbaijani relations have improved dramatically since 1992, suspicions of Russia remain deeply entrenched to the present day. They are seldom expressed aloud by official Baku but are widely shared in private. Policy-makers, independent observers and the public at large broadly converge in their deep-seated mistrust of Russia and pessimism about the outcome of the Nagorno-Karabakh peace process. The next sections focus on how the lack of trust precluded alignment with Russia under the PFA and Aliyev. Indeed, the key goal under the PFA became the reversal of the policy of bandwagoning adopted by Mutalibov and the withdrawal of Russian troops from the country. Under Aliyev, the focus shifted to fending off Russia’s attempts to reintroduce troops, even as peacekeepers in NagornoKarabakh, to Azerbaijan. The early withdrawal of Russian troops enlarged Baku’s policy space, allowing the leadership to focus on, and successfully implement, energy policy on the Caspian. The latter is discussed in detail in the next chapter. Developments in Russia facilitated the PFA policy of Soviet troop removal and enabled its implementation within a much shorter timeframe than could have been feasible under a different political situation. The permissive external environment played an important role in catalysing the process, while the PFA was able to capitalise on the existing window of opportunity in order to push through its preferred policy choice. This section looks at developments in Azerbaijan and Russia that allowed for the rapid troop withdrawal of 1992–3.

Policy of troop withdrawal, 1991–3 The PFA began to push for the removal of Soviet forces even prior to its formal accession to power in June 1992. Mutalibov announced on 17 December 1991 the nationalisation of all military assets and equipment on Azerbaijani territory and proclaimed himself commanderin-chief.32 On 30 December 1991, he signed the CIS armed forces and Border Troops agreement, but only after introducing an amendment on the transfer of Azerbaijan-based conventional armed forces to the state within a two months’ period.33 This timeframe was shorter

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than anticipated by the Russian defence establishment and was out of line with the preferences of some political circles in Moscow. On 18 February 1992, Mutalibov reached an agreement with Boris Gromov, representative of the commander-in-chief of the CIS armed forces, Admiral Vladimir Chernavin, to transfer parts of the former Soviet Army and Caspian Flotilla to Azerbaijani jurisdiction.34 On 20 March, Mutalibov refused, along with Ukraine’s President Leonid Kravchuk and Moldova’s President Mircea Snegur, to sign the CIS agreements on defence and military-technical cooperation, which envisaged the supply of armaments and ammunition to the armed forces of the CIS member-states.35 These policy moves from late 1991 to March 1992 deviated from Mutalibov’s general strategy of close alignment with Russia and appear to have been made in response to increasing pressure from the PFA. His personal preferences remained consistently in favour of aligning with Russia. For instance, despite the moves on the partition and withdrawal of forces that he was being forced to undertake, Mutalibov was opposed to the departure of troops from Karabakh and reportedly warned Mikhail Gorbachev of a ‘Saint Bartholomew’s Day massacre’ were this to happen. On 14 November 1991, Mutalibov joined the Novo-Ogarevo process, signalling his acceptance of Gorbachev’s vision that the ‘Union of Sovereign States [would be] a confederative, democratic state, with a certain distribution of powers between the union centre and the republics, where the centre and the republics have their roles and their responsibility – moreover, not something diffuse but rigid and firm’.36 Under the treaty, the republics were entitled to set up republican armed formations, but their functions and strength were to be defined by Moscow. Accepting this provision alone appears to be a marked departure from the declaration on state independence adopted earlier that year.37 Mutalibov sought to restore Azerbaijan’s jurisdiction over Nagorno-Karabakh and, in return, was prepared to accept Moscow’s continued domination within the new Union. The Mutalibov government’s position was clear – the conflict had to be solved within the Union, even if now it consisted of only seven republics and was formally referred to as the Union of Sovereign States.

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The strategy of bandwagoning adopted under Mutalibov was the result of a combination of factors. Firstly, developments in NagornoKarabakh reinforced his view that Azerbaijan had better chances of securing its territorial integrity if it remained aligned with Moscow. Secondly, his eroding legitimacy, which was increasingly obvious against the background of violent clashes in Nagorno-Karabakh, made aligning with the Kremlin – under Gorbachev or Boris Yeltsin – expedient, as Moscow could guarantee his political survival and, if things turned sour, personal immunity. Thirdly, his indecisive leadership style made him reluctant to explore possibilities that arose from the gradual collapse of Moscow’s authority over the Union republics. In a mode of thinking reminiscent of the Soviet period, Mutalibov aimed only at accruing limited jurisdiction over internal matters. He also lacked the time necessary to adjust to the fundamental changes transforming the strategic landscape of the former Soviet Union.38 Finally, circumstances beyond Mutalibov’s control worked against him, precipitating his downfall. Rapidly unfolding events deprived him of time and strategic manoeuvring space, leaving him to cling to the strategy he considered to be safest – bandwagoning. One key event constraining his choices took place on 20 November when a military helicopter with a number of senior Azerbaijani officials on board crashed in Nagorno-Karabakh. This tragic accident had two major political repercussions. On the one hand, it provoked a government crisis, as Mutalibov lost some of the most important people in his cabinet. Among the dead were State Secretary Tofig Ismaylov, Presidential Administration Chief Osman Mirzoyev, Deputy Prime Minister Zulfi Gadjiyev and a presidential adviser, Mohammad Asadov.39 On the other hand, the tragedy created the momentum for the PFA to mobilise the masses under slogans that were both nationalistic and anti-government. Experts subsequently confirmed that the helicopter had been shot down from the ground. But even before the results of the investigation were announced, the PFA organised on 24 November one of the largest demonstrations in its history. The PFA built on the assumption that the helicopter had been shot down by Armenian guerrillas to make a strong anti-Armenian appeal, which was also aimed against the government in Baku and the Soviet authorities

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in Moscow. It accused both Gorbachev and Mutalibov of not taking more forceful measures to restore Azerbaijan’s control over NagornoKarabakh. The conclusion was as plain as the argument: Mutalibov’s strategy of relying on Moscow was not working and more drastic measures were required to defend Azerbaijan’s territorial integrity. The fact that the PFA continued to gather strength throughout December 1991 forced Mutalibov to declare – much to the displeasure of Soviet Defence Minister Yevgenii Shaposhnikov – that Azerbaijan would proceed to nationalise all military assets on its soil.40 Even earlier, in the course of negotiations in late October in Baku, Shaposhnikov had criticised the Azerbaijani government for attempting to seize weapons from the Soviet Army. In fact, such attempts had not been sanctioned by the government, and were largely conducted by the PFA and its supporters. When the Cabinet of Ministers announced plans to nationalise weaponry and the fleet in early November, Mutalibov did not publicly react until a month later. The nationalisation of assets announced by Mutalibov on 17 December was thus in reaction to domestic events, which he was largely unable to control. On 21 December, Mutalibov joined the protocol to the treaty creating the CIS and the Alma Ata Declaration.41 In commenting on this decision, he stated that he was ‘banking on the Commonwealth’ as the only institution that could ‘manage to do what we could not do in the course of four years, having forced this problem into a real impasse, not to mention a bloody impasse’.42 In the days leading to the Khojaly tragedy in February 1992, Mutalibov continued to cling to declarations on the non-use of force in relations between CIS states and solving all problems by peaceful means.43 Although his pro-Russian orientation was responsible for his growing unpopularity at home, Mutalibov could not envisage solving Azerbaijan’s problems in a situation of strategic non-alignment with Russia. This could be attributed to lack of political imagination and intuition, but it was also an attempt not to be excluded from the newly forming geopolitical constellation around Russia, after Armenia and the self-proclaimed Republic of Nagorno-Karabakh had manifested their intention to join the CIS.44 In Mutalibov’s words, ‘refusal to take part in the Alma Ata meeting would have led to Azerbaijan’s political

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and economic isolation and, ultimately, would have dealt a serious blow to its national security’.45 Continued reliance on Moscow in the face of the Kremlin’s persistent failure to intervene in the conflict on the Azerbaijani side undermined Mutalibov’s personal legitimacy and support. The Khojaly tragedy, which took place on 25–6 February 1992, became the bloodiest episode in the Nagorno-Karabakh conflict and the turning point that sealed Mutalibov’s departure from the political scene. Estimates of the number of civilians killed in the massacre vary, with Azerbaijani official sources quoting 613 dead, 487 wounded and 1,275 taken hostage.46 In a 1994 report, Human Rights Watch stated that while ‘it was widely accepted that 200 Azeris were murdered, as many as 500–1,000 may have died’.47 The reason for the lack of exact figures is the occupation of the area by Karabakh Armenian forces following the massacre.48 International observers confirmed that soldiers and officers of the 366th Motor Rifle Regiment stationed in the area took part in the attack on Khojaly, alongside Armenian militants. It is highly probable that their participation was against the orders of the Military District command. In March 1993, Krasnaia Zvezda newspaper reported that: Despite categorical orders . . . some military personnel of the 366th Regiment took part in military operations near Khojaly on the Karabakh [Armenian] side . . . During the evacuation of the regiment’s military personnel, paratroopers selectively searched several servicemen and found large amounts of money on them, including foreign currency.49 Following the evacuation of the regiment in March, over 100 servicemen remained and joined the Armenian forces.50 With the tragedy and Mutalibov’s resignation came a radicalisation of the PFA’s policy on the Russian troop presence. In the aftermath of the Khojaly events, interim Defence Minister Rahim Gaziyev issued a statement, in which he described Russia as the ‘aggressor’ and accused Russian forces of openly supporting Armenian operations in Nagorno-Karabakh.51 Later that year, Elchibey stated that

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the cessation of hostilities and the start of peace negotiations with Armenia were in ‘Russia’s hands’.52 On 1 December, the Azerbaijani Ministry of Internal Affairs reported that ‘Russian mercenaries, who had taken part in the military operations on the Armenian side in the Karabakh conflict, had been captured and were held in Azerbaijani prisons’.53 The ministry’s spokesman did not specify numbers, stating merely that they were former soldiers of the regiment that had been stationed in Khankendi (Stepanakert) for several decades.54 This statement suggests that the PFA authorities distinguished between mercenaries of Russian nationality and the Russian Army under Moscow’s control. But caught in a flurry of rapidly unfolding dramatic events, their policy displayed little understanding of this critical difference: it generally equated Russian soldiers with the Russian state and accused Russia of organising the Khojaly massacre. The perception of Russian involvement in the Khojaly tragedy in the eyes of the PFA and its followers fully discredited the policy of alignment with Russia. The experience of the two years since Black January supported the image of Russia as an implacable and unappeasable enemy, reinforcing the sense of acute insecurity. This concern for Azerbaijan’s independence and territorial integrity added to the perceived urgency to break away from Moscow’s ambit in the shortest time possible. Gaziyev, who continued in the position of defence minister after Elchibey’s election in June 1992, pressured Moscow into signing an agreement to speed up the transfer of assets of Fourth Army units and the Caspian Flotilla to Azerbaijan.55 According to the protocol on the division of the Caspian fleet, Azerbaijan received 17 ships (25 per cent of the total), the bulk of the fleet’s property and a military factory located in Azerbaijan. The rest of the fleet withdrew to Makhachkala. The official government line, that those regular Soviet Army sub-units that did not have soldiers of Armenian nationality would stay and guard the border between Azerbaijan and Armenia, gave way to the policy of immediate removal of Russian forces from the country.56 An increasing number of senior government officials vocally asserted Azerbaijan’s right to guard its borders.57 In late April, Prime Minister Panah Huseynov and Russian Internal Security Minister Viktor Barannikov concluded an agreement on the

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withdrawal of the CIS/Russian troops from Azerbaijan by the end of 1993.58 But what enabled the signing of this agreement and its subsequent rapid implementation?

Factors behind success The chronology of events shows that the initiation of the policy of Soviet/Russian troop withdrawal predates Elchibey’s election to the presidency. In his memoirs, Primakov describes the period from mid1990 to March 1992 as dvoevlastiye (diarchy), because the PFA had captured seats in parliament and installed patrols to control the situation in the capital.59 The PFA also shaped the development of events outside Baku, where the Soviet/Russian Army units were based. The demand for the withdrawal of Russian forces followed the proclamation of independence on 18 October 1991. The timing delineated the linkage that the PFA saw between the removal of Russian troops and the consolidation of independence.60 The remarkable aspect of this policy was that a wide popular consensus on the desirability of the troops’ rapid departure led the public to contribute to its implementation. Following the Khojaly events, harassment of troops and seizures of weapons began to occur with a regularity that made Russian servicemen even outside Nagorno-Karabakh feel apprehensive. Hostage taking of servicemen and harassment of their wives caused widespread concerns, while hostile treatment by the Azerbaijani authorities became the norm of the day.61 Shortages of officers to defend arsenals meant that military depots could not be adequately protected against those PFA supporters who sought to procure arms and ammunition.62 Complaints to Russia’s highest command from local officers asking to be withdrawn from the area were voiced with increasing regularity and became a factor that Moscow could not easily ignore.63 To be sure, the mood of the officers on the ground differed from the attitude of political strategists and military commanders in Russia. In January 1992, an Officer Assembly of the All-Union Army (Vsearmeiskoye Ofitserskoye Sobraniye) took place in the Kremlin, at which Defence Minister Shaposhnikov was severely criticised for failing to maintain a single army and prevent the rapid reduction in its size.64

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But troops deployed in Azerbaijan insisted on being withdrawn from the region. Firstly, officers complained that the Union forces had been placed in an ill-defined legal position, which jeopardised their mission and personal safety.65 Regiments based in and near Baku wrote to Yeltsin, Russian Defence Minister Pavel Grachev and Shaposhnikov between April and July, requesting to be allowed to leave Azerbaijan. In one case, 89 senior officers of the Caucasian Military District AntiAircraft Forces asked for their units to be evacuated from the area, citing constant attacks from various armed groups and chronic shortages of supplies. Yet these units were not stationed in the troubled area, which sheds light on the extent of harassment that servicemen and their families were experiencing. On 4 November 1991, the USSR Ministry of Internal Affairs (MVD) Internal Troops unit in Nagorno-Karabakh sent an appeal to the presidents of the Soviet Union and Russian Federation, the USSR and Russian MVDs, and the Russian parliament asking to be withdrawn from the area. The officers complained of the numerous obstacles in receiving food, fuel and other supply deliveries as well as of the disputes into which All-Union servicemen were provoked by local militias.66 The appeal further outlined that throughout October alone, troop detachments, outposts and aircraft had been attacked 15 times, resulting in six people wounded. Military vehicles were often impounded and servicemen examined at gunpoint.67 On 29 November, the same MVD unit reported an increase in the number of attacks on Internal Troops outposts following the crash of the helicopter with Azerbaijani officials onboard. The appeal expressed perplexity at the accusations made against the troops, alleging their involvement in the tragedy.68 Some Russian military commanders also supported withdrawal from Azerbaijan. In October 1991, the head of the USSR Internal Troops Directorate for the North Caucasus and Transcaucasus, MajorGeneral Anatolii Kulikov, stated that MVD troops had to be withdrawn from Karabakh, pointing to the large number of civilian and military casualties. A month later, the commander of the USSR Internal Troops, Lieutenant-General Vasilii Savin, similarly called for the withdrawal of MVD forces from Karabakh. The trauma of Soviet failures in Afghanistan and the resultant awareness of the dangers of

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exacerbating local conflicts may have stalled Russian military adventurism and precipitated the departure of forces from Azerbaijan.69 In later years, the more moderate views of Russia’s senior military commanders would be overridden by conservatives in the Russian Security Council and in the power ministries.70 In 1992, however, the advocates of active interference in Russia’s so-called near abroad had not yet gathered sufficient strength, and inward-looking tendencies seemed to prevail. Accordingly, in that year, the committee of the Russian president for the affairs of servicemen and members of their families proposed a list of recommendations to Yeltsin, one of which included the withdrawal of troops under Russia’s jurisdiction from ‘hot spots’ and other territories of the CIS.71 The incoming Yeltsin government initially favoured a reduction in Russia’s presence abroad; as a result, it granted the request of the troops stationed in Azerbaijan to be evacuated from the region. Growing popular pressure for the withdrawal of Russian troops from Azerbaijan added to the populist PFA government’s determination to carry out such a policy. The support that the PFA received from the public not only contributed to its implementation but also reassured decision-makers of the correctness of the chosen policy course. One government official stated that, by the end of 1992, the shared desire of the leadership and public to see the departure of all Russian troops from Azerbaijan had begun to resemble a national-liberation movement. The situation gained a momentum of its own, and ‘no concrete instructions were required’ to the members of the public on how to proceed about implementing the policy.72 Nationalism and apprehension for newly gained statehood – both products of unfolding dramatic events, which invited analogies with traumatic historical experiences – induced large sections of the population to support and contribute to the government’s policy on troop withdrawal. Shared images of Russia as a threat reinforced the publicgovernment nexus, which, despite the very weak policy implementation channels in 1992–3, made this policy a top national priority that was executed with a high degree of consistency. Intimidation and harassment of troops at the grassroots level was matched with a government policy of paying officers to leave the

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country. In June 1992, the Azerbaijani parliament passed a resolution according to which Russian servicemen came to own their accommodation in Azerbaijan and could exchange it for compensation from the government in Baku. At the same time, PFA leaders paid individual officers to go home and offered them money to buy flats in Russia. A large number took the money and left.73 Grassroots harassment of servicemen continued even after Russia started the withdrawal of MVD troops from the area. Reportedly, local inhabitants blockaded the barracks and demanded that the troops leave their weaponry behind in exchange for safe passage to Russia.74 Mistrustful of Russian soldiers and fearful of their much better-armed Armenian neighbours, ethnic Azeris in Nagorno-Karabakh proved keen to confiscate weapons from departing Soviet troops. The pervasive sense of insecurity affected the course of AzerbaijaniRussian negotiations. Hikmet Hajizade, then the PFA ambassador in Moscow, claims that some senior Russian politicians and government officials expressed extreme dissatisfaction with the rapid pace of troop withdrawal and used threats to try to stall the process. ‘At every meeting, they – [Anatolii] Adamishin, [presidential representative for Karabakh Vladimir] Kazimirov and Grachev – criticised us. They said, “Are you not afraid something will happen?”’75 Such statements could not but strengthen the PFA leaders’ image of Russia as an enemy. Threat perceptions, often overstated given the general noninterventionist mood in Moscow, and the deepening crisis in NagornoKarabakh, narrowed the timeframe within which policy had to be implemented, and ruled out compromise.76 Developments in Russian politics facilitated the departure of troops from Azerbaijan. Locked in a power struggle with Gorbachev and the USSR Supreme Soviet, Yeltsin sought to expand Russia’s powers at the expense of the All-Union authorities. He therefore offered encouragement to independence-minded republics. On the issue of troops, in particular, Yeltsin did not object to the ‘lawful right of the memberstates of the CIS to create their own armed forces’.77 Relations with the republics that hosted strategic forces on their territory were to be governed by an agreement until such time as those forces were withdrawn.78 Although the radar station at Gabala was classified as

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strategic, it did not receive immediate attention owing to the absence of nuclear weapons on its premises. The appointment of Kozyrev, of ‘liberal internationalist’ conviction, as Russian foreign minister led to relations with the ‘far abroad’ being assigned greater priority than involvement in the CIS. Military intervention was not on the reformers’ agenda, and the PFA’s provocative rhetoric did not produce the result it almost certainly would have under a different leadership in Moscow. Indeed, Kozyrev showed sensitivity to the past experiences of the former Soviet republics when he wrote: ‘Memories of the massacres organised by the Soviet authorities in Tbilisi, Baku, Vilnius and Riga are compounded by new fears spurred by the ultra-nationalistic slogans of a number of Russian politicians.’79 In addition to Kozyrev’s personal convictions about non-intervention, the MID had been weakened institutionally as a result of the political turmoil and economic crisis that followed the collapse of the Soviet Union. A separate Ministry for Cooperation with CIS MemberStates was not established until January 1994. Yet, even with greater organisational capacity, these ministries would not have had the final say over policy in the CIS because the presidential apparatus cast them in the position of policy executors, not policy strategists, for the near abroad.80 Matched with a lack of strategic guidance from the president, the early months of Russia’s existence witnessed what became known as Moscow’s ‘benevolent neglect’ of the former Soviet republics.81 Finally, in 1992–3, Russia did not regard Azerbaijan as a priority state even in the near abroad. That is why the hardening of Russian foreign policy from late 1992, as reflected in Yeltsin’s October 1992 decree halting the departure of troops from the Baltic states, did not have an immediate effect on Azerbaijan.82 The military withdrawal from Azerbaijan had been almost completed by February 1993, when Yeltsin indicated the official policy shift in a more assertive direction.83 The military doctrine signed in November 1993 established the defence of Russia’s interests on the territory of the former Soviet Union as Moscow’s right and priority. It defined the expansion of blocs or alliances to the former Soviet republics as a threat to Russia’s national security. Any interference with

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Russian military installations abroad was also categorised as a threat to national interests.84 This shift suggests strongly that the withdrawal of Russian military personnel from Azerbaijan would have become more difficult to achieve from late 1993. The shift in Russia’s policy became so pronounced that even Kozyrev came to argue that Moscow could not completely withdraw from the ‘zones of its traditional influence, which . . . had been won over centuries’.85 Terms such as Russia’s ‘immediate vicinity’, ‘historic spheres of influence’ and ‘power vacuum’ rapidly made their way into the vocabularies of policy-makers in Moscow. The role of the Russian military was significantly enhanced in the aftermath of the September–October 1993 constitutional crisis, which empowered Yeltsin domestically. By demonstrating loyalty to Yeltsin, the army gained political capital and a greater say in foreign affairs from late 1993. Russia’s reorientation to the near abroad after 1993 highlights that its focus on a single issue deemed vital to national survival had enabled the PFA to exploit successfully a short-lived window of opportunity to drive out Russian troops. Remarkably, the withdrawal of troops from Azerbaijan was completed earlier than specified in inter-governmental agreements. In late June 1992, the air force regiment was redeployed to Chelyabinsk in the southern Urals.86 In October 1992, the main combat sub-units of the Caspian Flotilla were withdrawn from Baku to Astrakhan and Makhachkala. Astrakhan became once again the home port of the Caspian Flotilla, for the first time since 1867. Astrakhan was badly prepared to accept the flotilla, even in its reduced form after the ‘loss’ of 18 combat vessels and 62 support ships following the division of the fleet among the littoral states. Indeed, Vice-Admiral Boris Zinin, who had commanded the flotilla, described Astrakhan as a ‘practically empty space’.87 The onshore infrastructure that Russia had left behind included ‘600 buildings, . . . practically all its warehouses and storage facilities, more than 2,000 metres of mooring facilities and communication lines, 50% of its stores of ammunition and other materialtechnical supplies, located on the territory of Azerbaijan’.88 The base in Astrakhan had to be built virtually from scratch, but, in the words of Zinin, ‘not one rouble was allocated from the federal budget for the redeployment of the flotilla’.89

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Despite the severe lack of funds from Moscow, the withdrawal of military personnel continued. The redeployment of paratrooper divisions to Ulyanovsk began in February 1993 and proceeded without interruptions.90 The redeployment of the Ganja-stationed 104th Airborne Division was completed in May 1993 – almost six months ahead of schedule. On the withdrawal of the last troops from Azerbaijan, Elchibey told his staff, ‘There is no Russian Army in Azerbaijan. This is our real independence day. I do not know how many days it will last, but Russian forces will not return. We will lose power, but the Russian Army will not return.’91 The statement emphasises the onedimensional nature of the PFA’s goal and the narrow focus on the single goal that it believed to be of paramount importance for national survival. This was a textbook case of non-bandwagoning, when the leadership of a small state believed that it had to risk its survival and even the country’s independence for the hope of achieving sovereignty over its affairs.

Policy evolution and Aliyev’s strategic manoeuvring The early departure of troops from Azerbaijan provided Aliyev with a strong starting point for negotiating with Russia and pursuing the policy of non-bandwagoning. The absence of troops reinforced his personal predilection for an independent foreign policy. It also broadened his manoeuvring space in negotiations by removing a lever that Russia was known to use to extract political concessions from smaller states in its vicinity.92 But, remarkably, Aliyev’s policy towards Russia came to be at the very core of his policy of non-compliance with it. Underpinned by images, perceptions and historical analogies that portrayed Russia as a threat, Aliyev’s ‘Russia’ policy became the cornerstone of his strategy of manoeuvring, which aimed to engage the USA and Turkey in a delicate balancing act to enable Azerbaijan to withstand Russian pressure and pursue its own policy goals. To some extent, Aliyev built his policy on the achievements of his predecessor, even though this was never acknowledged in public. Nevertheless, there is no doubt that if the withdrawal of troops had not been assigned utmost priority by the PFA government and implemented before the end of 1993, it would

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have taken longer to complete once the shift in Russian foreign policy had occurred and Azerbaijan had adopted strategic manoeuvring, which was predicated on distancing itself from Russia without antagonising it. Aliyev’s sophisticated strategy hinged on two conceptual understandings that differed fundamentally from those of the previous government: Aliyev did not view Russia as a monolithic enemy and he did not overestimate Azerbaijan’s importance to the West. The rest of this chapter and the next examine continuity and change in Azerbaijan’s policy towards Russia. Together, they analyse the consistency with which Azerbaijan withstood Russian pressure for compliance and consider the various tactics that the government devised to achieve this for a prolonged period of time. Aliyev’s strategy of manoeuvring is assessed by examining three issue areas: the military, the oil sector and the status of the Caspian Sea. While this chapter focuses on the first, the next considers the latter two in great detail. Together, they examine how the Aliyev government created linkages between these three issue areas to enhance the success of individual tactics to achieve non-bandwagoning with Moscow.

The military dimension of Aliyev’s foreign policy The withdrawal of Russian troops from Azerbaijan was in line with Aliyev’s personal preferences. This was apparent from his conduct during the PFA’s first months in power when, despite insubordination on other policy matters, Aliyev reinforced the policy on the withdrawal of Russian/Soviet military personnel initiated by the government in Baku. Under his leadership, Russian regiments were forced out of the Nakhchivan Autonomous Republic, where he was at the time the speaker of the Supreme Soviet.93 As a shrewd policy-maker, Aliyev observed the disastrous consequences of the PFA’s attempts to ally with Turkey against Russia and learned from its mistakes. From his early days as leader of independent Azerbaijan, he abstained from openly expressing the possibility of balancing against Russia with Turkey. This is despite his earlier calls for close political-military cooperation with the ‘brotherly nation’. In an interview given in 1991, Aliyev stated that ‘Azerbaijan had no one

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but Turkey to cling to’ after its independence from Moscow because ‘the USA and France protected the Armenians’. Emotionally, he added, ‘unless Turkey helps us, we have to throw ourselves into the river’.94 Although such discourse was typical of the early 1990s, what differentiated Aliyev from most other policy-makers of his time was his ability to comprehend and adjust to the rapidly changing and highly complex international environment of the early post-Cold War period. The experience of the PFA had demonstrated that Turkey was not prepared to defend Azerbaijan’s interests – at least, not to the extent expected by the country’s leadership. Once in power, Aliyev distanced himself from the PFA, accusing it of ‘incompetence’ and stating that its foreign policy was ‘in need of serious corrections’.95 Aliyev used the PFA’s foreign policy blunders to accumulate political capital and gain acceptance for his own policy strategy. Although some analysts have traced Aliyev’s non-bandwagoning behaviour to his experiences as first secretary of the Azerbaijan Communist Party, his learning experience in 1992–3 suggests a more complex combination of factors.96 Aliyev may well have preferred to break away from Russia because he had been forced to retire from the Politburo under Gorbachev and is highly unlikely to have forgiven Yeltsin for his efforts to have him removed. But the unfolding of events under the PFA convinced him that a more refined and, above all, more balanced policy was in order. The strategic manoeuvring that Aliyev adopted as leader of independent Azerbaijan reflected his experience (both positive and negative) as a member of the Soviet leadership. But it also reflected his cognitive complexity that enabled him to overcome the emotional baggage from his past bitter interactions with Yeltsin and initiate an inter-presidential dialogue. Aliyev paid his first visit to Moscow as acting president and chairman of the Azerbaijani Supreme Soviet on 5–8 September 1993.97 This highlighted the importance that Aliyev attributed to the normalisation of relations with Russia. Speaking at the airport minutes before departure, Aliyev said that he had held several telephone conversations with Yeltsin and that direct bilateral negotiations were needed to ‘correct the mistakes of the previous government of the republic, which it committed in relations with Russia’.98 He added that the visit was a

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necessary step in Azerbaijan’s foreign policy for the achievement of its national interests. Repeatedly, the Aliyev government sent the message that Baku was now more aware and more accepting of Russia’s interests in the South Caucasus than it had been under the PFA. The effort at reconciliation with Russia was obvious from the tone of Aliyev’s speeches. The new leader emphasised that ‘intensifying’ relations with Russia was in Azerbaijan’s national interests and that Azerbaijan could not live ‘in isolation from Russia and be successful’. In his public interviews, he called Russia an ‘undeniably great state’ (velikaia strana), which, despite the difficulties of transition, was continuing to play a leading role in world affairs.99 During another visit, Aliyev stated: ‘We always try to borrow the best from Moscow. But we do not claim to be able to advise Russia.’100 Moreover, publicly, Aliyev sought to de-link Russia from Armenia, and he called on the Russian leadership to play a peacemaking role in the South Caucasus. Thus, the early phase of Aliyev’s Russia policy consisted of cajoling Russia into adopting a more neutral, if not benevolent, stance towards Azerbaijan. Although acquiescence seemed to be the message that Aliyev was communicating to the Russian leadership verbally, the actions that accompanied that rhetoric did not fit the pattern of bandwagoning quite as neatly. For instance, on 23–4 December 1993, Aliyev took part in a meeting of CIS heads of states but declined to sign the memorandum on cooperation in joint protection of external boundaries of the CIS.101 He did not sign the memorandum even after Ukraine (and Belarus) joined it in April 1994.102 At the Conference on Security and Cooperation in Europe (CSCE) summit in Budapest in December 1994, Aliyev successfully resisted Moscow’s proposals to introduce Russian/ CIS peacekeepers into Nagorno-Karabakh. In fact, he had rebuffed a similar idea in May 1994, when following the establishment of a ceasefire, Russia offered to station collective CIS peacekeepers (dominated by Russia) in the conflict area. Aliyev argued that, pending the creation of international peacekeeping forces, the sides would respect the truce without intermediaries. According to the CSCE Budapest resolution in December, to which Russia grudgingly consented, the member-states accepted to establish international peacekeeping forces

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in Nagorno-Karabakh, in which no more than 30 per cent of the manpower could be provided by any one country. It is possible that Aliyev initially considered the use of militarystrategic incentives, such as joint border protection and favourable terms for the lease of the radar station at Gabala, as bargaining chips to induce Russia to pressure Armenia to return occupied territories to Azerbaijan.103 A ceasefire was insufficient for such concessions to take place; Aliyev wanted a Russia-mediated permanent settlement on Azerbaijan’s terms. This, however, Russia was not willing or even able to deliver, and gradually Aliyev’s position shifted towards a tougher negotiating stance – and rhetoric. By bringing Azerbaijan back into the CIS and signing the CST, Aliyev pursued the goal of discouraging Russia from acting on the side of or even through Armenia, which was a widely accepted operational belief in his government (as well as in the government of his predecessor). Already, during the September 1993 visit to Moscow, Aliyev had called on the Russian MoD to be the ‘peacemaker’ in the region, stating that ‘the role of Russia as a great power and a northern neighbour [is] immense’.104 When in 1999, Aliyev refused to renew the CST, he explained that the treaty’s rationale had proved self-defeating because its member-states, while supposedly being partners in the same defence alliance, in practice violated each other’s sovereignty and territorial integrity. The refusal was an act of defiance, which followed from disappointment with the earlier policy and led to a gradual firming of Aliyev’s approach. Aliyev’s assessment of potential benefits from military cooperation with Russia became increasingly public and less favourable overtime. In the aftermath of the September 1993 visit, he said that he preferred not ‘to divulge all questions’ that had been discussed in Moscow ‘at the highest levels’.105 This suggested a certain degree of optimism over what could be achieved through limited concessions to Moscow. When answering the same question in November 1994, Aliyev publicly expressed determination not to allow the return of Russian troops. In his own words: There is no discussion about this. What is military cooperation? . . . If you are thinking of a military alliance, then there

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is no thought about this, and we have not received proposals to that effect. Perhaps we have received hints that this would be good. However, there can be no direct offer.106 In a 2001 speech, Aliyev claimed that, after the signing of the ceasefire, Grachev had offered to deploy troops in Azerbaijan to prompt the departure of the Armenian army from Karabakh. He stated: ‘I listened to them and said thank you for your initiative. But we do not need that. They tried hard . . . I said, No. I asked them to turn around and go home. We avoided this danger at the time.’107 Any reintroduction of troops became out of the question, as Aliyev showed awareness that, by making the first round of concessions, Baku could demonstrate vulnerability, increase Moscow’s demands for concessions and tangibly encroach on Azerbaijan’s sovereignty. Unsuccessful bargaining could even result in the reintroduction of Russian troops in Azerbaijan without the promised liberation of the territories under Armenian occupation. In an article reprinted in the Azerbaijani media, the Washington Post speculated that Russia would freeze Armenian victories and then sign an agreement to allow Russian bases in Azerbaijan.108 Difficulties in military relations were compounded by Russia’s increasingly hostile stance towards Azerbaijan on the issue of the status of the Caspian Sea – a question that was interlinked with the rights of the littoral states to develop offshore resources. Russia’s unwillingness to see Azerbaijan develop oil reserves in the Caspian was to a large extent the result of its apprehension over the consequences of foreign penetration into the region. As the next chapter demonstrates, Russia’s security concerns about a foreign presence in the Caspian went back centuries, and Azerbaijan’s signing of the contract with an international consortium could not but provoke an antagonistic response from Moscow. Or, more precisely, it provoked an antagonistic response from certain parts of the Russian policy establishment. Various pressures – political, economic and military – were applied to discourage Baku from pursuing the signing and implementation of the contract. While the means that Russia used to try to compel Azerbaijan to abandon cooperation with the West are examined in the next chapter,

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the significance of the military dimension can be appreciated from the following assessment by the commander of the Caspian Flotilla, ViceAdmiral Vladimir Masorin: I want particularly to underline that such ‘housekeeping’ problems [related to the lack of funds for maintenance and training] do not deflect us from the main task – upholding the defence of Russia’s interests in the region. We do not consider the states that have access to the Caspian Sea as our likely opponents. Russia has friendly relations with them. But a threat has arisen in relation to our economic security in the form of unilateral actions by Caspian Sea littoral states in the creation of sea borders and sectors as well as the uncontrolled extraction of the area’s mineral and biological resources, which do not help to strengthen mutual understanding. [In the light of] the unstable nature of the region, the danger of the appearance of conflict situations makes it necessary to cooperate closely with the North Caucasus MD [Military District] . . . In essence, we are the naval flank of the District . . . Now, regardless of how the military-economic and political situation in the region unfolds, regardless of what political decisions are taken, the sole, real, strength capable of defending the state interests of Russia in the Caspian is our flotilla.109 In October 1994, Russia warned that it would use whatever means it deemed necessary to put an end to the ‘unilateral actions’ by littoral states and restore the status quo in the Caspian. The fact that the warning was expressed in a letter to the UN indicated Russia’s defiance of the international community and its determination to act in a belligerent manner to defend its interests in the region. From Azerbaijan’s perspective, this hostility on the part of Russia ruled out concessions to it in the military sphere, as they could only be interpreted as acts of submission. It was around this time that Aliyev for the first time publicly insinuated the involvement of the Russian MoD in the Karabakh conflict. Following a meeting with Defence Minister Igor Rodionov

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in November 1994, Aliyev made an explicit connection between Russia’s military bases in Armenia and Armenia’s military victories in Nagorno-Karabakh.110 In July 1997, Aliyev came out strongly against joint protection of national borders, arguing that this ‘artificial concept devised by Russia’s power ministries’ was reminiscent of Russia’s imperial past and precluded genuine cooperation between the CIS states. Indeed, he publicly ridiculed the idea of having Russia protect the ‘external borders’ of the CIS.111 This hardening of rhetoric suggests a policy shift in a more uncompromising direction. This was in part the result of the difficulties in relations with the Russian MID and MoD over the exploration for and production of oil in the Caspian Sea. Russia’s hostility over this question spilled over into other issue areas, negatively affecting Baku’s perceptions of Moscow. Equally, the absence of convincingly strong signals from Moscow that it was interested in reaching a permanent settlement to the conflict ruled out any military concessions and strengthened the policy of non-bandwagoning. Meanwhile, Russia’s assertiveness towards its near abroad was growing, as suggested by a September 1993 document presented to the UN by Kozyrev, proposing to give the CIS full operational responsibility for peacekeeping within its territory. By June 1994, Kozyrev was arguing that Russian peacekeeping in the CIS was already ‘legitimate to 150%’, and that Russia was not asking ‘permission’ from the UN or CSCE to establish a presence in its former territories. During a visit to Baku in June 1994, Grachev argued that Russia reserved the right to introduce peacekeepers in Nagorno-Karabakh either under the CSCE aegis or of its own accord (po sobstvennomu usmotreniyu).112 Separately, he stated that the UN could have no presence on the territory of the former Soviet Union in the next five years while Russia single-handedly ‘creates order in its former country’.113 Yet pressure alone was insufficient to force the small state into compliance. Perceptual factors played a crucial role in Azerbaijan’s military policy under Aliyev. Firstly, prominent officials in the Aliyev government, possibly even Aliyev himself, felt that the disintegration of the Soviet Union did not fundamentally alter the nature of the Russian state, which remained dominant and demanded to be unilaterally involved in the affairs of the smaller states on its borders.114

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Experiences in formative years play an important role in how individuals perceive situations later in their lives. Aliyev’s formative experiences as a leader involved Moscow’s heavy-handed treatment of the Warsaw Pact countries, which it called ‘allies’. This suggested strongly that bandwagoning with Russia carried no security guarantees against its military intervention. Moreover, the ‘military-psychological heritage’ of pressure, coercion and domination that prevailed in centreperiphery relations over two centuries of Russian rule had left a deep imprint on the thinking of Azerbaijani decision-makers and played a part in the decision to move away from Russia despite the rising pressure for compliance.115 Secondly, Baku’s more rigid military policy towards Russia from the mid-1990s was the result of a belief that the West would be reluctant to accept what Azerbaijan’s ambassador to the USA, Hafiz Pashayev, referred to as, ‘Russia’s version of the Monroe Doctrine’. He suggested that Azerbaijan’s hopes were predicated on the understanding that the USA would back those CIS states that ‘threw in their lot’ with the West.116 Western governments were also expected to back Azerbaijan’s foreign policy once oil companies became engaged in lucrative oil deals in the Caspian. Thirdly, the exposure in 1997 of large-scale weapon transfers from Russia to Armenia between 1994 and 1996 provided material evidence for the widely held belief in Azerbaijan that Russia supported Armenia and therefore, by definition, represented a threat to the country’s national interests and even its sovereignty. The reinforcement of this belief – already prevalent among the decision-making elite and public alike – could not but strengthen Baku’s policy of non-bandwagoning.

The weapons scandal A scandal erupted in 1997, after the Russian Duma uncovered illegal weapons transfers from Russia to Armenia worth over $1 billion. The bulk of the military equipment, including modernised T-72 tanks, GRAD multiple missile launchers and long-range missiles, had been transferred to Armenia in the years after the Russia-mediated ceasefire in May 1994. The transfer of these weapons and the timeframe

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within which this was done suggested to the Aliyev leadership that, despite its rhetorical overtures to Baku, Russia remained a close ally of Armenia and a paramount security threat to Azerbaijan. Further investigation revealed other facts related to the weapon transfers. For example, it became known that the Russian MoD had covered the expenses related to moving the equipment to the region. This meant that the operation was not the work of individual officers or officials but a planned and coordinated action of the Russian military. An inter-state committee appointed to investigate the incident failed to produce results because the Kremlin’s appointees ensured that the issue became bogged down in a bureaucratic quagmire. The session of the joint trilateral commission was postponed indefinitely, while the explanation that Moscow put forward to justify the transfers was that they were made to compensate Armenia for the military imbalance. This imbalance, Moscow argued, was created in the aftermath of the Soviet collapse, when Azerbaijan received more weapons than Armenia. Baku protested against this explanation, pointing out that there existed no data confirming that Azerbaijan had inherited a larger military arsenal than Armenia.117 Russia broke international norms, Baku argued, when it engaged in unilateral action instead of making a formal request to the OSCE (the successor to the CSCE). The clandestine manner in which the transfer had been conducted could not be justified and were almost certainly in violation of the flank agreement of the CFE Treaty. These arguments had little effect on Moscow, but they were decisive in convincing the Aliyev leadership not to enter an ‘Al Capone’ alliance with Russia.

Unsuccessful coups and presidential relations Aliyev was also circumspect because he suspected that Russia had orchestrated several unsuccessful coups to overthrow his government. This added to the perceptions of both personal and national insecurity. Less than cordial relations with Yeltsin throughout 1993–7 made military cooperation an unpalatable option. This state of affairs changed markedly under Vladimir Putin, with inter-presidential diplomacy significantly shaping relations for the better. From 2000, Baku not

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only considered military relations as part of its foreign policy strategy but became increasingly willing to enter into military-technical agreements with Russia. The first and most significant attempted coup took place on 21 September 1994 – one day after the signing of the Azerbaijani International Oil Consortium (AIOC) contract, which was vehemently opposed by some parts of the Russian establishment. Four high-profile prisoners, who had occupied important positions in the Elchibey government and were serving long jail terms on treason charges, had escaped from custody. Aliyev claimed that the timing of this incident and the signing of the contract were no coincidence. On 29 September, two top officials – the president’s security chief and the deputy chairman of the Azerbaijani parliament – were found assassinated, while Aliyev was on a visit to the USA. On 3 October, the deputy chief of the special police department, Rovshan Javadov, led a police mutiny, while forces loyal to Prime Minister Suret Huseynov seized the airport and several other strategic buildings in Ganja, Azerbaijan’s second largest city. On his return, Aliyev declared a state of emergency and called on people to take to the streets. Addressing a large crowd on 5 October, Aliyev unequivocally blamed Russia, and accused it of ambitions to bring Mutalibov to power in order to make Baku a ‘marionette’ in Moscow’s hands. Following the suppression of the coup, Aliyev claimed that Huseynov’s actions were supported by individual officials in the Russian government. However, he stopped short of accusing the Russian state of plotting against him.118 By 1997, many of those accused of participating in the coup had received Russian citizenship; this factor became a new irritant in Azerbaijani-Russian relations.119 Aliyev’s rhetoric acquired bolder overtones in 1997: in an interview with Ekho Moskvy, Aliyev stated that all coups against him since 1993 had been organised from Russia by individuals who resided there and enjoyed the protection of the Russian state.120 Cooperation with the Russian MVD to capture Chechen fighters was undertaken with a very specific goal in mind: the government returned them in order to have its own opponents extradited to Baku and tried on treason charges. According to some estimates, by mid-1998, over 300 people were returned to

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Baku through this inter-governmental exchange, which to a degree quelled perceptions of threat from Russia and paved the road to greater cooperation under Putin.121 Normalising relations with Russia under Yeltsin proved exceptionally difficult, given the history of intense dislike between the two men since their time in the Politburo. In his memoirs, Yeltsin recalls trying to persuade Gorbachev to expel Aliyev from the Politburo.122 From early 1993, the Russian presidential envoy for Nagorno-Karabakh, Kazimirov, repeatedly tried to draw Yeltsin’s attention to Aliyev’s re-emergence on the political arena as the leader of independent Azerbaijan, but to no avail.123 When in February 1993, Kazimirov invited Aliyev, who was in Moscow on a private visit, to lunch with him at the MID mansion, Yeltsin’s top aide Viktor Ilyushin instructed Kozyrev to cancel the appointment less than an hour before it was due to take place.124 Aliyev and his entourage were convinced that Yeltsin’s refusal to invite him on a state visit until 1997 was indicative of the lack of recognition of him personally and of Azerbaijan as an independent state.125 Their relationship did not improve even after Aliyev’s official visit to Moscow, during which both sides strove to give the impression of placing state interests above personal animosity. In a super-presidential system, frosty inter-presidential diplomacy can have a direct and immediate bearing on inter-state relations. Personal antipathy spilled over into the foreign policy domain, depriving both leaders of valuable information that could only be obtained through direct interaction. Moreover, it may have prompted Yeltsin’s aides to conceal information related to Azerbaijan for the fear of upsetting him. The lack of good working relations between the two presidents and the presence of pro-interventionist forces in the military, the MID and parliament exacerbated Aliyev’s perceptions of a threat emanating from Russia and intensified the policy of non-bandwagoning. Strong perceptions of Russia’s pro-Armenian bias and the enhanced influence of the military in the post-1993 political climate in Russia made it seem even more dangerous. Expressions of support for Armenia from senior officials, including Yeltsin himself, did not go unnoticed in Baku. Thus, following the resignation of Armenian President Levon Ter-Petrosyan, Yeltsin stated that the country would

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remain in ‘the field of our strategic interests’ and ‘close to us by virtue of being Christian’. In a meeting with the chairman of the Duma Foreign Relations Committee, Vladimir Lukin, Aliyev expressed his indignation and argued that such statements undercut trust in Russia.126 Acute threat perceptions made Baku more attuned to the fact that the limited energy cooperation that was taking place between Azerbaijan and Russia was insufficient for the strategy of manoeuvring to work and that US support was critical in the long term. Inter-presidential relations remained tenuous throughout 1997– 2000, but improved tangibly following Putin’s accession to power. Already in late January 2000, less than a month after Putin became acting president, Aliyev noted ‘positive shifts in the Russian leadership’s attitude towards Azerbaijan’.127 Aliyev expressed the hope that under a new leader, Russia would conduct ‘a friendly and honest policy towards all CIS states’, which, he emphasised, was ‘regrettably . . . not always the case in the past.’128 Rhetorically at least, Azerbaijan’s efforts to normalise inter-state dialogue were reciprocated: Putin accentuated Aliyev’s ‘balanced and very wise’ foreign policy.129 During his trip to Baku on 9–10 January 2001, Putin stated: ‘I would like to repeat that Russia is categorically against any interference in internal affairs of the sovereign states under pseudo-humanitarian pretexts without sanctions of the UN Security Council.’130 This new approach under Putin did not suggest Russia’s withdrawal from the southern CIS, but it did signal a greater recognition of these states’ independence and Russia’s new preparedness to cooperate, not just to dominate. In his book on ‘new Russian diplomacy’, Putin’s foreign minister, Igor Ivanov, captured this conceptual change in approach from the Yeltsin and late Kozyrev era when he argued that a ‘deep and multidimensional revision’ of the historical experiences of Russia’s relations with its neighbours was required, and that Russia was prepared to show that it had liberated itself from its imperial past.131 Sensitivity to the historical legacy of the former republics was not exceptional among Russia’s foreign ministers and had had a place in Kozyrev’s thinking too, especially in his early years as foreign minister. For a short period after the collapse of the Soviet Union, Russia sought to rid itself of its

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imperial legacy through non-intervention. This trend did not last, but the policy reversal that followed did not witness the emergence of a coherent policy towards the near abroad. Instead, it led to piecemeal intervention, which aroused feelings of animosity and apprehension but at the same time strengthened the policy of non-bandwagoning. By contrast, under Putin, the rhetoric to mend relations adversely affected by Russia’s imperial, Soviet and post-Soviet past acquired a different meaning: not a withdrawal from the geopolitical area that Moscow continued to see as its legitimate sphere of interests, but pragmatic cooperation with the governments of the states in that area based on mutual interests. In exchange for a greater and more explicit recognition of these states and their leaders than was ever the case under Yeltsin, Russia sought acknowledgement of its security needs in the region. This formula was acceptable to Azerbaijan, which sought to pursue a strategy of strategic manoeuvring, with no definitive alliances with either Russia or the West. But it did not work for Georgia, whose unequivocal efforts to accede to NATO and ally with the USA were interpreted as hostile gestures by the Kremlin, heightening tensions and perceptions of threat on both sides, ultimately leading to the eruption of hostilities in August 2008. From Azerbaijan’s perspective, Putin’s succession witnessed a transition from an era of erratic and emotionally charged leadership to a more consistent and pragmatic one. It came to be understood that the new Russia would seek to re-establish itself in the southern CIS – indeed, this foreign policy trend had been under way for several years, but the Yeltsin presidency had failed both to consolidate it conceptually and implement it coherently. Greater assertiveness but also pragmatism and predictability from Moscow instilled confidence that relations would improve and that negotiations could be conducted in a manner that would advance the interests of both states. The emphasis that Putin and his aides placed on ‘direct, top-level official dialogue’ with Azerbaijan resonated well with Aliyev, as this was the leadership style at which he was most adept; yet inter-presidential dialogue was precisely the element in Azerbaijani-Russian public diplomacy that remained embryonic throughout Yeltsin’s years in power.132 Putin was intent on changing this, and, in the course of his visit to Azerbaijan,

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a clause was inserted into the Baku Declaration stipulating that the parties would maintain ‘constant and close contacts between the top-ranking leaders of the two states, and have regular exchanges of opinions concerning important bilateral, regional and international questions’.133 This was unprecedented and highly welcome in Baku. Against this background, Putin’s calls for military cooperation received a favourable hearing. As a result, the Baku Declaration also came to contain a clause on long-term bilateral military and militarytechnical cooperation between Azerbaijan and Russia. This, both parties argued, corresponded to the interests of both states.134 On Putin’s invitation, Aliyev paid a return visit to Moscow between 24 and 27 January 2002. In the course of that visit, Russia and Azerbaijan reached an agreement on the long-standing issue of the Gabala radar station (GRS). The status of the GRS had been contentious because of its strategic value to the Russian defence system. It is located 200 kilometres (km) from Baku and 150 km from the Azerbaijani-Iranian border. Built during the Cold War, the GRS has been in operation since 1985. Its Daryal-type radar is one of the most powerful in the world, with a range of 6,000 km. It is capable of monitoring launches of inter-continental ballistic missiles (ICBMs) from Iran, Turkey, China, Pakistan, India, Iraq, Australia, most of Africa, and the Indian and Atlantic oceans. Together with a twin station in Olenegorsk in the Russian north, it is at the core of the Russia’s missile defence early warning system. Following the collapse of the Soviet Union, Russia continued to use the GRS, despite the Azerbaijani government’s repeated objections. Baku’s intransigence on the issue reflected the underlying concern that Russia would use an agreement on the GRS as a pretext to return its troops to Azerbaijan. Such suspicions were poorly concealed behind arguments about the station’s ecological safety.135 Putin’s visit to Baku paved the way for negotiations, and the agreement reached was a compromise that satisfied both sides. Azerbaijan agreed to Russia’s demand for a ten-year lease of the GRS, while Russia recognised the GRS as the property of Azerbaijan and agreed to pay $7 million per year for the exploitation of the facilities. This was significantly less than Azerbaijan’s initial demand of $20–30 million per year, but Russia agreed to pay $31 million dollars in arrears for 1997–2001.

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The station’s status was changed to an ‘informational-analytical centre’ and the number of personnel was capped at 1,500. As of the time of writing, Russia employed 1,100 staff at Gabala – 800 servicemen and 300 civilians. The fact that an agreement, which seemed beyond reach for over a decade, was finalised within two years of the establishment of the inter-presidential dialogue emphasises the importance of leadership interaction and the prominence of perceptions in foreign policy. Putin’s Russia was more predictable, willing to negotiate and therefore less threatening than it was under Yeltsin.136 This enabled Azerbaijan to make reciprocal concessions without appearing to act out of the inherent weakness and lack of policy options that are typically associated with small states.

Between Munich and Heiligendamm The status of the GRS resurfaced in Azerbaijani-Russian relations in June 2007, this time receiving significantly more international attention and media coverage. Remarkably, it was invoked not as an issue of disagreement but as a potential site for US-Russian cooperation. The proposal was voiced by Putin at the G8 summit in Heiligendamm, Germany, where he suggested that elements of the proposed US antimissile defence system be based in Azerbaijan. Russia had confronted the USA over missile defence for months, arguing that stationing interceptor missiles in Poland and a radar in the Czech Republic targeted Russia and posed an ‘obvious threat’ to it.137 Its strong opposition was expressed at a number of international events and forums, most notably at the 43rd Munich Conference on security policy in February 2007. There, in what many critics apocalyptically labelled the return to the Cold War, Putin stated: Plans to expand certain elements of the anti-missile defence system to Europe cannot help but disturb us. Who needs the next step of what would be, in this case, an inevitable arms race? I deeply doubt that Europeans themselves do. Missile weapons with a range of about 5,000–8,000 km that really pose a threat to Europe do

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not exist in any of the so-called problem countries. And in the near future and prospects, this will not happen and is not even foreseeable. And any hypothetical launch of, for example, a North Korean rocket to American territory through Western Europe obviously contradicts the laws of ballistics. As we say in Russia, it would be like using the right hand to reach the left ear.138 In the months between Munich and Heiligendamm, Putin continued his strong opposition to the idea, ridiculing some actions and statements of Russia’s ‘partners’ as ‘incompetent’. He also did not exclude the possibility of retargeting Russian missiles against Europe and linked the testing of RS-24 ICBMs with the US plan to station missile defence elements in Eastern Europe. By contrast, on the first day of the Heiligendamm summit, Putin stated that Russia shared US concern over missile threats but remained wholly unconvinced that missile defence bases in Poland and the Czech Republic were an appropriate response to them. Instead, he suggested that the USA use the GRS in Azerbaijan jointly with Russia. The earlier adoption of an openly antagonistic stance and the subsequent departure from it pursued two related goals. At first, the Kremlin sought to demonstrate that Moscow would not hesitate to confront Washington if its interests were threatened. Belligerent rhetoric worked, in so far as it helped Moscow attract international attention, highlight its fears of encirclement and announce its intention to defend Russian national interests. Then, having set this context, the Kremlin offered to cooperate, thus demonstrating that it could make major policy proposals on a par with the USA. With the GRS proposal, Moscow aimed to test Washington’s proclaimed willingness to cooperate on an issue of national security for both the USA and Russia. If Washington accepted the proposal, the main perceived challenge to Russia’s strategic deterrent would be removed. However, if Washington rejected the idea, Moscow would be able to argue that the system was primarily targeted at Russia and not so-called rogue states. In so far as major policy initiatives go, Moscow had matched Washington and laid out for the first time its vision of an acceptable format for cooperation on missile defence.

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Negotiations with Azerbaijan had preceded the announcement in Heiligendamm, indicating that Putin’s proposal was not spontaneous but part of a structured and well-orchestrated diplomatic initiative. Russia appears to have discussed the Gabala proposal with the Azerbaijani authorities at least a month prior to the G8, with the first consultations taking place in early May. Commenting on Putin’s statement in Heiligendamm, Azerbaijan’s deputy foreign minister described it as a ‘continuation of that process’.139 In mid-May, the Russian ambassador to Baku, Vasily Istratov, publicly mentioned the possibility of cooperating with Washington on the GRS, citing US interest in receiving information from Russia’s missile defence radars.140 Less than a week later, Russian Foreign Minister Sergei Lavrov paid a visit to Baku to discuss the idea.141 Following the talks, his Azerbaijani counterpart, Elmar Mammedyarov, stated that Azerbaijan would ‘certainly and necessarily’ be notified of any new proposals regarding the GRS. Azerbaijani Deputy Foreign Minister Araz Azimov had also visited Moscow earlier that month for security talks in the Russian MID. At the G8, Putin stated that he had held a telephone discussion with Azerbaijani President Ilham Aliyev, who by now had succeeded his late father and apparently endorsed the Russian proposal. This degree of policy planning highlighted that Moscow was serious about the alternative solution to the US plan to station missile defence elements on Russia’s western borders. From Moscow’s standpoint, joint use of Gabala was consistent with Russian security interests because the Daryal radar does not cover Russian airspace and therefore could not pose a threat to the country’s nuclear deterrent. Even if Washington decided to proceed with locating US missile interceptors in Poland, these would be guided by the GRS and would not represent a security concern for Moscow. Moscow’s discussions with the Azerbaijani government prior to the Heiligendamm announcement indicated the enhanced planning process that came to characterise policy initiatives under Putin. Equally, they indicated a shift in approach to relations with Azerbaijan, as Baku was now being formally consulted, with its interests taken into account and its consent secured. Indeed, at a press briefing in Baku, Mammedyarov stated that ‘it was not possible to undertake any actions

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[related to the GRS] without us’ and that ‘both Russia and the USA had accepted our position’.142 The consultation procedure contrasted sharply with Moscow’s approach in the early 1990s, when it occasionally sought to resolve issues directly concerning Azerbaijan without informing the government in Baku. An episode that took place prior to the signing of the AIOC contract is noteworthy in this respect. In April 1994, the Russian MID handed in a formal protest note to the UK, disputing the use of the term ‘the Azerbaijani sector of the Caspian Sea’ and warning that both production and transportation of hydrocarbons from the Caspian would be illegal. Azerbaijan was not made aware that Moscow had lodged a formal complaint with the UK. By choosing to address diplomatic questions, such as the status of the Caspian and the right to offshore drilling, in negotiations with larger states, without formally notifying the Azerbaijani MFA, Moscow demonstrated its refusal to recognise and treat the small state as an equal. The subsequent joint actions of the UK and Azerbaijan stifled Moscow’s initiatives and precluded them from undermining Baku’s foreign and energy policy. Azerbaijan’s prompt response to Russia’s blatant disregard of its interests was crucial in preventing damage to its statehood, including its right to drill offshore. By the 2000s, the diplomatic situation had changed for the better: Baku’s active foreign policy was matched with a more consultative approach from Moscow, enabling Azerbaijan to further its interest in the regional arena. Moscow’s policy initiative to use the GRS, which followed formal consultations with Baku and was announced at a G8 summit, benefited Azerbaijan by raising its geopolitical standing and giving it exposure in the area of not just regional but international security. Any Russian-US cooperation on the territory of Azerbaijan promised to create opportunities to engage more pro-actively with both. Although it was understood that a US military presence at the GRS would complicate relations with Iran, Azerbaijan expected that it would also create the right conditions for it to ask Washington for military assistance without antagonising Russia. Therefore, almost immediately after the airing of Putin’s proposal, Baku stated that it was ready to start negotiations in a trilateral format.

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Speaking on the prospects of US-Russian cooperation at the GRS, the US ambassador to Azerbaijan, Anne Derse, stated in late July that the USA had not refused the proposal but the issue had to be discussed with Azerbaijan first.143 In the course of those discussions, she said, it would be possible to elaborate how the GRS met the requirements of the US anti-missile system. This statement is notable because of its emphasis on direct negotiations with Azerbaijan to determine the technical specifications of the station even though it continued to be manned by Russia after the disintegration of the Soviet Union. More than two months after the summit at Heiligendamm, the US assistant secretary of state for European and Eurasian affairs, Daniel Fried, stated that the ‘best solution would be to combine this proposal [for joint use of the GRS] with the idea of establishing anti-missile systems in Poland and the Czech Republic and to establish [a] single and transparent system that would increase common security’. Mammedyarov announced that, on Moscow’s initiative, a group of scientists, diplomats and military officials from Azerbaijan, Russia and the USA would jointly inspect the station. This was to be the first time US officials would be allowed to enter the GRS, but by then it had become clear that, even though officially consultations continued, Washington was not interested in Russia’s offer on ‘this out-of-date radar’.144 The USA had been monitoring parts of Iranian territory from Azerbaijan since 2005, using a radar installed in the southern town of Astara on the Caspian Sea, some 20 km from Iran. This radar along with one in Azerbaijan’s northern town of Khizi, forms part of the Caspian Guard initiative, developed by the US European Command and financed by the Office of the Secretary of Defense.145 Agreements between Baku and Washington for the disbursement of funds and construction of the radars were reportedly signed in January 2004. Neither was given the status of a military base; instead, both came under the umbrella of Azerbaijan’s border control network.146 This was partly done to avoid antagonising Russia and Iran, and partly to circumvent the legislative ban on foreign military bases on Azerbaijani soil. It would be recalled that the GRS also had its status changed to an informational-analytical centre before its lease agreement with Russia was finalised.

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The Astara and Khizi radar stations are capable of locating objects within a 450 km radius at a maximum altitude of 300 km.147 The Astara radar station is designed to monitor the entire southern coastline of the Caspian Sea as well as northern and north-eastern Iran. Meanwhile, the Khizi radar station covers southern Russia, including Chechnya and Dagestan. Both stations are reportedly capable of detecting ballistic missile launches as well as intercepting radio communications and mobile phone conversations, not only in Azerbaijan but also in those parts of Russia and Iran that they have been designed to monitor. The existence of these two radars, where half of the personnel in the mid-2000s was reportedly US nationals,148 significantly reduced Washington’s interest in the GRS. Moreover, the construction in 2007 of a Voronezh-M radar at Armavir in Krasnodar in southern Russia has reduced Russia’s own need to remain at the GRS. Reducing strategic reliance on foreign states for defence capacity became a tenet of Moscow’s policy thinking soon after Latvia’s dismantlement of the Dniester-M radar at Skrunda in 1999. The Voronezh-M radar that was constructed at Lekhtusi, near St Petersburg, became operational in December 2006. It provided coverage of the north-west part of Russia that had been left vulnerable without Skrunda. It also made the Volga-type radar at Baranovichi in Belarus largely redundant, as it covers largely the same area.149 Visiting the Lekhtusi radar in 2007, Putin said a largescale programme of replacing the Soviet-era early warning system would take place until 2015.150 According to the commander of Russia’s Space Forces, Colonel-General Vladimir Popovkin, Russia would give up radar stations in Ukraine, Azerbaijan, Kazakhstan and Belarus.151 However, radar coverage may be not the only reason for extending Russia’s presence at the GRS. Although the Armavir radar probably meets Russia’s security requirements in the south, being more modern and better equipped, the renewal of the GRS lease in 2012 may still take place out of considerations such as the US military presence in Azerbaijan. Indeed, in an effort to strengthen its regional presence, the Russian government proposed in July 2010 to extend the lease of the Russian military base at Gyumri in Armenia from 25 to 49 years.152

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An agreement to that effect was signed during President Dmitrii Medvedev’s official visit to Yerevan in August 2010. Loss of interest in the GRS would weaken the military-strategic significance of Azerbaijan, reducing Baku’s leverage in negotiations with Russia. But this loss could be compensated for by the US long-term focus on Afghanistan. In an article in Foreign Affairs, a well-known US commentator on Azerbaijan, Thomas Goltz, described Azerbaijan’s contribution to the campaign in the following terms: The country has donated a symbolic company of 90 soldiers (which has suffered no casualties to date) and shared intelligence with the USA. But Azerbaijan’s main contribution to the US-led war effort has been geographic: The country’s location in the Caucasus is a gateway between Europe, the Middle East and Central Asia, and Baku has provided a vital transportation alternative by opening its air, rail and seaport space to NATO. There has been no murmur of a threat to close or restrict the Azerbaijan corridor, but even the remote possibility that the Azerbaijanis would do so has apparently worried Pentagon contingency planners – enough so that a decision was made to show Baku some respect, in the form of a personal letter from President Barack Obama to Azerbaijani President Ilham Aliyev.153 The eviction of US troops from the Karshi-Khanabad base in Uzbekistan in 2005, and the prolonged instability in Kyrgyzstan in 2010 where the USA operates the Manas airbase, has made Azerbaijan’s geographical position even more valuable but also more precarious than before. Having successfully implemented the strategy of manoeuvring since 1993, Baku is unwilling to lean too heavily towards the USA. This is particularly true at a time when individual senior officials in Baku are becoming more vocal about the widely shared concern that Washington considers Azerbaijan primarily in terms of its broader strategic interests in the region and shifting priorities. This spurs unease that Azerbaijan could one day become a dispensable ally. Strategic manoeuvring will remain at the core of Azerbaijan’s foreign policy, even if some alterations are introduced to adapt to the

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continuously changing complex international environment in which it exists. For instance, the military doctrine adopted in June 2010 introduces greater flexibility on the issue of foreign military bases in Azerbaijan. Their stationing is now allowed ‘on a temporary basis’ if undertaken by a duly ratified international agreement with the country’s government and in response to a change in the military-political situation. The clause was inserted into the doctrine (which had been under discussion since 2004) in an attempt to enlarge Baku’s foreign policy options in negotiations with the USA. The withdrawal of Russian troops from Azerbaijan was completed in the early 1990s, and their return is unlikely except in case of open hostilities with (and occupation by) Russia, which appears unlikely, or Armenia, in which Russia may be reluctant to interfere openly on the Armenian side. The extension of the lease on the Russian base at Gyumri is a source of concern to Baku, but it does not fundamentally change the geopolitical situation, as the base has existed since 1997. Russia may well seek to retain some of its military personnel at the GRS after 2012, but any continued presence will be negotiated on a bilateral basis. Although complicated and precarious, the regional situation today is worlds apart from the one Azerbaijan had to confront in 1993. This situation is to an important extent the result of what it, as a small state, has achieved through its active diplomacy by engaging continuously with Russia, the regional state that it has historically perceived as threatening, and the USA, the extra-regional state that it has generally regarded as protective and benevolent.

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CHAPTER 5 MINING, PIPELINES AND DEALS: STR ATEGIC M ANOEU VR ING WITH RUSSIA ON THE CASPIAN

In July 1997, President Heydar Aliyev visited Moscow on the invitation of his Russian counterpart, Boris Yeltsin, in what marked the first official visit by the president of independent Azerbaijan to Russia. In the course of that visit, the two presidents concluded the Treaty of Friendship, Cooperation and Mutual Security before presiding over the signing of a protocol of intent between the State Oil Company of Azerbaijan (SOCAR), Lukoil and Rosneft for the exploration and development of the Kyapaz oilfield in the Caspian Sea. The field, known as Serdar in Turkmenistan, is disputed by Ashgabat. The signing of the protocol to develop the field with two Russian companies, one of which is state-owned, served two strategic purposes. Firstly, it highlighted that Moscow de facto recognised the Azerbaijani sector of the Caspian Sea. Secondly, it sought to shift the regional balance of power in the dispute with Ashgabat in its own favour. The international engagement with industrial and diplomatic circles that Azerbaijan had secured by 1997 in its offshore was unrivalled in the Caspian basin. Turkmenistan, with its isolationist policy under President Saparmurat Niyazov, would have faced sharp criticism and

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international pressure for pursuing claims to the Azeri and Chirag fields (known as Omar and Osman in Turkmenistan), already under development by the Azerbaijan International Operating Company (AIOC).1 But the ownership of the deposits further out in the sea, such as Kyapaz, which did not yet have a production-sharing agreement, could be more easily disputed. Finding an investor willing to commit to a deposit that was potentially subject to arbitration was problematic. Russia’s willingness to participate in the development of Kyapaz seemed to address this issue. By allowing its companies to drill offshore, with SOCAR, the Kremlin implicitly acknowledged its recognition of the sectoral division and sided with Baku in the dispute against Ashgabat. To be sure, by 1997, Moscow had de facto recognised Azerbaijan’s right to develop the offshore Azeri-Chirag-Guneshli (ACG) complex of fields and was preparing to start exporting part of the output from these fields to the port in Novorossiysk. Moscow was also keen to secure an agreement to construct the main export pipeline (MEP) for ACG oil through its territory. Despite these fundamental changes in Moscow’s stance, parts of the Russian policy establishment – most notably, the Ministry of Foreign Affairs (MID) – continued to raise the issue of the unresolved status of the Caspian. To reinforce its position, Baku persevered with involving Russian companies in oil and gas contracts on the Caspian. Kyapaz was one such deal. Russia’s support for Azerbaijan in the Kyapaz dispute was expected to advance the commercial interests of its companies, which, under the deal, received the rights to 50 per cent of a deposit estimated to contain over 1 billion barrels of oil. Russia’s economic and political leverage over Turkmenistan made it at the time the only power capable of exerting the necessary level of pressure on the leadership in Ashgabat to resolve the conflict. This was due to the country’s relative isolation from the international community and its overwhelming reliance on Soviet-era gas pipeline infrastructure, which passed through Russia and which Ashgabat needed for revenue generation. Moscow was therefore in a position not only to enforce the terms of gas contracts beneficial to itself, but also to pressure Ashgabat on a host of other issues.

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However, following talks with Niyazov in Moscow in August 1997, Yeltsin made a U-turn when he backed Turkmenistan’s claim to the ownership of the field. This announcement was preceded by the departure of Rosneft from the consortium, which, in the words of a Lukoil spokesman, ‘killed the venture’.2 The dispute over Kyapaz rumbled on, with Ashgabat threatening to take the issue to court in July 2009. Baku showed preparedness to defend its positions ‘on all levels’.3 Although this dispute has not yet been resolved, it bears the marks of the profound geopolitical changes that have shaped the Caspian region since 1994. Firstly, unlike in the 1990s, Moscow is no longer power broker in the region, with Baku and Ashgabat now discussing the issue on a bilateral basis. Secondly, Azerbaijan has succeeded in developing the ACG fields, despite the objections from other littoral states about the unresolved status of the Caspian and common ownership of the sea. This chapter shows that both arguments were politically motivated and advanced by Caspian states when they suited their interests. Russia was, in this regard, the most serious threat. To break its resistance, Azerbaijan had to convince Moscow that supporting the division of the Caspian into national sectors – essentially, continuing the practice adopted under the Soviets – best suited its interests. Once Russia’s opposition was overcome, Baku developed the ACG fields without feeling pressure to accommodate Turkmenistan’s interests. Turkmenistan, which over the years changed its position on the issue several times, currently argues that neither the Soviet-era division into sectors nor the median line principle is applicable to the Caspian. It disputes the ownership of the fields, including Kyapaz, on the grounds of ‘equitability’ and distance from the Turkmen shore.4 But, with Russia altering its stance on Azerbaijan’s offshore development, Turkmenistan is now outnumbered by those states that want to divide and already have divided the Caspian seabed into sectors. This raises a third point. The bilateral agreements that Russia signed with Kazakhstan and Azerbaijan in 1998 and 2002, respectively, have strengthened Baku’s position on the Caspian. With almost two-thirds of the Caspian seabed already delimited between three of the five littoral states, Baku is in an advantageous position in its discussions with Ashgabat.

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This chapter demonstrates that Baku’s foreign policy was a key catalyst that brought about the change in Moscow’s stance on the division of the Caspian. It focuses on the origins of Russia’s opposition to the development of hydrocarbons in the Caspian Sea, the political and legal tenets of its argument for denoting this body of water as a common sea, and the strategy that Azerbaijan under Aliyev used to overcome this very tangible threat to its national interests. It then traces how Baku’s policy moves progressively undermined and changed Moscow’s legal position on the Caspian. The issue of sovereignty over the national sectors was intricately linked to the export of hydrocarbons from landlocked states. The sophisticated tactics that Azerbaijan under Aliyev employed throughout the 1990s were indicative of strategic manoeuvring. They enabled the state to diversify its export routes, both pipeline and rail, ensuring political cooperation of the larger regional states and operational flexibility.

Building alliances from within: Russia’s oil interests Azerbaijan’s cooperation with Russia’s oil companies and individual ministries began in 1993. This policy of engagement was predicated on granting oil concessions to Russian companies in exchange for the Russian policy establishment turning a blind eye to a range of politically sensitive issues, such as the status of the Caspian Sea. In October 1993, Aliyev and Russian Minister for Fuel and Energy Yurii Shafrannik signed a protocol on cooperation in the energy sector, which implicitly recognised Azerbaijan’s jurisdiction over the part of the Caspian where the ACG offshore deposits were located.5 This protocol paved the way for Lukoil’s entry into the AIOC, which, in turn, gave the company an incentive to lobby for the sectoral division of the Caspian. However, there was a second factor that motivated Azerbaijan to invite Russian companies into the AIOC. Some evidence suggests that in the course of negotiations, the recognition of Russia’s commercial interests and the need for political stability to evacuate oil from the landlocked region gave the Azerbaijani leadership reasons to believe that Russia would seek to halt Armenian military

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advances and, possibly, help Azerbaijan restore its territorial integrity. Shafrannik’s statement that the signing of the energy contracts between Moscow and Baku would have ‘an effect on solving the Karabakh conflict’ appeared to indicate that Russia would engage on the Azerbaijani side if its interests in the Caspian were accommodated.6 As any such support failed to materialise, the first set of expectations – namely, that Russia be included in the project in order to minimise its attempts to jeopardise it – became more prominent in Baku’s thinking. Aliyev and his predecessor as president, Abulfaz Elchibey, coincided in their assessment of Russia as a threat. The difference lay in how to deal with this threat. Elchibey leaned in favour of Azerbaijan entering any Western-led alliance to distance itself from the source of threat. By contrast, Aliyev’s more refined approach aimed at neutralising Russia through cooperation with its influential oil and gas lobby while simultaneously securing recognition and support from Western governments. Such strategic manoeuvring did not entail subordination to the interests of any of the more powerful states, but nor was it synonymous with aligning against the state that was considered threatening. Rather, Azerbaijan sought to assuage Russia’s security concerns about the presence of foreign states and international oil companies in a region historically divided between the Soviet Union and Iran, through ongoing diplomatic dialogue, cooperation and limited concessions. The key objective underpinning this strategy was the enhancement of the small state’s sovereignty and autonomy over its domestic and foreign policy. The profound ideological and organisational restructuring of the Russian foreign policy apparatus that followed the collapse of the Soviet Union left the MID poorly equipped for monitoring and reacting to international developments. This continued to be the case in 1994, especially in Russia’s relations with its ‘near abroad’, which were not accorded priority by then Foreign Minister Andrei Kozyrev. Russian embassies in the CIS states suffered from a shortage of diplomatic cadres and funding. Yeltsin, whose involvement in foreign policy was erratic at best and who did not, on balance, share Kozyrev’s views about the CIS, often harshly criticised him. The first such

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public criticism came at a meeting of the MID Collegium in October 1992. The second took place in May 1995 at a meeting of the Russian Security Council. Yeltsin expressed his deep dissatisfaction with the MID but particularly with Russian ambassadors to the CIS, who, he claimed, failed to report properly to Moscow and whose reports lacked analytical depth.7 This under-institutionalisation and lack of policy coordination gave Azerbaijan the vital leeway to negotiate oil contracts with foreign investors, including Lukoil, without raising strong objections from Moscow. From 1994, as Russia became more assertive in the southern CIS and the Caspian, Aliyev used inter-ministerial conflict in the Russian policy establishment – such as that between the MID, the Ministry of Defence (MoD) and the Ministry of Fuel and Energy – to advance Azerbaijan’s efforts to build an international oil consortium. Attracting investors and ensuring the robustness of the AIOC became the cornerstone of Azerbaijan’s early foreign policy. Large-scale international investment in the Caspian offshore was intended to raise the country’s international profile, providing a measure of security against Russia’s potentially revanchist foreign policy. Russia’s Ministry of Fuel and Energy, Prime Minister Viktor Chernomyrdin and private company Lukoil emerged as Aliyev’s key allies within Russia. Lukoil’s interest in Azerbaijan was purely commercial; however, the fact that its president, Vagit Alekperov, was Azerbaijani, born in Baku, educated at the Azerbaijan Oil and Chemistry Institute and with early work experience on Caspian rigs must have played a role in Aliyev’s considerations to welcome Lukoil and not any other Russian company into the consortium. The Ministry of Fuel and Energy, on the other hand, sided with Baku because it believed that Russia could regain influence in the region through the exercise of ‘soft power’. The ministry also came under heavy lobbying from oil companies, whose views it advocated in the Kremlin. Finally, as a former chief executive of Gazprom, Chernomyrdin generally favoured investment in Azerbaijan’s hydrocarbons sector. Driven by a variety of motives, these three important players in Russian politics found themselves supporting Baku’s position of securing investment in the Caspian offshore.

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By contrast, the MoD and MID insisted that to guarantee security on its southern borders, Russia had to delay or prevent Western involvement in the Caspian basin. In July 1994, the backers of this policy convinced Yeltsin to sign a secret directive ‘On securing the interests of the Russian Federation in the Caspian Sea’, which envisaged sanctions against Azerbaijan if it proceeded with the enactment of the AIOC contract. The measures to hinder the contract’s realisation included the blockage of the Volga-Don Canal and river system for traffic en route to Azerbaijan, which would have had immediate repercussions for the AIOC’s logistical operations. Chernomyrdin, however, refused to endorse and sign the directive. Furthermore, when Russian Deputy Foreign Minister Albert Chernyshev stated in August 1994 that Russia would not tolerate the ‘one-sided actions of the littoral states’,8 he disavowed the MID’s statement as not reflecting the overall policy of the Russian government. After a round of bilateral consultations in late October, Aliyev declared that Chernomyrdin had assured him that Azerbaijan could officially, on his behalf, issue a statement that the Russian government had not raised the question of the legal status of the Caspian Sea. These gestures of support from the Russian prime minister significantly lessened the impact of Moscow’s retaliatory actions against Baku. Chernomyrdin’s support on the sectoral division of the Caspian Sea remained crucial to counterbalancing the MID in the months following the signing of the contract. Yet the issue of territorial waters and the ownership of subsoil resources soon became entangled with and even overshadowed by a related issue of how hydrocarbons extracted in the landlocked Caspian region were to be transported to international markets. The following section examines the MID’s reaction to the signing of the AIOC contract, and the political and legal stance that Baku adopted to counter Moscow’s claims. The MID’s proposals for common ownership of the sea were heavily influenced by security concerns; an examination of the legal regime that governed the Caspian prior to the dissolution of the Soviet Union is therefore required to understand Moscow’s perspective. The chapter focuses on the legal doctrines that have been used to delineate the status of the Caspian as a sea or a lake before linking it with the issue of exports of Azerbaijani oil to international markets via Russia.

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Status of the Caspian Sea Baku strongly opposed Russia’s idea of common ownership of the Caspian, and regarded the dispute as Moscow’s response to its attempts to engage Western companies – and their governments – in the region. Baku strove for recognition of the Caspian as a sea governed by the rules and principles of international law. Securing sovereignty over its maritime sector was fundamental to Azerbaijan’s ability to exploit its subsoil mineral deposits and export oil and gas to international markets via pipelines bypassing Russia. The latter was essential if the new state was to conduct commercial negotiations without undue political pressure, collect revenue from its exports and consolidate control over its affairs, both domestic and foreign. In retrospect, the example of Turkmenistan, whose pipeline infrastructure until 2010 remained almost exclusively Russia-bound (with the exception of the small Korpeje-Kurt Kui line to Iran), demonstrates that dependence on Russia for export markets has significantly reduced the country’s economic gains, since the price Ashgabat could fetch internationally for its gas was much higher than what Gazprom would pay for Turkmen imports. The pipeline configuration also helped preserve Soviet-era linkages between Moscow and Ashgabat, deepening the latter’s international isolation and constraining its foreign policy options. To move away from political and economic dependence on Russia, Azerbaijan needed to diversify its pipeline infrastructure away from Russia. At the same time, to have any oil (or gas) to fill the envisaged pipelines, it first needed to assert sovereignty over its territorial waters in the Caspian. This was particularly true in the light of the fact that Azerbaijan’s onshore deposits were either depleted or very mature. Thus, the success or failure of Azerbaijan’s foreign policy came to hinge on its ability to sign and enforce the AIOC contract. On 20 September 1994, just a few hours after the AIOC signing ceremony in Baku, MID spokesman Grigorii Karasin announced that Russia did not recognise the legitimacy of the contract. The statement seemed to contradict Russia’s own policy, since Deputy Minister for

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Fuel and Energy Stanislav Pugach had attended the ceremony earlier that day and Lukoil became one of the original signatories to the contract with a 12.5 per cent stake (it was reduced to 10 per cent after Exxon and Itochu joined the consortium, and in 2003, Lukoil sold its stake to Japan’s Inpex). Nevertheless, the MID disputed the legitimacy of the contract on the basis that the Caspian was a lake (not a sea) and so could not be subject to the Law of the Sea.9 It also argued that the Caspian remained governed by the Soviet-Iranian treaties of 1921 and 1940, which gave the littoral states equal rights to its utilisation.10 The validity of these treaties, according to the MID, did not cease with the collapse of the Soviet Union because, as a signatory to the Alma Ata Declaration of 1991, Azerbaijan took on obligations under all relevant treaties concluded by the Soviet Union. Consequently, decisions regarding seabed mining in the Caspian could only be made by consensus involving all five coastal states, as specified in the SovietIranian treaties. To be sure, the MID first raised the issue of the Caspian’s status in April 1994, but the intensive political negotiations that Baku launched with the UK (as discussed in Chapter 7) ensured that the preparation of the contract proceeded uninterrupted. The protests lodged five months later, on the day of the signing of the AIOC, were followed with concrete action. On 5 October 1994, Russia submitted a letter to the UN maintaining that the Law of the Sea was inapplicable to the Caspian because it ‘lacked a natural link to the world’s oceans’ and was thus ‘a landlocked body of water’.11 The note contained a warning in that it stated that Russia reserved ‘the right to take such measures as it deemed necessary and whenever it deemed appropriate, to restore the legal order and overcome the consequences of unilateral action’.12 It further added that ‘full responsibility for these events, including major material damages’, would rest with the party that ‘undertook unilateral actions’.13 The MID’s objections to the AIOC contract on legal grounds forced Baku to use international law to justify its position. Baku predicated its defence on the inconsistency in Russia’s official position and violation of customary practice, which Moscow had itself established in Soviet times by de facto delimiting the Caspian into sectors.

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Baku’s perceptions of the Caspian dispute and its legal stance Fighting the legal battle became prominent on the Azerbaijani agenda after Russia had circulated the warning letter in the UN. The gesture and the content of the letter heightened Baku’s fears and confirmed its perceptions of Russia as a hostile and potentially belligerent power. In Aliyev’s understanding, Russia aimed at preventing the realisation of ‘a very large contract with Western oil companies on joint exploitation of three of our oil deposits discovered a long time ago – Azeri, Chirag and Guneshli’.14 Individually and collectively, Azerbaijani decisionmakers believed that Russia was prepared to use all means to preclude Azerbaijan from consolidating its independence. Disputing Baku’s rights over the waters off its coast in the south-western part of the Caspian was only one way to achieve this goal.15 Winning the legal – as well as the political – battle over the division of the Caspian thus became important for Azerbaijan’s overall strategy of non-bandwagoning with Russia. Sovereignty over subsoil resources promised greater independence in the country’s energy, economic and foreign policy, effectively becoming the primary instrument by which to consolidate independence. The understanding that in trying to block Azerbaijan’s claims to a part of the Caspian subsoil Russia was motivated by the desire to weaken the new state co-existed in the minds of Azerbaijani decisionmakers with the notion that Moscow wished to misappropriate the oil riches.16 However, by declaring common ownership, Russia would have imposed a de facto moratorium on the exploitation of mineral resources by all sides, in which case there would have been no commercial profit for any of the coastal states, including Russia itself. International practice shows that establishment of a condominium over a body of water is generally tantamount to freezing the situation, while considering alternative solutions.17 In 1994, faced with the crippling lack of coordination in foreign policy and no consensus on what constituted the national interest in the Caspian basin, the MID effectively proposed to establish a condominium. This was most likely to be a temporary solution that gave Moscow time to assess its policy options.

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As events unfolded, Baku came to believe that Russia advocated common ownership in order to monopolise transportation routes for Azerbaijani oil and obtain a veto over any potential pipelines under the Caspian Sea.18 A lack of export outlets, except through Russia, would stifle Azerbaijan’s newly gained political independence and reduce it to the position of a protectorate – in effect, forcing the small state to bandwagon.19 This understanding became pervasive in Azerbaijan’s strategic thinking between 1995 and 2003, forcing Viktor Kalyuzhny, the Russian president’s special negotiator on the Caspian, to deny explicitly Russia’s desire to have all oil and gas outlets from the region pass through its territory.20 Acute perceptions of malevolent intent prompted the Aliyev government to focus on the articulation of Azerbaijan’s legal position on the Caspian. Baku proposed a set of legal arguments to counter Russia’s position. Firstly, it argued that the Soviet-Iranian treaties of 1921 and 1940 regulated navigation, fishing and border guard practice but not the mining regime.21 The AIOC contract, therefore, did not contravene the existent treaties, even assuming that they were still in force.22 Secondly, in the 1970s, the Soviet Union demarcated the ‘republican’ sectors of Azerbaijan, Turkmenistan, Kazakhstan and Russia, which, Baku claimed, was more than a matter of internal administration – the division constituted state practice and its continuation was in line with customary law. The Azerbaijani Ministry of Foreign Affairs (MFA) placed considerable emphasis on this argument, as evident in the note circulated in the UN: In accordance with the generally recognised rules and principles of international law and in the absence of other treaty provisions limiting the jurisdiction of the littoral states, the de facto tradition of the use of the Caspian Sea within national sectors on the basis of the recognised customary rules of international law remains in effect. On this basis, each sovereign Caspian state develops the mineral resources in its own national sector.23 Thirdly, the 1954 and 1957 Soviet-Iranian frontier agreements implicitly established inter-state maritime borders, stretching from the

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Astara terminus on the western shore to Gasan-Kuli on the eastern shore of the Caspian.24 The Astara-Gasan-Kuli line thereby became a de facto frontier. Iran’s rights on the Caspian were ‘very limited’ by this de facto border, which was strictly observed. Specifically, the border precluded Tehran from developing a large fleet or having sizeable industrial complexes on its northern shore.25 In addition, in the 1970s, the USSR Ministry of the Oil Industry divided the Soviet sector of the Caspian into subsectors. Following its merger with the Ministry of Gas Industry and the Ministry for Petroleum Refining in 1989, the newly created USSR Ministry of Oil and Gas issued in January 1991 a joint act with the Council of Ministers of the Azerbaijani Soviet Socialist Republic, which confirmed the boundaries of the Azerbaijani sector of the Caspian. The act refers specifically to the ‘four giant oil and gas fields discovered in the deep-water section of Azerbaijan in the Caspian Sea’. On the basis of this evidence, Baku concluded that the common ownership clause in the Soviet-Iranian treaties was not binding on the new littoral states because the Soviet Union had always exercised ‘exclusive internal jurisdiction’ over its sector of the Caspian.26 This enabled it to divide the Soviet sector of the Caspian Sea into subsectors, which under common ownership would not have taken place or would have taken place with Iran’s participation. The pattern of administering the Caspian, Baku claimed, by dividing it between the littoral states ‘in one form or another’ was fully consistent with the international maritime practice.27 The 1982 UN Convention on the Law of the Sea (UNCLOS III) used the term ‘enclosed or semi-enclosed seas’ to denote ‘a gulf, basin, or sea surrounded by two or more states and connected to another sea or the ocean by a narrow outlet or consisting entirely or primarily of the territorial seas and exclusive economic zones [EEZs] of two or more coastal states’.28 To be sure, the application of this definition to the Caspian is not clear cut. This is because using the second criterion – considering a body of water as an enclosed sea if it consists entirely or primarily of the territorial seas and EEZs of the coastal states – risks falling into a circular argument. Should the Caspian be considered an enclosed sea because it

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is already de facto divided into sectors or should the existing division be made de jure because the Caspian is an enclosed sea? And, if the latter is the case, then what is the basis for deciding that it is an enclosed sea? Using the first criterion in the definition – that the term should apply to a sea surrounded by two or more states and connected to another sea or the ocean by a narrow outlet – is less problematic. This is because it is possible to navigate from the Caspian to the ocean through a complex network of rivers and canals.29 However, in doing so, the use of the artificially built Volga-Don Canal, opened in 1952, is indispensable, as this is the outlet that connects the Caspian with the high seas. Attempts have been made to assimilate artificial canals and straits into international law, but this has until now been unsuccessful.30 The definition is perhaps not of fundamental importance because, even if all parties concerned agree that the Caspian is an enclosed sea, UNCLOS III does not provide sufficient guidelines as to how this type of sea is to be governed. Instead, it limits itself to the recommendation in Article 123 that the coastal states exercise their rights cooperatively and through consensus.31 In a situation where no consensus can be reached, the UNCLOS Preamble suggests the use of generally recognised rules and principles of international law. These, as enshrined in international conventions, stipulate the exercise of sovereign rights over 12-mile territorial waters, 200-mile EEZs and the continental shelf. In bodies of water, like the Caspian, where the width does not allow for the establishment of a 200-mile EEZ, Article 15 provides for the drawing of a ‘median line every point of which is equidistant from the nearest points on the baselines from which the breadth of the territorial seas of each of the states is measured’.32 In 1994, Azerbaijan came out as a proponent of partitioning the Caspian on the basis of the principle of equidistance– a position that Kazakhstan and, initially, Turkmenistan shared.33 In an attempt to give it an additional measure of control over the situation, Azerbaijan incorporated its Caspian claims into the 1995 constitution. Article 11(2) of the constitution on territorial integrity reads: ‘Internal waters of the Azerbaijan Republic, the sector of the Caspian Sea (lake) belonging to the Azerbaijan Republic, [and] airspace over the Azerbaijan Republic are integral parts of the territory of the Azerbaijan Republic.’ This constitutional clause was widely

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interpreted as a step to legalise the informal delimitation into sectors established under the Soviet Union, thus giving Azerbaijan additional legal grounds to use what it considered to be its territorial waters and subsoil resources as the republic’s exclusive property.34 It is indeed remarkable that the formulation inserted into the constitution read ‘the Caspian Sea (lake)’. Since 1994, Baku has argued that the Caspian is a sea, but, on several occasions, it has floated the idea that it might accept viewing it as an international frontier lake.35 The legal distinction would have made no difference to the actual delimitation because frontier lakes are divided into sectors on the basis of the principle of equidistance. Azerbaijan used the examples of the Great Lakes, Lake Chad and Lake Geneva as precedents for such delimitation.36 This terminological flexibility both in the constitution and in articulating its position in international forums suggested strongly that the Caspian’s legal status per se was of marginal importance to Baku as long as it could consolidate control over its sector, seen as vital to its economic and political independence. By leaving some terminological leeway, the Azerbaijani government hoped to find a formula on which to base negotiations with Russia. Recognising the Caspian as a frontier lake would have allowed the MID to present the situation as a foreign policy achievement while still meeting Azerbaijan’s demands for sectoral division. Although Azerbaijan under Aliyev’s leadership integrated legal arguments into its policy towards Russia, political strategies remained at the core of its strategic manoeuvring – a strategy devised to address the threat that emanated, or was perceived to emanate, from Russia. As a small power, Azerbaijan tended to see itself in a position of vulnerability vis-à-vis its vastly more powerful neighbour. However, the history of Russia’s involvement in the Caspian shows that its objections to foreign involvement, underpinned by security concerns, were longstanding and dated back to the treaties with Persia.

Perceptions mismatch: Russia and security on the Caspian The history of Russian-Persian and Soviet-Iranian relations demonstrates the importance of the security dimension in Russia’s treatment

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of the Caspian Sea. Both Tsarist Russia and the Soviet Union in the early years of its existence aimed at barring Persia from deploying naval forces in the Caspian. A clause to this effect appears in the Russian-Persian treaties of 1813 and 1828. The Friendship Treaty signed between the Soviet Union and Persia in 1921 gave the latter equal rights in navigating the Caspian, but this concession was made only after Persia had pledged to exclude from its fleet subjects of third governments. This conditionality reveals Russia’s underpinning concerns of espionage through the presence on Persian vessels of foreign nationals who could collect and use information in anti-Russian activities. In the neutrality pact of 1927, the Persian government agreed not to have non-Persian subjects, including former subjects of third powers who accepted Persian nationality, among the employees, labourers and contractors at the southern Caspian port of Pehlevi for 25 years. The Soviet Union claimed the right to demand the removal of any such persons. The Russian-Iranian Treaty of 1940 explicitly excluded the vessels of non-littoral states from sailing on the Caspian, while in a note relayed to Moscow in September 1962, Iran agreed not to have ‘military bases of any type’ on its territory. This was widely interpreted in Soviet jurisprudence as including the set-up of naval bases on the Caspian.37 Having closed the Caspian to foreign vessels, the Soviet Union proceeded with a de facto delimitation of this body of water in line with international maritime law. From 1959 onwards, Soviet jurists referred to a ‘state boundary’ in the Caspian, which Iranian warships were not allowed to cross without prior permission.38 Some analysts also interpreted the 1962 exchange of notes – between Iranian Foreign Minister Abbas Aram and Soviet Ambassador to Tehran Nikolai Pegov – as a confirmation of the Soviet-Iranian boundary, the specific parameters of which were set by the Astara-Gasan-Kuli line.39 The Soviet Union also enacted domestic legislation sanctioning the exploration and production of mineral resources in the Caspian, an aspect that was not covered by the Soviet-Iranian treaties. The 1968 edict of the USSR Supreme Soviet ‘On the continental shelf of the USSR’ proclaimed that the Soviet continental shelf encompassed the seabed and subsoil of depressions in the continuous mass, irrespective

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of their depth.40 This definition, adopted for the purposes of exploiting the natural resources of all coastal areas of the Soviet Union, covered the Caspian, which is sometimes regarded as a depression on the landmass (rather than resting on a continental shelf of its own).41 In an explicit reference to the Caspian, Soviet law manuals noted that its subsoil resources belonged to the USSR and Iran ‘within the limits of their respective area of the sea’.42 The division of the Soviet part of the sea into republican subsectors, which took place in the 1970s, was in accordance with the internationally recognised median line principle of equidistance. In addition to bilateral arrangements with Iran, Russia sought to use international law to further strengthen security along its southern defence perimeter. From 1947, the Soviet Union developed and began to promulgate the doctrine of the closed sea, which argued that geographical, historical and military-strategic reasons necessitated the creation of a special regime for some regional bodies of water. Nonlittoral states, it stated, did not have ‘any legal grounds for claiming participation in deciding questions concerning the regime of navigation in closed seas or in straits leading to these seas’.43 Importantly, the doctrine stipulated that foreign warships would have no right of access to the closed seas, and even commercial navigation by non-littoral states could be restricted (at least in peacetime).44 Soviet jurists argued that the regime of closed seas was applicable, among others, to the Caspian. Other seas for which the Soviet Union claimed exceptional status were the Aral, Azov, Black and Baltic seas, as well as the Sea of Japan and Sea of Okhotsk. Although the international community never explicitly accepted the legitimacy of the doctrine, it did not openly dispute the status of those bodies of water that were of marginal geostrategic importance during the Cold War. The Caspian was one such sea by virtue of its location on the southern periphery of the Soviet Union, surrounded by the Soviet Union and Iran, and receiving no international oil investment. Furthermore, the international acceptance of the concept of spheres of influence during the Cold War implied that, while most littoral republics were part of the Soviet Union, the entire Caspian basin fell within the area of Moscow’s legitimate interests.

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The dissolution of the Soviet Union, the collapse of the bipolar world order and the redrawing of state boundaries in the former Soviet south, coupled with the efforts of the regional states to attract international investment, made it harder for Moscow to insist on the preservation of the status quo with regard to the non-penetration of third parties into a closed sea. Claims voiced in 1994 to recognise the Caspian as a lake with common ownership were an attempt at a partial revival of the closed sea thesis, devised to restrict access for non-littoral states and protect Russia’s ‘vital interests, primarily in the security sphere’.45 In fact, Russia alternated between calling the Caspian a lake and a common sea.46 The latter term dates back to the Soviet-Persian Treaty of 1921, and was more positive than a closed sea, which clearly harked back to the Soviet era and was reminiscent of Cold War spheres of influence – rhetoric with which even the Russian MID did not want to be associated in the early 1990s. The above analysis reveals that under the Soviet Union, Moscow pursued a two-pronged policy on the Caspian. On the one hand, it refused to apply the norms of the high seas because – as Soviet jurists inconsistently argued – the Caspian was a common sea, a closed sea or a lake. These three terms were used interchangeably as it suited Soviet national interests in the spheres of security and mineral exploitation. Thus, to safeguard the Caspian from foreign penetration, the Caspian was presented as a closed sea. But for the purposes of mineral resource exploitation, it was treated as any other marine body of water, divided in accordance with the principle of equidistance. There was no doubt that the Soviet Union exercised exclusive jurisdiction over the subsoil resources within its territorial waters. This inconsistency became highly relevant to the development of Russian-Azerbaijani relations on the Caspian in the post-Soviet period. It made Russia’s legal position of joint ownership untenable in the light of the fact that de facto exploitation of Caspian resources in the Soviet part of the sea had been taking place since the 1970s, in strict observance of the republican subsectors. At the same time, the formula preferred by Azerbaijan – to agree on full national jurisdiction over the seabed, subsoil, superjacent waters and airspace for each littoral state within its sector of the Caspian – was unacceptable to post-Soviet

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Russia for largely the same strategic-military reasons that had shaped the policy of the Soviet Union. In Russia’s thinking, conceding the new states’ claims to exclusive sovereignty over their part of the Caspian would give them the right to harbour commercial and military vessels of third states in their territorial waters without seeking Russia’s consent.47 In a July 1998 meeting with Aliyev, First Deputy Foreign Minister Boris Pastukhov shed light on Russia’s fears when he stated: If national sectors existed, if the sea was to be divided into national sectors, practically speaking into five small seas, then these national sectors would be under full-time national jurisdiction. That would mean that the laws of the state would prevail in navigation, fishing, ecology and state border regime, and, if you wish, the regime on crossing territorial airspace. Restrictions would be introduced and territorial disputes cannot be excluded. Russian Ambassador to Tehran Aleksandr Maryasov openly stated that Russia ‘categorically oppose[d] any outside military presence in the Caspian as a development, which could entail further destabilisation’.48 The latter statement was a veiled reference to the USA, as the special presidential envoy for the Caspian, Kalyuzhny, made explicit in March 2004, when he stated: The littoral states could reach an agreement on militarisation if it was not for external influences . . . By the way, I wanted to say that we have an interest in the US Great Lakes. I will soon ask my government to set up a Russian representative office for these lakes.49 In addition to any outside military presence, recognising the Caspian as international waters would have required Russia to allow the littoral (and non-littoral landlocked) states the right of innocent passage through its territorial waters en route to their port of destination. This is because, as previously mentioned, the only access to the high

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seas from the Caspian lies through the Volga-Don Canal. The issue of commercial shipping by littoral and non-littoral merchant ships would have also sprung onto the agenda. Experts on international maritime law argue that the regime for merchant vessels in closed seas should be identical to that on the high seas, apart from whatever state regulation may be necessary. This means that, at least in peacetime, closed seas must provide merchant vessels of non-littoral states with the same access to the sea as that enjoyed by the littoral states.50 Providing the littoral states of the Caspian Sea and the non-littoral states of Central Asia rights of passage through the Volga-Don Canal would have reduced Moscow’s political leverage in the region. The two-pronged approach in Russia’s policy – expressed in its preference for common ownership of the Caspian to preclude any outside military presence and its traditional adherence to the de facto division of the Caspian into sectors for the purpose of resource exploitation – did not disappear with the collapse of the Soviet Union. Indeed, in many respects, it became more pronounced. Although Russia remained the preponderant power in the region, the Caspian was no longer unquestionably accepted as Moscow’s sphere of interests and influence. Western oil companies, backed by their governments, established direct ties with Baku and held negotiations for offshore production. When presented with Russian objections, BP and the UK government chose to continue negotiations with Azerbaijan on the development of the ACG fields. Moscow was in a position to impose its will on individual Caspian states, but was unwilling and, arguably, unable to confront the AIOC, a consortium of foreign companies, that enjoyed the support of their home governments and whose investment Russia itself sought to attract to help rebuild its post-crisis economy. Unwilling to instigate an international conflict, but keen to shut out ‘outsiders’ from the region, post-Soviet Russia – or, more precisely, its MID – chose to advocate the concept of common ownership for the Caspian. It was intended to enable it to veto the presence of foreign nationals in Caspian waters – just as did in the treaty with Persia in 1921. But in the 1990s, any Russian objections over the status of the Caspian were undermined by the presence of Lukoil in the AIOC

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consortium. That the inclusion of a Russian company was a deliberate policy move is confirmed by the first president of the AIOC, Terry Adams, who states: Heydar Aliyev was clear in his choice of investors. They had to include major oil companies with an international track record and reputation for successful project delivery . . . But the president primarily saw such a broad range of foreign investors with a diversity of national interests as being the mechanism from which he could build Azeri foreign policy, and secure national stability.51 The MID’s continued insistence on the common sea principle as offshore work began on the ACG complex of fields weakened Russia’s position further. Baku’s strategic manoeuvring exposed the serious lack of coordination in Russia’s foreign and economic policy. Domestically too, Lukoil pushed for exploration activities in the Russian sector of the Caspian Sea, which, subsequently, led to the discovery of six oil and gas deposits, with total estimated reserves of 4.7 billion barrels of oil equivalent. The MID’s position, which from the very beginning was legally disputable, became increasingly politically untenable and economically counter-productive. The change came unexpectedly, in November 1996. Speaking at a meeting of the littoral states in Turkmenistan, Russian Foreign Minister Yevgenii Primakov stated that Russia accepted a 45-mile ‘coastal’ zone and acknowledged the rights of the littoral states to exploit the mineral resources in their respective zones.52 The U-turn was all the more remarkable given that in January that year Russia, together with Iran, brought up an official challenge at the UN protesting against any offshore development in the Caspian. Two considerations appear to have changed the MID’s stance. The first was that work on the Chirag-1 platform was in full swing and there was little Moscow could do to stop it. Since Russia was the only littoral power with offensive naval capability on the Caspian, it could, of course, contemplate an attack on the offshore platform, but this would have provoked a major diplomatic and possibly military conflict.

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Moscow’s apparent unwillingness to resort to force or adopt punitive sanctions, along the lines envisaged in the secret directive of 1994, was in part the result of the arrangements put in place by the Azerbaijani government to accommodate some of Russia’s interests. This applied particularly to the decision to have one of the outlets for Azerbaijan’s so-called early oil at the Russian port of Novorossiysk. Therefore, the second consideration that enabled Moscow to move to a less intransigent stance on the legal status of the Caspian was the perception that it could work with Baku in a manner that met at least some of Russia’s national interests. This understanding acted as a deterrent to the use of violence. Having offered to recognise a 45-mile zone for each littoral state, Primakov also suggested case-by-case discussions on national jurisdictions over oil and gas deposits beyond the 45-mile limit at sites where drilling had already begun.53 There was a reason for this specification. The ACG complex of fields is located at some 100 kilometres (km) offshore and work had been under way there for almost two years. Moscow’s offer came too late and was too vague to be attractive to Baku. The Aliyev government refused to take it up. It also refused to support a joint proposal by Russia, Iran and Turkmenistan for a 45-mile zone to exploit the ‘non-living resources and joint ownership of the rest’.54 By November 1996, Baku had come to believe that it was in a position to obtain better – and more concrete – terms on the division of the Caspian into national sectors. It continued to exploit the inter-ministerial conflicts in the Russian foreign policy establishment, worked with the Russian oil lobby and used its influence over export pipeline decisions to sway the argument in its favour. It was clear to the Aliyev leadership that once Russia agreed to have one of the export pipelines routed via its territory (something it intensively lobbied for) and fed from the Chirag-1 field, it would de facto concede the division of the Caspian on a national sector basis. It would also de facto accept Azerbaijan’s national jurisdiction over the ACG fields. This calculation proved to be correct. The production of first oil from Chirag-1 in November 1997, underpinned by agreements to refurbish and fill the Baku-Novorossiysk pipeline with Azeri crude from this field, exposed the contradictions within Russia’s legal position, making it unjustifiable. In addition to

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offshore production in Azerbaijan, Lukoil had been conducting geological and geophysical exploration in the northern and middle parts of the Caspian since 1995, covering more than 63,000 square km of the Russian national sector, as delimited under the Soviet Union.55 The MID was forced to concede that Russia would benefit more, both politically and economically, if the Caspian seabed were carved out between the littoral states. On 6 July 1998, it signed a bilateral agreement with Kazakhstan, dividing their shared part of the seabed in accordance with the median line principle. In June 2001, it signed a similar agreement with Azerbaijan. The deal was confirmed on 23 September 2002 in the ‘Agreement for the division of adjoining areas of the Caspian seabed between the Republic of Azerbaijan and the Russian Federation’.56 A tripartite agreement between Azerbaijan, Russia and Kazakhstan, ‘On the intersection point of the division lines between adjoining areas of the Caspian seabed’, was signed on 14 May 2003. As a result of these agreements, some 64 per cent of the Caspian seabed has been delimited, with Russia receiving 19 per cent, Azerbaijan 18 per cent and Kazakhstan 27 per cent.57 Given its initial objections to the delimitation of the seabed, it is somewhat ironic that, as of 2010, Russia remains the only littoral state on the Caspian to have its national sector fully delimited. Despite these agreements on the division of the seabed, Russia has remained adamant on the issue of common ownership of water mass and sea surface. Article 1 of the agreement with Kazakhstan reads: ‘The seabed of the northern part of the Caspian and the subsoil thereof, without prejudice to the continued common use of the water’s surface, including protection of navigation, agreed fishing quotas, and environmental protection, shall be delimited between the parties.’58 A very similar position was expressed during Pastukhov’s negotiations in Baku in July 1998. The Russian negotiator added that the fishing zone under the coastal state’s national jurisdiction could be extended from the ten miles fixed in the Soviet-Iranian agreements to 12–20 miles, subject to negotiation.59 But the rest – the water mass and the sea surface – had to remain under the ‘system of united control’.60 The delimitation agreement signed between Azerbaijan and Russia reflected the bargaining positions of both sides. On the one hand,

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Russia accepted Azerbaijan’s demands for exclusive sovereignty over seabed resources in its sector, in line with the ‘established practice in the Caspian’.61 On the other hand, it partially enforced the closed sea doctrine in the clause that affirmed common ownership of superjacent waters. The development of the new legal regime was to remain ‘an affair of the littoral states of the Caspian’.62 Speaking before the Azerbaijani parliament in January 2001, the then Russian president, Vladimir Putin, emphasised that a new legal regime could only be achieved through consensus; until then, the existing regimes on ‘navigation, fishing, and the prohibition on the sailing of ships under the flags of non-Caspian states’ would apply.63 The head of the MID Caspian working group, Andrei Urnov, echoed Putin’s words when he said that the signed protocol divided not the Caspian Sea but the natural resources of the seabed.64 The compromise formula that was reached reflected the balance of forces and interests within the Russian policy establishment and between the negotiating parties. No final agreement on the status of the Caspian has been signed at the time of writing, but the agreements of 1998–2003 have created an acceptable framework of cooperation between Russia, Azerbaijan and Kazakhstan. Azerbaijan’s shared borders with Turkmenistan and Iran remain undefined and subject to various disagreements. Without their consent, there will be no new legal regime in the Caspian. This state of affairs suits Russia, which is keen to preclude the construction of undersea infrastructure, such as a trans-Caspian gas pipeline, from Turkmenistan to Azerbaijan en route to European markets. For the time being, the prevailing status quo is also acceptable to Azerbaijan, which has secured sovereignty over its main offshore fields and used the output from these fields to justify the construction of numerous pipelines. In the words of Aliyev’s former foreign policy adviser, Vafa Guluzade: I am not at all worried about the timeframe within which the consensus will be reached. Because Azerbaijan will give its consent when it [the solution] corresponds to its national interests. And nobody will be able to force upon us any other kind of division of the Caspian.65

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Pipeline negotiations: Baku-Novorossiysk The position of the MID throughout the 1990s was not unanimous. Although officially it opposed the division of the Caspian into national sectors, senior MID officials were quoted as saying that Moscow would like Caspian oil to be developed but on the condition that it would go only through Russian territory. The Georgian pipeline to Supsa, even if built, might be considered only as auxiliary to the Russian route.66 It became increasingly clear to Aliyev in the course of negotiations in 1994–5 that at least one of the oil routes would have to go through Russia. Baku’s manoeuvring space was constrained by the fact that the Russian ministries, despite their numerous divisions, converged on the idea that the northern route via Novorossiysk had to become an exit point for Caspian oil. In a private conversation, Chernomyrdin is known to have told Aliyev that, if the Novorossiysk pipeline was not chosen for early oil, he would no longer be able to defend Azerbaijan’s interests in the Kremlin against those who pressured for assertive action.67 Several factors lent credibility to Chernomyrdin’s warning. Firstly, the support that the Russian ministries extended to Baku was predicated on their vested interest in Azerbaijani oil. Its transport from the landlocked region played a key part in perceived future gains that the supporters of Baku understood would accrue to Russia in return for allowing the implementation of the Contract of the Century. For instance, Shafrannik stated that Russia would truly profit from Caspian oil only if the routes of the pipelines ran through its territory. He also stated that Russia would not accept a situation where none of the oil routes went through its territory, but added that he considered a two-pipeline solution as favourable. Refusal to nominate at least one route for ACG oil via Russia risked distancing and losing the support of those Russian ministries and politicians who had until now been indispensable in blocking potentially damaging actions by the MID. Secondly, from 1994, the proponents of a forceful approach to negotiating with Russia’s near abroad began to gain clout in Russia’s policy-making community. They amply demonstrated it by blocking the

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north-bound railway in January 1995. The MID and MoD argued that Azerbaijan supplied terrorists in the North Caucasus, allowed Chechen fighters and arms transit through its territory, and provided many of the wounded with safe haven.68 Azerbaijan denied involvement, pointing at the timing of Russia’s accusations.69 According to Azerbaijani decision-makers, Russia used the Chechnya pretext to close borders every time Baku was about to take a decision on oil routes.70 Russia also blocked the Volga-Don Canal, the only link from the Caspian to international waters and the route used to import equipment for the oil rigs. Aliyev raised the issue during his official visit to Moscow in July 1997, pointing out the fact that Azerbaijan suffered from ‘the Russian blockade’, but this led only to a verbal agreement from Chernomyrdin to look into the issue and reopen the waterway.71 Russian economic sanctions have proved counter-productive in the long run, as they have pushed Azerbaijan to diversify and deepen its international contacts. Azerbaijan’s then foreign minister, Hasan Hasanov, stated that Russia’s actions made the Azerbaijani government rethink its entire ‘communications policy’ and draw the conclusion that a drastic reorientation was needed of the routes – not only of pipelines but also trade – from the north, to the south and east.72 Remarkably, Russia’s blockage of the Volga-Don Canal in the mid1990s was not an exceptional occurrence; it happened even in times of relative stability in bilateral relations. For example, in early May 2005, Russia refused to allow three Azerbaijani ships carrying BP equipment to enter the canal.73 Bringing the equipment through the canal was the only route available. Theoretically, an alternative route existed via Iran, but this was not an option because of the Iran-Libya Sanctions Act imposed by the US government in 1996 and the strenuous relationship that Baku had with Tehran over the status of the Caspian. Tehran resented both the division of the sea into sectors based on the principle of the median line and the presence of outsiders in the region. The situation demonstrated Azerbaijan’s geographic vulnerability and the limitation of its policy options in the case of a blockade by the two powerful neighbours – Russia and Iran. On 25 May 2005, the presidents of Azerbaijan, Georgia and Turkey signed a declaration to create an international rail transportation

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corridor, Baku-Tbilisi-Kars (BTK), worth $600 million. The construction of the rail link began in November 2007. Its original start date was set for 2010, but it was delayed to the end of 2012 because of technical and environmental issues as well as the Russian-Georgian armed conflict.74 The main advantages of BTK, from Azerbaijan’s perspective, are that they give Baku a physical rail link to Turkey, thus reducing Russia’s leverage while also bypassing Armenia.75 Projections show that the railway line will transport up to 1 million passengers and 6.5 million tonnes of cargo, including oil, in the early stages of becoming operational. By 2030, BTK may carry an estimated 17 million tonnes of cargo and about 3 million passengers.76 The BTK railway was therefore Baku’s response to Russia’s attempts to pressure it into compliance. This response became incorporated into Baku’s long-term strategy of diversification aimed at reducing Russia’s leverage. But, in 1995, Russian sanctions hurt the Azerbaijani economy and Aliyev could not afford to take lightly Chernomyrdin’s threat of Russia exerting even greater pressure if the Baku-Novorossiysk pipeline were not nominated as an export route for ACG oil. In addition, Aliyev believed that Russia remained capable of destabilising the internal political situation in Azerbaijan. Throughout his time in office, the president strongly suspected the involvement of Russia’s security establishment in the attempted coup of 1994 that took place in the immediate aftermath of the signing of the AIOC contract.77 In the light of these perceptions of interference and malign intent, Chernomyrdin’s warning in 1995 that Azerbaijan had to designate the Russian route for at least one of the oil pipelines or face more instability was received very seriously and given the utmost consideration. In February 1995, Aliyev had a confidential meeting with the heads of SOCAR and the AIOC, who were given ‘a very firm directive that dictated the early pipeline strategy’.78 Initial pipeline negotiations would focus on obtaining inter-governmental and oil transportation contracts for the Baku-Novorossiysk pipeline. Preparations were to begin on west-bound pipelines too, but the documents related to the Novorossiysk pipeline had to be signed in order to assure Russia that

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its interests were served first. According to Adams, the first AIOC president: The geopolitical imperative could not have been made clearer for Baku oil diplomacy. But, the presidential directive had been given behind closed doors and stayed that way. It had been suspected by some, but for many the selection of an export route became a matter of national and international debate . . . [R]eality had already been accepted by the more realistic investors in AIOC: that both routes would be needed for operational security, flexibility, capacity and broader political cooperation both within and outside the region. Access to the Volga-Don in Russia was important for AIOC operational logistics; and Georgian ports linked to the Trans-Caucasian railway played an equally important role. AIOC and its investors could afford to offend no one.79 On 18 January 1996, Aliyev signed an inter-governmental agreement to transport Azerbaijani oil via the northern route from Baku to Novorossiysk. Azerbaijan claimed that sending oil to Russia cost five times as much as it would to go through Georgia, insinuating political motives for the decision.80 The pipeline, which ran through Chechnya, had to be repaired by August 1997 in order to be filled with the early oil from the ACG fields. Extraction of the first oil from Chirag-1 began on 7 November 1997 and the first delivery of AIOC oil to Novorossiysk took place on 26 December 1997. This was an ambitious schedule to meet under the prevailing geopolitical circumstances, but Azerbaijan’s ability to do so is testimony to the top priority that Aliyev allocated to foreign and energy policy.81 The MID shifted its position on the common ownership of the Caspian in 1996 – that is, after the signing of the agreement on the use of the Baku-Novorossiysk pipeline for the export of ACG oil to international markets. Thus, although the agreement to send oil to Russia appears to have been negotiated from a position of weakness and, at first sight, may resemble a surrender to the interests of the dominant state, it was in fact a limited concession to serve Azerbaijan’s broader

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interests. This point is crucial because, by accepting oil from AIOC through the network of Russian state pipeline monopoly Transneft, under a treaty enforceable in international courts and under a freely negotiated transport agreement, Russia de facto recognised Azerbaijan’s jurisdiction over the ACG fields in the Caspian that lay beyond the 45-mile coastal zone that the MID was proposing. Furthermore, once this concession was made, Aliyev’s position in negotiating the BakuTbilisi-Ceyhan (BTC) pipeline as the main export outlet for ACG oil strengthened.

Between Novorossiysk and Ceyhan Baku used Moscow’s lack of control over the situation in Chechnya to increase its chances of avoiding Russia as the main outlet for ACG oil. Russia’s difficulties in negotiating with the Chechen leadership provided a convincing argument for why Azerbaijan would not use the Russian route for the main export pipeline (MEP). When in mid-1997, after months of negotiations, Chechen delegations failed to reach an agreement with Moscow on the transport of oil, Azerbaijan threatened to find a different outlet even for early oil, which was then about to start flowing to Novorossiysk. In the course of Aliyev’s visit to Moscow in July 1997, Deputy Prime Minister Boris Nemtsov publicly confirmed the existence of an agreement with Chechnya on the transit of oil through its territory, but insisted that it was purely ‘technical’.82 However, only a day before Aliyev’s visit to Moscow, the then president of the Republic of Ichkeria (Chechnya), Aslan Maskhadov, had visited Baku to ‘discuss the possibility of a trilateral agreement’ between Russia, Chechnya and Azerbaijan. Furthermore, in August, Chechen Vice-President Vakha Arsanov complained during a visit to Baku that Moscow was not providing funds to repair the Chechen section of the pipeline. The Chechen leadership was insisting on having a say in international pipeline politics, and, without full control over the situation, Moscow was unable to guarantee the security of the pipeline. Despite the risk of transporting oil through Chechnya and the potential economic losses associated with the prevailing instability in the North Caucasus, this

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state of affairs advanced Azerbaijan’s longer-term objective of bypassing Russia as the main outlet for its oil. The then deputy minister of fuel and energy, Sergei Kiriyenko, sought to reassure Baku that Russia would take measures to fulfil its transport obligations. Specifically, Transneft offered a swap arrangement: to export Azerbaijani oil across the Caspian to Astrakhan and Volgograd, and provide the equivalent amount of oil to the Azerbaijani side at Novorossiysk. However, Baku rejected the proposal and claimed that Russia’s inability to transport the agreed amounts via the pipeline to Novorossiysk would force it to turn to alternative routes.83 Although oil exports began in late 1997, the northern pipeline remained – as Aliyev repeatedly emphasised – subject to constant delays and interruptions. In April 1999, tensions escalated after Transneft allegedly failed to pay oil transit fees through Chechnya, compelling Azerbaijan either to suspend oil production or send a greater share of output through the western route to Supsa.84 Two months later, as the security situation in the North Caucasus continued to deteriorate, the pipeline had to be shut down following an explosion in Dagestan. Russia’s incoming energy minister, Kalyuzhny, reacted by suggesting closing down the section permanently and building a bypass so that Azerbaijani crude could be transported safely to market.85 The suggestion indicated both Moscow’s inability to control the situation and its recognition that something had to be done about it. During the interruptions, Transneft offered to transport oil by rail via Dagestan, but Azerbaijan declined the offer in view of its economic unprofitability.86 It was only after Russia lowered rail transit tariffs to the level set in the agreement for the transport of oil via the Baku-Novorossiysk pipeline that Azerbaijan acquiesced in its oil going by rail to the Russian port.87 Nevertheless, it was understood that the security risks associated with the transport of oil by pipeline were also present in sending it by rail through the North Caucasus region. The 1998 financial and economic crisis made it difficult for Transneft to raise funds for the construction of the 315-km bypass of the Chechen section of the line. The unstable security situation and frequent disruptions of flows throughout 1998–9 gave Azerbaijan enough reasons – and time – to justify its choice of the Turkish

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Mediterranean port of Ceyhan as the main export outlet for its oil. With oil already flowing to Novorossiysk, Baku was in a position to point out the disadvantages of this line and build a case for preferring the western route on the basis of its greater reliability for the larger volumes that were to come from the later stages of ACG development. Indeed, throughout this period of manoeuvring, Baku never lost sight of its strategic objective of aligning energy pipelines with its political inclinations. From 1997, Baku adopted tougher rhetoric, placing emphasis on Russia’s failure to honour the obligations it had assumed under bilateral treaties, including ‘firm security guarantees’ for the safety of the Baku-Novorossiysk pipeline.88 The unreliability of the pipeline, Baku argued, inflicted financial losses on Azerbaijan and jeopardised its state prestige because it could not provide foreign investors with a safe outlet to international markets.89 Moreover, the Baku-Novorossiysk pipeline did not have a quality bank, so that higher-value Azeri Light crude was mixed with Russian Urals, thus reducing Baku’s revenue from exports. In 1999, Azeri Light sold at a premium of $1/barrel to Urals; this differential increased to $5–6/barrel in 2005.90 Baku’s lost profits were therefore not negligible. In view of these factors, Baku reasoned, the MEP, with a projected throughout capacity of 1 million barrels per day, had to go through Georgia to Ceyhan. During a visit to Baku in March 1998, Russia’s first deputy foreign minister, Pastukhov, asked Aliyev to give serious consideration to increasing the capacity of the Baku-Novorossiysk pipeline: Please allow me to voice one more question on the request of the Russian government. We know that in the autumn of this year, you, Heydar Aliyevich, will take a decision on the route of the main export pipeline from Baku. We are telling you with all determination that it will be your and only your sovereign decision . . . But at the same time we would like you to pay attention to the fact that we are ready, in the shortest time, to increase the throughput capacity of the working pipeline, BakuNovorossiysk, to 17 million tonnes [per year] – that is, of course, if we have your consent . . .91

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In his reply, however, Aliyev affirmed his ‘principled opinion’ (printsipial’noye mneniye) to see the realisation of the BTC pipeline.92 Under the 1996 agreement, the Baku-Novorossiysk pipeline was to receive at least 1.5 million tonnes of oil in 1998, 2.2 million in 1999 and 5.0 million in 2002.93 Indicative of strategic manoeuvring, Azerbaijan tried to fulfil its commitments to the pipeline: even in 1999, after the explosions, when the AIOC stopped exports through Russia and opted for the transport of oil to Batumi on the Black Sea, SOCAR continued to send its oil by rail to Novorossiysk. The difficulties experienced by the AIOC in 1999 in evacuating oil via Russia – the route that many shareholders in the consortium initially preferred for economic reasons – became an important factor in leading it to support BTC.94 BP Amoco’s statement in October 1999, favouring the pipeline as a strategic transportation route, came despite a World Bank study in May, which concluded that BTC was the most costly option for transporting crude.95 A tripartite governmental agreement between Azerbaijan, Turkey and Georgia delineating BTC as the MEP was signed on 5 November. It was followed on 18 November by the formal endorsement for the project from the presidents of the three states, signed in the presence of US President Bill Clinton as a witness and the presidents of Kazakhstan and Turkmenistan as observers. Having made a concession in the political battle over the division of the Caspian seabed in order to benefit from the extraction of hydrocarbons offshore, Russia was now increasingly losing on the economic front. In the short term, transit via Baku-Novorossiysk was threatened by the Baku-Supsa pipeline, which was refurbished to raise the throughput of the Georgian route, while in the long run, BTC was becoming a looming reality, expected to divert the bulk of the ACG output to the Mediterranean Sea. Turkey’s attempts to regulate traffic in the Bosphorus were therefore seen in Russia through the prism of seeking to secure oil flows through its territory while minimising the transit of Azerbaijani and Kazakhstani oil to Novorossiysk. Russia, in turn, responded by proposing economic incentives intended to make Baku and the AIOC change their minds. The refurbishment of the Baku-Supsa line, which took four and a half years, was officially completed in April 1999, with the opening of

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the terminal in Supsa. The capacity of the pipeline, which had been completed in late 1998, was upgraded from 150,000 to 220,000 barrels/day. Flows via Georgia were economically more profitable than via Russia not only because of quality bank issues but also because of the large differential in tariffs: the $15.60/tonne ($2.15/barrel) tariff for the Baku-Novorossiysk line compared unfavourably with $3.10/ tonne for Baku-Supsa. In 2000, Transneft floated the idea of reducing tariffs to $10/tonne if Azerbaijan committed to send 5 million tonnes a year (100,000 barrels/day) through it; this tariff could be reduced even further, to $8/tonne, if annual throughput rose to 7 million tonnes.96 The proposal was in anticipation of production increases from the Chirag field and came at a time of abundant spare infrastructure capacity – pipeline and rail – in exporting oil from Azerbaijan. Transneft also proposed to set up a quality bank for Azeri Light by constructing a new branch from Tikhoretsk where it was blended with Urals. These initiatives were not implemented in part because ideas floated in meetings were not translated into official proposals even when AIOC shareholders expressed interest. But in part they were not implemented because Baku remained determined to have BTC constructed even though it was the most expensive route for the transport of oil, especially while prices were still recovering from the lows they had reached in 1998. As production at ACG rose, Transneft changed its position on tariffs, proposing to revise them upwards because they ‘had not been changed since 1996’.97 Pressure in 2005–6 became intense, as production continued to increase while BTC was still under construction. In March 2006, for example, up to 100,000 barrels/day were being transported via the Baku-Novorossiysk pipeline, reaching utilisation rates close to its full capacity.98 Azerbaijan’s bargaining position strengthened from June 2006, when the MEP became operational.

Pipelines and conflicts in the Caucasus The availability of BTC capacity became crucial in 2006, in the light of two factors. Firstly, the Baku-Supsa line had to be shut down after technical faults were discovered during inspection. The completion

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of BTC with spare pipeline capacity enabled the AIOC to continue exports via western routes. Secondly, in late 2006, Russia demanded much higher payments for the approximately 4 billion cubic metres of gas that it exported to Azerbaijan.99 Baku responded that the price of $230/1,000 cubic metres on which Gazprom insisted was too high, and that it would stop imports of Russian gas, turning instead to its indigenous production. However, in return, Baku would no longer use the Baku-Novorossiysk pipeline for exports, as more oil would be needed internally to compensate for the shortfall in gas by switching to oil products. Understandably, Azerbaijan needed only a portion of that oil for internal consumption, and the decision to stop using the Baku-Novorossiysk line was in retaliation for Russia’s actions. This quid pro quo policy response was made possible by the existence of spare capacity in the BTC pipeline. The above discussion highlights that the utilisation of the northern route through Russia varied with the output at Azerbaijan’s fields and the existence of spare capacity in other pipelines, such as BakuSupsa and BTC, which provided operational flexibility. But it also varied with the level of Russian-Azerbaijani political relations and the security situation in the Caucasus. The last became strikingly important during the Russian-Georgian military conflict in August 2008. Georgia alleged that Russian aviation deliberately targeted strategic oil and gas infrastructure on its territory. Moscow denied the accusation, but extended no guarantees that transport infrastructure would not become collateral damage. On 12 August 2008, BP shut down the Baku-Supsa pipeline as a precautionary measure. It also announced that it would suspend operations on the South Caucasus gas pipeline that runs from Baku to Erzurum in Turkey via Tbilisi. BTC had been shut down earlier that month, on 6 August, after an explosion and fire on the Turkish stretch of the pipeline.100 The Baku-Batumi route had to be closed on 16 August following an explosion that destroyed a key railway bridge. Attempts to redirect deliveries failed because alternative routes proved unsuitable for transporting liquid cargoes. Meanwhile, repairs on the Baku-Batumi route proved difficult given the presence of Russian troops in the area near the damaged bridge in Grakali, some 45 km from the capital. Over 1,000 wagons loaded with

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crude and oil products were stranded on the Baku-Batumi rail route, while stocks at Ceyhan had run out as early as 6 August.101 Baku-Novorossiysk now became the only operational export pipeline for Azerbaijani oil. SOCAR also began shipping crude to the Iranian port of Neka. Both measures were deemed essential to prevent costly shutdowns at the fields. A source at SOCAR explained that Azerbaijan had no choice but to export the crude to Iran as its own storage facilities were ‘overflowing’. He stated that exports to Neka would continue until either the BTC pipeline reopened or trans-shipments to Georgian ports resumed in full. It took almost three weeks to restart the flow of oil through BTC. On 23 August, the line began pumping 600,000 barrels/day – only half of its upgraded maximum capacity. The first two cargoes were loaded in Ceyhan three days later. Nevertheless, the security situation remained highly precarious, with an explosion on 24 August near Gori destroying up to 16 wagons loaded with crude.102 Lukoil was estimated to have lost some 1,000 tonnes of oil stranded en route to Batumi. Rail shipment partially resumed two days later, but the hostilities had led to the accumulation of 1,200 wagons on the Azerbaijani section of the Aktau-Baku-Batumi line loaded with Kazakh and Azeri oil, and this backlog took time to clear.103 In addition, four tankers carrying 31,000 tonnes of oil had arrived at Baku port from Turkmenistan and Kazakhstan on 11–25 August.104 The crude was due for trans-shipment to the international market via Batumi. But with storage full and all west-bound infrastructure non-operational, there was nowhere to send – or even unload – the cargo. The two-week war demonstrated the significance that Azerbaijan and Georgia had acquired as regional hubs for the transit of Caspian oil, but it also highlighted their vulnerability. The existence of multiple west-bound routes became virtually meaningless, as they all had to be shut down almost simultaneously either as a result of damage or out of precaution. Indeed, the BakuSupsa pipeline did not reopen until November because, according to one confidential source, ‘it was impossible to guarantee the security of the section in western Georgia’. Despite the resumption of flows via BTC, exports continued to be carried out through Novorossiysk and Neka.

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The availability of the Baku-Novorossiysk pipeline highlighted the operational flexibility that the geographical diversification of transport corridors provided in circumstances of force majeure. The pipeline, to which Azerbaijan had in 1996 conceded for strategic reasons of proceeding uninterrupted with the production of oil in its offshore and luring Russia into giving de facto consent to the division of the Caspian seabed, came to play a key economic role in enabling Azerbaijan to evacuate oil from the region when hostilities in Georgia erupted. Sceptics would say that in 2008, Azerbaijan had no choice but to send its oil through Russia, the very state from whose ambit it was seeking to break away, while Russia was demonstrating its military might across the border, thus forcing Azerbaijan (and Georgia) into compliance. However, given the outbreak of war – an event over which Azerbaijan had no control – evacuating oil through Novorossiysk was a real solution. This solution would not have existed in the absence of the Baku-Novorossiysk pipeline and would have forced the AIOC to shut down production at its fields. Importantly, this solution was temporary. BTC was built and acted – in line with Baku’s political preference – as the main export outlet for its oil. Once the exploded pipeline valve in Turkey was fixed and the armed hostilities subsided, the AIOC returned to the use of BTC as the MEP. Without the Baku-Novorossiysk pipeline and the political manoeuvring that surrounded its selection as a route for early oil, it is highly unlikely that Baku would have been able to develop the ACG complex and transport oil to international markets via Turkey. Russia would almost certainly have used its might to block offshore production and exports on the basis of the disputed status of the Caspian. In the very least, it could have raised the security risk to a level that foreign investors would have found unacceptable. By approving Novorossiysk as one of the exit points for its oil, Azerbaijan virtually solved its dispute with Russia over the Caspian seabed. The remaining disputes over the division of the Caspian with Iran and Turkmenistan are of a different order of magnitude to those Azerbaijan had with Russia because of this great power’s ability to inflict damage. A complex region, such as the South Caucasus, requires complex solutions. And although diversification has since 2009 become

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a buzzword in energy discussions in the EU, Azerbaijan has had to wrestle with the issue of constructing bypass pipelines since 1993. The solution it found lay in strategic manoeuvring that enabled it to send its hydrocarbons in several directions, thus moving away from the dominant regional power.

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CHAPTER 6 FROM EUPHOR IA TO PR AGM ATISM: THE EVOLUTION OF AZER BAIJAN’S POLICY TOWAR DS TUR KEY

As a neighbour, and a linguistically and culturally close nation, Turkey has for a long time been regarded in Azerbaijan as a fraternal state. At the popular level, many in Azerbaijan identify with Turkey, learn the Turkish language (which despite similarities is not identical to Azeri) and enjoy Turkish cuisine both in Baku’s numerous Turkish restaurants and at home while watching Turkish television channels. At the level of foreign policy, too, Turkey has been at the centre of attention, forming one of the core relationships of Azerbaijan as a state from the day of its independence. Indeed, having emerged out of the chaos that surrounded the dissolution of the Soviet Union, Azerbaijan received its first formal recognition as a state from Turkey. The expression ‘one nation, two states’, often used to describe Azerbaijani-Turkish relations, had a practical significance in the early 1990s. The perception of Turkey as not just a friendly but a fraternal nation made the country’s early decision-makers leap to the conclusion that Ankara was Baku’s natural ally, which would naturally come to its defence when circumstances required. Today, such idealised visions of Turkey appear naive. The Azerbaijani foreign policy establishment has long since moved to embrace a

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practical and pragmatic approach to foreign relations, including those with Turkey, and disputes of various kinds, masked under the thin veil of fraternity rhetoric, are not exceptionally rare. Yet in the early 1990s, when lack of knowledge and experience ruled the day and Azerbaijan found itself with a great, traditionally imperialistic power at its doorstep, a power which it accused of sponsoring Armenian ambitions on its territory, Turkey looked like the first – and only – port of call. During the early period after independence, which in the literature is often referred to as a period of ‘euphoria’, Baku gave little regard to the hard power calculations and geopolitical interests of other states. Euphoria was born out of decision-makers’ beliefs and perceptions of Turkey as a benevolent power and gateway to the West. But this perception of Turkey as an ally was reinforced and deepened by Baku’s grave circumstances, in which it had very limited access to the world and was desperately seeking to secure its independence and territorial integrity. The chapter will broadly distinguish between three stages in the evolution of Azerbaijan’s attitudes towards Turkey. The first stage (1991–3) was a period of grand hopes and expectations, which resulted from an overestimation of the degree of support that Turkey was willing and able to lend to Azerbaijan. Scarcity of knowledge about the Turkish policy establishment and its foreign policy priorities, coupled with an emotional official discourse that became common in both Baku and Ankara in the early 1990s, led to a policy of balancing with Turkey. To be sure, Turkey was eager to engage in Azerbaijan and Central Asia, and it was among the first to establish its presence in the former Soviet south. However, there were limits to this engagement imposed by its Kemalist foreign policy, which was inward looking with a traditional orientation towards the USA and the legacy of coexistence with the Soviet Union. The latter in particular came to dictate caution when dealing with the new Russian state. The second stage (1993–7), which began with Aliyev’s accession, was characterised by an improved understanding of Turkey’s limitations. The policy was reformulated in a way that no longer made ethnicity- and identity-based pan-Turkist ideals the core of Azerbaijan’s policy towards Turkey. Pragmatism and national interests became the foundation stones of the new policy of cooperation. As the policy

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evolved, Baku came to expect Turkish support on a host of issues, such as promoting Azerbaijan’s access to the West and maintaining diplomatic pressure on Armenia in the Nagorno-Karabakh dispute. However, during this stage, such support was not expected to be free, but was to be extended in exchange for valuable prizes, such as the engagement of Turkish companies in Azerbaijan and a commitment to build oil and gas pipelines through Turkish territory. A key characteristic of this stage was the creation of areas of mutual interests that would bind the natural allies. The third stage began in 1997 with the growth of US-Azerbaijani relations, which reduced Azerbaijan’s need to rely on Turkey as an intermediary with the West. The establishment of direct dialogue with an extra-regional great power enlarged Azerbaijan’s foreign policy space and enabled it to manoeuvre with greater prowess. This downgraded the importance of close ties with Turkey. Nevertheless, mutual interests created during the previous policy stage continued and were reinforced by the construction of the Baku-Tbilisi-Ceyhan (BTC) oil pipeline and the discovery of the Shah Deniz gas field, which spelled the need for a new gas pipeline to the West. Strategic friendship has thus evolved, taking on new aspects and lasting to the present day. Policy evolution has been gradual: as Azerbaijan became more proactive in its foreign policy, Turkey’s indispensability as a partner has waned. Common interests from the earlier period continued to bind Turkey and Azerbaijan together, but the expulsion of several Turkish companies from Azerbaijan demonstrated that Baku would seek to affirm its interests even at the expense of cordial relations with longstanding partners. The rising price of oil from the lows of the late 1990s to record highs in summer 2008 made the gas contract with Turkey look unprofitable, as it set a ceiling price for gas. Azerbaijan requested a price reopener, but negotiations proved difficult. The course of negotiations over the existing gas contract negatively affected another contentious issue – the Nabucco pipeline envisioned to carry Azerbaijani gas across Turkey to the markets of Eastern and Central Europe, terminating in Austria. Indeed, the implementation of Nabucco has been delayed by a number of issues, not all of which relate to Azerbaijan and Turkey. And yet, the

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poor state of Azerbaijani-Turkish relations directly affected Nabucco just as prospering relations a decade earlier had spearheaded the construction of the BTC oil pipeline. This chapter highlights that strong regional ties with Turkey remain important for Azerbaijan’s implementation of the policy of strategic manoeuvring. In their absence, key projects could suffer – projects that have been designed to strengthen Azerbaijan’s position regionally and internationally. This may deepen Azerbaijan’s reliance on Russia, over time encroaching on the small state’s flexibility to conduct its independent foreign policy.

Euphoria: The Elchibey period, 1992–3 This section assesses the influence of the Azerbaijani government’s perceptions of Turkey on its foreign policy decisions in 1992–3. Azerbaijan’s misinterpretation of the motives behind Turkish engagement in the region resulted in a soaring spiral of expectations, which the Turkish government was unwilling and unable to meet. The mismatch in perceptions led to the formulation of a heavily Turkey-oriented foreign policy course that estranged Russia and Iran, and jeopardised Azerbaijan’s goal of pursuing an independent foreign policy agenda. In 1989–92, Azerbaijani elites regarded the West as inherently protective and liberating, and Turkey was seen as an integral part of it.1 In 1992–3, this perception was reinforced by US-Turkish joint advocacy of the so-called Turkish Model. Azerbaijan’s affinity with Turkey was amplified through the pan-Turkist brotherhood discourse adopted by some Turkish leaders. The romantic admiration that Azerbaijani elites felt for their Turkish brothers across the border – a feeling that was widely shared by many ordinary Azerbaijanis – stemmed from the close ethnic and linguistic ties between the two peoples. Under President Abulfaz Elchibey, this feeling directly affected the foreign policy choices of the Popular Front of Azerbaijan (PFA) government.

Domestic factors The radicalisation of Azerbaijan’s domestic politics between August 1991 and June 1992 helps in explaining the uncompromisingly

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pro-Turkish bias in the PFA’s foreign policy course. In the referendum held in March 1991, Azerbaijanis voted in favour of preserving the Soviet Union. But nationalist sentiment was awakened following the intensification of the Nagorno-Karabakh conflict, when Azerbaijan felt an acute threat was being posed to its territorial integrity not just by Armenia but by Russia, which was regarded as a firm ally of Yerevan. This is the context that shaped the PFA’s political platform. Many PFA leaders belonged to the so-called historical preservation groups that sprang up in Baku State University and the Azerbaijani Academy of Sciences in the last months of the Soviet Union. These groups formed the core of the nationalist movement until the PFA seized power in June 1992.2 As a movement, the PFA built on feelings of negative nationalism, which appealed to the anti-Armenian sentiment of the public and sharply criticised the non-interventionist approach of the central authorities in Moscow. This period witnessed the emergence of romanticised visions of Azerbaijanis as Turks, who, it was argued, had been separated from their ethnic kin in Turkey by the Bolsheviks. Yesterday’s Sovietnurtured Azerbaijani intelligentsia turned to Azerbaijan’s pre-Soviet past to rediscover its ‘true identity’.3 This identity was cleansed of all Russian and Soviet elements, and laid heavy emphasis on a common Turkic (and often simply Turkish) ethnic and cultural heritage. Selectively, Azerbaijani nationalists relied on myths, memories, symbols and traditions to carve a new ethno-cultural identity for the crisis-stricken republic. Feeling increasingly uncomfortable, the Communist Party leadership in Baku (and Moscow) made sporadic attempts to silence PFA activists. However, the crude efforts of the special police produced results opposite to what was intended, adding to the visibility and popularity of the movement.4 Political developments in the months that followed included a dramatic increase in the popularity of the PFA, as its appeal widened to substantially larger segments of society. The PFA rapidly transformed into a political movement with a large nationalist constituency.5 In a 2002 interview, a former PFA leader, Yusif Samedogli, admitted that, although his government ‘understood the concept of democracy’,

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it had only ‘a vague idea of how to implement it’.6 The popularity of the nationalist discourse in the months prior to its accession to power and its lack of previous political experience led the PFA to carry over its anti-Russian and pan-Turkic aspirations from its time as a movement into its time in government. Added to this was the pan-Azerbaijani rhetoric that called for unification with the Iranian province of Azerbaijan, which was certain to antagonise Iran. A pan-Turkist discourse, which until then had been ignored by the outside powers, became a source of irritation for Russia and an unwanted burden for Turkey.

Misunderstanding motives The Azerbaijani government under the PFA underestimated the importance of institutional constraints within the Turkish foreign policy establishment. Its prevalent understanding of the situation was that, having discovered its ethnic kin in the former Soviet south, ‘our 50 million Anatolian brothers in Turkey’ would ‘naturally’ want to ‘establish the closest ties possible with Azerbaijan’.7 No distinction was made between the sentiments of the Turkish people and the foreign policy objectives of the state. By ascribing Turkey’s regional activism to kinship bonds, PFA leaders assumed that the Turkish foreign policy establishment was very receptive to public opinion. Statements in the Turkish press and the pronouncements of high-ranking Turkish officials added to the perception that Azerbaijan was Turkey’s foreign policy priority. Little thought was given to the question of why Turkey wanted to embrace the former Soviet periphery; the brotherhood rhetoric that dominated official discourse seemed sufficient and fully convincing to the Azerbaijani side. Turkish society eagerly embraced the idea of re-establishing contacts with long-lost Turkic brothers, especially in Azerbaijan.8 However, the public mood was not a factor that motivated the traditionally conservative and inward-looking Turkish Ministry of Foreign Affairs (MFA). This time too it proved insufficient to make it embark on an assertive course of action.9 Indeed, in an interview in late 1990, a top Turkish MFA official summarised Turkish foreign

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policy in the following terms: ‘Our policy has not changed. We do not want to interfere with internal Soviet politics. Pan-Turkism is a false dream . . . But I personally would prefer to see more independent Turkic republics.’10 It should not be forgotten that President Turgut Ozal – who was revered by many in PFA circles for his pan-Turkist ideas and rhetoric – had described the introduction of Soviet troops in Baku in January 1990 as an ‘internal problem of the Soviet Union’. He also did not fail to point out that the difference between Turks and Azeris was that the former were predominantly Sunni Muslims while the latter were Shi’a.11 Ostensibly, Ozal’s visit to Kazakhstan and Azerbaijan in March 1991 marked a change of heart in Turkish foreign policy. In the course of this visit, Ozal signed three agreements of cooperation with Baku and opened a consulate there. The PFA, which at the time was gathering strength as a movement, attributed tremendous importance to these diplomatic gestures.12 However, it was universally overlooked that Ozal had balanced his trip to the Caucasus and Central Asia with visits to Russia and Ukraine. In Moscow, he signed several agreements, including the Treaty of Friendship, Good Neighbourliness and Cooperation of 12 March 1991. This treaty was more comprehensive and advanced than anything signed between the Soviet Union and Turkey since 1945. According to it, the parties pledged to refrain from any threat or use of force against each other and to maintain their common borders. The latter clause referred not only to Kurdish insurgencies in Turkey but also to possible separatist tendencies among the Muslim Turkic peoples of the Soviet Union.13 In 1990–1, the Turkish foreign policy establishment was facing a problem. Its position as the southern flank of NATO and bastion against Soviet expansionism in the Mediterranean was rapidly declining, as Mikhail Gorbachev’s ‘new political thinking’ gained allies.14 Finding a new role to guarantee the country’s continued importance for the West became the central preoccupation of foreign policy-makers in Ankara.15 The decision to engage in the southern periphery of the Soviet Union was therefore due not to adventurism but to Turkey’s determination to re-establish its strategic value for the West and, particularly, the USA.

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In April–May 1992, Prime Minister Suleyman Demirel toured the area and offered $1.2 billion in import credits and loans. He also spoke of the possibility of establishing a Union of Turkic States and upheld Ozal’s idea of establishing a Common Economic Market. In addition, the Turkish government advocated building oil and gas pipelines through its territory in order to deliver Caspian energy to international markets. The idea of laying pipelines through the Caucasus was not new, having first been expressed in the course of Soviet-Turkish talks in 1989, but Turkey now seemed to emerge as the champion of such a project.16 This did not go unnoticed in Baku, and by 1993, a high-level protocol was signed with Ankara for the future construction of an oil export pipeline to Ceyhan. Turkey also encouraged the adoption of the Latin Turkish script – an essentially cultural policy but with significant political ramifications. It set up several cultural centres and joint business councils throughout the area and initiated cultural-educational exchanges. In early 1992, Turkish Airlines began to operate flights to Baku despite their unprofitability.17 By October 1992, Turkey’s Netas had installed digital switches in Azerbaijan to facilitate its telecommunications access to the world and ‘create a dependent relationship at an early stage’, whereby the republic would have to rely on Turkey for access to international lines.18 The Turkish government thus became active in establishing formal relations with and physical connections to Azerbaijan in an attempt to become an intermediary between Azerbaijan and the West. The Turkish government’s seemingly bold bid for the position of power broker was largely contingent on US support for the Turkish Model. Demirel’s visit to the region had been preceded by his official trip to Washington in February 1992, during which the Bush administration referred to Turkey as ‘the model of a democratic, secular state’ and a ‘beacon of stability in the region of changing tides’. Furthermore, a little more than a month prior to Demirel’s visit to Azerbaijan, in March 1992, Ankara had submitted a proposal to Washington, offering its good offices as a conduit for channelling funds, aid and ideas to the region.19 It was only after this proposal received explicit US approval that Demirel toured the area in April.20

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On this visit, Demirel, accompanied by a 140-strong delegation, spoke with utmost confidence about the forthcoming ‘Turkic century’, signed bilateral treaties and protocols, and inaugurated the Avrasiya satellite television network. In other words, once Demirel received US backing, he played his hand in the region with aplomb. The Bush administration began encouraging US companies to find Turkish partners for joint ventures in the region. It also urged Central Asian politicians and bureaucrats to travel to Turkey ‘to see a modern country at work’.21 Moreover, in May 1992, the Russian ambassador to Ankara, Albert Chernyshev, said Moscow recognised the ‘legitimacy of Turkish interests in Transcaucasia and Central Asia in the domain of political, economic, and cultural contacts’.22 In the same year, Turkey and Russia signed a cooperation agreement, which reassured Ankara of Moscow’s favourable disposition towards its regional presence.23 Ankara remained attuned to Russia’s interests in the region; however, Azerbaijan came to believe that by embracing the Turkish Model, it was distancing itself from Russia, and allying with Turkey and, de facto, the USA. Several factors led PFA decision-makers to overestimate Azerbaijan’s value to Ankara. First, Azerbaijani leaders met mostly those Turkish MFA officials who were assigned to work in the region, often as a result of their interest in and enthusiasm for the area. Many of these diplomats believed in the need to unify the Turkic peoples, a belief that was not widely shared in the Turkish foreign policy establishment. That these officials were mavericks in the very establishment they were supposed to represent substantially complicated the PFA’s task of deciphering Turkey’s actual foreign policy priorities.24 Secondly, occasional statements by the highest-ranking Turkish officials, reminiscent of the pan-Turkic ideational discourse, resonated favourably with Elchibey and his allies, strengthening their already pronounced pro-Turkish sympathies.25 For instance, the apparent aspiration to build ‘a gigantic Turkic world, stretching from the Adriatic to the Great Wall of China’, voiced by Demirel during his 1992 visit to Azerbaijan, became a single most-cited quotation on the region and was taken in Baku as an expression of Turkey’s foreign policy ambitions.

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Indeed, the fact that Demirel included Alparslan Turkes, an outspoken pan-Turkist and the head of the Nationalist Action Party, in his entourage on the 1992 official trip to the region was interpreted as a signal of the seriousness of Turkey’s pan-Turkist aspirations. Moreover, repeated Armenian claims that Azerbaijanis were Turks – and not merely of Turkic ethnic stock – reinforced the perception of Azerbaijan’s Turkishness, pushing Elchibey and his government to try and ally even closer with Ankara.26 Thirdly, following Demirel’s visit to the region, the Turkish government became noticeably more active in forging relations with the Turkic states. In a flurry of diplomatic activity, summits were followed by reciprocal ministerial visits, business study trips, conferences and other high-level contacts. The size of the Turkish delegations ‘seemed guaranteed to give the impression that extensive cooperation was taking place on a variety of different levels, and to ensure that such an impression received maximum publicity’.27 Virtually all meetings ended with the signing of some bilateral cooperation treaty, raising the number of Turkey’s agreements with Azerbaijan and the states of Central Asia to over 140 by February 1993. In the light of Turkish diplomatic endeavours, the PFA government was not unjustified in expecting it to act as its most reliable, indeed natural and strategic, ally.28 Meanwhile, a mismatch between Turkish rhetoric and action was becoming increasingly apparent. An early warning signal to the Azerbaijani government should have come during the first conference of the Turkic states, which was hosted by Turkey on 30–31 October 1992, but was not given an official name. The event coincided with the 69th anniversary of the Republic of Turkey, which gave the government the necessary leeway not to give the conference a formal title, although it became known retrospectively as the first Summit of the Turkic States. All subsequent Turkic conferences went by this name, but the point remains – Turkey played safe in deciding not to advertise the event as an official gathering of Turkic states under its leadership. Moreover, at this same conference, President Ozal made it unequivocally clear that Turkey’s economic and foreign policy relations with Russia ‘continued to be of primary importance’.29 Incidentally, the same message was conveyed by Prime Minister Tansu Çiller when, on

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a 1993 visit to Moscow, she drew attention to the fact that her first visit as head of the Turkish government was to Russia.30 The sentiment of continued deference towards Russia was echoed by the presidents of the Central Asian states, who remained vigilant and reluctant to join any kind of a new ‘union’. In contrast, the Azerbaijani leader was vocal in his sincere desire to forge a partnership and, preferably, an alliance with Turkey. The failure to reach a consensus on any of the major issues that would bring Turkey and the Turkic states closer together revealed a glaring gap between words and action, and fell substantially short of the expectations of the PFA government. The misunderstanding of Turkey’s motives led Elchibey and his advisers to overestimate the nature and extent of support that Turkey was prepared to give to Azerbaijan. The efforts to ally with Ankara were a direct consequence of this misunderstanding. The degree to which PFA decision-makers failed to recognise Turkey’s foreign policy limitations became strikingly apparent at the height of the 1992–3 Armenian attacks on Nagorno-Karabakh and surrounding regions of Azerbaijan proper. Following the occupation of the Azerbaijani region of Agdam by Armenian forces in June 1993, Turkey engaged in active telephone diplomacy with US President Bill Clinton, German Federal Chancellor Helmut Kohl, French President Francois Mitterrand, British Prime Minister John Major and Russian President Boris Yeltsin. The Turkish government argued that Armenia had violated the UN resolution of April 1993 and urged world leaders to refer the issue to the UN Security Council.31 Turkey proposed deploying UN peacekeeping forces along the Armenian-Azerbaijani border and demanded the imposition of sanctions on Armenia if it did not withdraw from the Azerbaijani territories. President Demirel, Prime Minister Çiller and Foreign Minister Hikmet Çetin also undertook efforts to pressure into action the CSCE chairman-in-office, Swedish Foreign Minister Marta Margaretha af Ugglas, and the chairman of the Minsk Group Italian Deputy Foreign Minister Mario Raffaelli. Earlier that year, Turkey had sealed its border with Armenia, initially preventing all deliveries through its airspace.32

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The Azerbaijani side was not satisfied, however, and summoned the Turkish ambassador to Baku, Altan Karamanoglu, to protest against ‘Turkish inaction’.33 Karamanoglu said Turkey would ‘never do anything to harm Azerbaijan’, but was told that the Azerbaijani government expected Turkey to move in troops and ‘stand by Azerbaijan to defend it’.34 Karamanoglu replied that military assistance to Azerbaijan would only be undertaken within the framework of international organisations and ‘by no means unilaterally’.35 In its refusal to intervene on the side of its Azerbaijani brothers across the border, the Turkish government had to withstand not only pressure from Baku but also rising popular discontent within Turkey. In Demirel’s words, ‘we are being pushed, and we are under pressure from pro-Azerbaijani public opinion. People say we should intervene. Actually we can intervene, but that won’t be the end of the problem. Maybe the problem will start when you intervene.’36 This stance reveals the underlying pragmatism of Turkish foreign policy. According to Demirel: Turkey would not act alone militarily . . . Foreign policy cannot go along with street-level excitement . . . [Intervention] would plunge Turkey into such trouble that we would be unable to disentangle ourselves in 20 years and it would turn the matter into a Muslim-Christian conflict.37 Elchibey’s repeated pleas for a bilateral security treaty met with firm resistance from the Turkish government. In fact, Turkey was often wary of extending the Elchibey government any military or logistical support, which came as a genuine shock to Baku. Elchibey complained: ‘I wanted two printing houses and four helicopters, but they did not give them. What can I ask for after this?’38 Despite its staunch refusal to become openly involved in the conflict, Turkey covertly sent in military advisers to ‘help train and advise Azeri forces’.39 Turkey also accepted 140 students at its military academies but warned that the results of this training would not be seen ‘for five or ten years’.40 Turkish diplomatic efforts failed to stop the war, while gestures of bilateral support proved inadequate in the face of rapid Armenian

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advances into Azerbaijan. This situation highlighted the mismatch between Turkish policy constraints and its earlier expansionist, panTurkic and even great power rhetoric. Speaking retrospectively, the PFA deputy ambassador to the USA, Jayhun Mollazade, expressed an understanding of Turkey’s position. In his assessment: Maybe under Elchibey, the government had great expectations of Turkey. Maybe it was unrealistic to expect this, since there are limits to what Turkey can and cannot do for Azerbaijan and generally for the region. But in a situation where Armenian forces were actually receiving strong Russian military backing, Elchibey was expecting the same kind of military backing from Turkey. But Turkey is a NATO member and, of course, it was not able to provide that kind of assistance. Further, it had many of its own domestic and other problems and was unable to commit itself to the kind of assistance that the Russians rendered to the Armenians of Nagorno-Karabakh and generally to Armenia.41 Turkey’s model of development was designed primarily to prop up its geostrategic value for the USA, and it used pan-Turkist discourse to make the model more appealing to the Turkic states. In 1992, the PFA leadership failed to see that, at its core, the Turkish foreign policy establishment remained true to its Kemalist foreign policy with its steady orientation towards the West. Paradoxically, the PFA’s unconditionally pro-Turkish stance reduced any gains from the Azerbaijani-Turkish partnership, as Turkey became increasingly anxious not to jeopardise its relations with Russia. Asked to comment on pan-Turkism in June 1993, the Russian ambassador to Baku, Valter Schonia, stated: A Russian empire is certainly a bad thing, but a Turkish empire is even worse. Pan-Turkism is also a variant of the imperial ambitions, that are nurtured by some circles in Turkey. For instance, a while ago, the director of Konya University spoke on Azerbaijani television about the necessity of building a single Turkish state in the twentieth century. The Turkic-speaking republics of the

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former Soviet Union would join this state in a single union. However, there is nothing but disappointment that awaits these people.42 Indeed, Elchibey’s focus on the ethnicity discourse led him to overlook the nature and extent of Russian-Turkish relations. Militarily, Turkey continued to see Russia as an important security threat, which was not to be antagonised.43 At the same time, Russia was rapidly emerging as Turkey’s second-largest partner in official trade, while unofficial or suitcase trade was double the amount of the official turnover.44 By 1994, over 58 per cent of Turkey’s total trade with the former Soviet states was with Russia. Turkish construction firms had been working under contract in Russia since 1987, the value of which in ten years exceeded $10 billion.45 In 1984, Turkey signed a contract with the Soviet Union to import 120 billion cubic metres (bcm) of natural gas over 25 years, and its gas imports from Russia had risen to 14 bcm per annum by 2002.46 When pan-Turkism became an irritant in Turkish-Russian relations, Ankara sacrificed its lesser political interest in Azerbaijan for the sake of maintaining bilateral relations with Russia. In February 1993, Turkish government adviser Professor Hasan Koni complained: ‘It is the Americans who told us that we were going to be a big power because Washington wanted a counterweight to Iran. Now we have come to believe it ourselves. But we cannot even keep our promise to Central Asia.’47 US’s waning enthusiasm for the Turkish Model became apparent in late 1992 and early 1993, thus adding political expediency to the need to maintain friendly relations with Russia. Counterfactually, it is clear that had Azerbaijan assumed a more balanced foreign policy stance, Ankara could have deepened its partnership with Azerbaijan without damaging its relations with Russia. The failure of the Turkish Model to elicit the level of Western interest that the Turkish MFA had expected meant that the PFA foreign policy course became a liability and, occasionally, a source of embarrassment to the Demirel government. An essential factor shaping Azerbaijani foreign policy behaviour under the PFA was its perceptions of Turkish regional initiatives. The

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pan-Turkic discourse, with its occasional replacement of the word ‘cooperation’ with ‘integration’, and the emphasis on cultural and ethnic affinity between the two peoples, were accepted without further scrutiny because of the prevalent belief in PFA decision-making circles that Turkey and Azerbaijan were kin nations and natural allystates. Consequently, perceptions of Turkey’s intentions were shaped by beliefs and ideas already held by PFA policy-makers and subsequently reinforced through Turkish overtures. Throughout 1992–3, Azerbaijan remained a passive, albeit a highly enthusiastic, recipient of Turkish policy. On the other hand, Turkish foreign policy towards Azerbaijan was also influenced by perceptions, as Ankara based its actions on the expectation of greater US support for its activities in the region, which would endow Turkey with a new regional role and status. There were, however, limits to how long perceptions could determine the two states’ foreign policy behaviour. The domestic implications of foreign policy examined in the next section highlight the linkage between the domestic and foreign policy of small states, and demonstrate the need for the change in the country’s foreign policy course that took place in 1993.

Domestic consequences and impact on regional states The PFA’s pro-Turkish foreign policy stance had repercussions for domestic politics as the government of the new post-Soviet state faced the challenge of constructing an identity for a complex mix of people with diverse ethnic, historical and religious roots. The government’s favourable response to the suggestion from the Turkish Ministry of Education to adopt the Turkish Latin script and standardise history textbooks in schools throughout the Turkic states had a direct bearing on Azerbaijan’s domestic agenda. These policies initially enjoyed wide popularity among the large sections of the ethnically Azeri population. They were even popular in Azerbaijan’s intelligentsia, which turned to the country’s Turkish cultural and linguistic heritage in an effort to fill the identity void created after the Soviet collapse. According to a survey conducted

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in 1992–3 by the Turkish journal Ipek Yolu (Silk Road), of the five Turkic states of the former Soviet Union, Azerbaijan was the most pro-Turkish, scoring 8.6 out of 10. It was followed by Uzbekistan (7.9), Turkmenistan (7.2), Kyrgyzstan (5.9) and Kazakhstan (3.7).48 However, the same policies that were proving popular in the capital and those parts of the country inhabited predominantly by ethnic Azeris caused discontent among Azerbaijan’s numerous ethnic minorities. This was notably the case with the Talysh and Lezghins, who did not identify with Turkey. The government’s willingness to ‘import’ and impose many elements of the Turkish identity resulted in two types of mutually reinforcing negative developments. Firstly, the process of Turkification affected Azerbaijan’s national cohesion, leading to vociferous protests and threats of secession by ethnic communities. Secondly, these secessionist demands were encouraged and, in some cases, financed by Russia and Iran, who viewed the PFA’s pro-Turkishness as a threat to their own interests in the region. Hence, when faced with the possibility of being excluded, Russia and Iran used ethnic groups inside Azerbaijan as access channels to intervene in Azerbaijani domestic politics and destabilise the situation from within.49 The first ethnic group dissatisfied with the PFA’s attempts to Turkify the country was the Azerbaijani Lezghins. According to unofficial statistics, the number of Lezghins in Azerbaijan at the time may have approached 500,000.50 Although, as an ethnic minority within the Azerbaijan Soviet Socialist Republic, the Lezghins had neither territorial nor cultural autonomy, they had largely preserved their distinct ethnic identity.51 The authorities in Moscow used this to their advantage when they sought to establish a state border between the Russian Federation and Azerbaijan – a move that was as ingenious as it was simple. On hearing that Lezghins in Azerbaijan and Russia would be divided by a border, several leaders of the Lezghin national movement, Sadval, warned that this would force them to take up arms.52 Azerbaijani Lezghins proclaimed that, instead of being separated by a border, they would rather join Dagestan and become part of the Russian Federation. At the same time, a contingent of troops from the

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Russian Ministry of Internal Affairs was sent to Dagestan allegedly to assist in setting up the border and prevent the situation getting out of control. This version of events was received with scepticism in the Azerbaijani Ministry of Internal Affairs, which suspected the Russians of supplying the Lezghins with arms and ammunition.53 Severely miscalculating the situation, the PFA government decided to settle 105,000 refugees from Karabakh in districts of Azerbaijan that border Dagestan. A move that was apparently intended to dilute the crisis was perceived as an effort to dilute the Lezghin population. Given the superficial assimilation of Azerbaijanis in Lezghin communities, the decision to add more Azerbaijanis to the area only contributed to the aggravation of the crisis.54 The Lezghin minority continued to remain susceptible to Russia’s influence and manipulation. In 1998, when Moscow voiced its dissatisfaction with Aliyev’s pro-Western orientation, Nezavisimaia Gazeta wrote: ‘Heydar Aliyev is sowing the Caspian region with seeds that in a not-so-distant future may yield unforeseen crops . . . How cosy will Azerbaijan feel if the problem of Lezghistan received a new impetus?’55 The presidential adviser on foreign affairs, Vafa Guluzade, assessed the article as containing a hidden threat to stir up secessionist sentiments in Azerbaijan’s north. Interestingly enough, the problem of Lezghistan resurfaced again between August and October 2002, just as Azerbaijan, Turkey, Georgia and a consortium of international oil companies began the construction of the BTC oil pipeline to the West. Elchibey’s pro-Turkish ethnic discourse encouraged the development of a separatist sentiment among another ethnic group on the territory of Azerbaijan – the Talysh. Because the Talysh had succeeded in preserving their essentially Persian identity throughout the Soviet period, Elchibey’s Turkification campaign alienated and embittered many of them. It is hardly surprising that they felt receptive to Iranian incitement. According to sources in the Azerbaijani Ministry of Internal Affairs, Iran ‘intensely proselytised Islam’ and ‘certainly extended the Talysh active financial support’.56 In June 1993, the Talysh, under the leadership of Alikram Gumbatov, proclaimed the formation of an autonomous Talysh-Mughan

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Republic,57 which came to be widely seen as Iran’s efforts to set up a ‘puppet regime’.58 The secessionist attempt might have succeeded had it not coincided with Elchibey’s ousting from power. In his televised address to the nation, Aliyev harshly criticised Gumbatov’s actions and, without accusing anyone directly, stated that ‘at the foundation of this process is an aspiration on the part of both external and internal forces to dismember Azerbaijan into smaller states’.59 The PFA’s simplified approach to the Turkish aspects of Azerbaijan’s national identity led it to underestimate the explosive potential of secessionist sentiment within the non-Azeri segments of the population. The existence of ethnic minorities in the country that shared linguistic, cultural and religious links with groups in the neighbouring larger states created informal links to those states, making covert external intervention by Moscow and Tehran easier. This situation had domestic consequences, but it also affected the foreign policy of all the states concerned. Firstly, the PFA’s unconditionally pro-Turkish stance alienated Russia and highlighted its need to formulate a policy for what it called its ‘near abroad’ that would assert Moscow’s interests in the southern periphery of the former Soviet Union. The policy was in the 2000s revisited under President Vladimir Putin and re-evaluated, almost retrospectively, in a more assertive direction to make official doctrine reflect the reality of Putin’s Russia. However, in the early 1990s, when Russia under Yeltsin’s leadership was eagerly shedding its Soviet legacy, the emergence of the concept of a near abroad, where Moscow claimed the right to pursue its legitimate interests was a response to the developing international situation. This was defined by progressive disillusionment with the USA and continuous irritants in the form of new states on Russia’s borders, which sought to distance themselves from Moscow and join the West. The tendency, despite variations in its manifestation, was the same from the Baltic states to Georgia and Azerbaijan. Frustration built rapidly and, coupled with Russia’s dislike of pan-Turkism, may have also contributed to the Russian-Armenian rapprochement. Secondly, the PFA ethnicity rhetoric did not end with Turkey, as Elchibey was fond of speaking of the ultimate goal of unifying

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‘northern’ and ‘southern’ Azerbaijan, by which he meant the current Republic of Azerbaijan and that part of north-western Iran which is inhabited by Azeris. Figures as to how many Azeris live in Iran vary, with advocates of the cause usually claiming 20–25 million ‘Azeris and Turks’. The term ‘Southern Azerbaijan’ has an irredentist and politically sensitive connotation, and its use by the PFA government proved to be an irritant at the very early stage of the formation of Iranian-Azerbaijani relations. Raising a larger state’s concern over its territorial integrity was not the best way to start diplomacy, especially as the newly formed Azerbaijani state was collapsing under aggression from Armenian forces. What Azerbaijan needed most in this situation was an ally – which it understandably, even if not very subtly, sought to secure in Ankara. However, from Iran’s perspective, this only exacerbated a tense situation. Along with suspicions of Baku’s intentions in Iranian Azerbaijan, Tehran became apprehensive of being regionally marginalised, as Turkey and the USA moved in to establish themselves in a politically fluid area. The region was understood to be susceptible to manipulation, and allowing it to come under the influence of the USA – or Turkey as its proxy – was regarded in Iran as synonymous with creating an anti-Iranian base across the border. That outcome was to be avoided, and various means could be used to that effect, including the encouragement of religious sentiment among Azerbaijan’s Shi’a population. Furthermore, the perception of a regional threat led Tehran to improve relations with Azerbaijan’s arch-enemy Armenia – a somewhat counterintuitive move given Iran’s rhetoric of Muslim solidarity. Thirdly, the PFA’s efforts to ally with Turkey reduced the scope for cooperating with it. Indeed, the lukewarm US response to the Turkish Model meant that a Turkish alliance with Azerbaijan was not on the cards. Baku’s rhetoric proved clearly detrimental to its objectives. Moreover, it could have reaped greater benefits through strategic manoeuvring than a strategy that aspired to a full-fledged alliance. Yet under conditions of a raging war and massive territorial losses, no government is likely to have been able to conduct the subtle and intricate diplomacy that the complex regional configuration of interests

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required. The lesson that alliance-building was not an option was learnt by the PFA’s successor government, whose policy proved to be far more nuanced and successful. What is important to note here is that the policies of the small state – good or bad – did not pass unnoticed: they made a difference regionally, forcing the governments of other states to respond, which, in turn, affected the external environment in which Azerbaijan operated and to which it was called to respond.

The origins of strategic friendship: early Aliyev period, 1994–7 Heydar Aliyev came to power in June 1993. His accession marked a new era in the country’s foreign policy, characterised by not only a greater complexity of goals but also a greater clarity of vision than under Elchibey. His approach to Turkish-Azerbaijani relations was not devoid of rhetorical flourish and, faced with an extremely complex geopolitical situation, Aliyev too briefly sought an alignment – though not an alliance – with Turkey. This policy was soon abandoned, however, giving way to an increasingly pragmatic approach that guides Baku’s foreign policy towards Ankara to the present day. Turkey became an important strategic partner, whose support was essential if Baku was to realise its key foreign policy goals, such as the export of oil and gas to international markets bypassing Russia. But Baku no longer over-relied on Ankara. This moderation of expectations led to the alignment of Turkish and Azerbaijani interests in 1994–2003. Subsequently, interests began to diverge on some key issues, such as Turkey’s relations with Armenia and its role in the Nabucco pipeline, but the existence of oil and gas infrastructure that binds the two countries together has helped to maintain the relationship. Aliyev’s complex and multi-dimensional views of foreign policy enabled Azerbaijan to construct a new type of relationship with Turkey. On his accession, peace and security became Aliyev’s guiding foreign policy principles, which resonated favourably not only with Turkey but also with Russia, Iran and the USA. The PFA’s pro-Turkish policy had

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brought the country to the brink of civil war, and to regain control of the situation, Aliyev needed to minimise the interference from the larger states in Azerbaijan’s internal affairs. He also needed to stop the war with Armenia. These two factors created paramount risks, which, coupled with the general internal instability and collapsing economy typical of many former Soviet states at the time, had driven away the first wave of investors who showed interest in Azerbaijani oil. Aliyev set out to achieve these goals by persuading the larger states that Azerbaijan was interested in stability and territorial integrity, which in addition to non-interference in the country’s affairs and a ceasefire in Karabakh meant the abandonment of any ambitions to instigate irredentism in Iranian Azerbaijan. In 1996, reflecting on the achievements of his first years in power, Aliyev stated: Stability is a vitally important achievement . . . Without stability, a country can’t attract foreign cooperation. I want to bring foreign investment to Azerbaijan. Stability that we’ve created here in Azerbaijan has induced foreign investors to express their interest to get involved with us . . . Stability has brought about our greatest achievements of the past two years.60 The first president of the Azerbaijani International Oil Consortium (AIOC), Terry Adams, agrees. In his recollection of the situation, Adams writes that negotiations for a single consolidated contract encompassing Azerbaijan’s giant fields – Azeri, Chirag and Deepwater Guneshli (ACG) – started only after Aliyev ‘reasserted political authority in Baku: firstly as head of parliament and then as elected president’.61 Turkey, which was forced to redefine the extent of its involvement in the region following the loss of US support for the Turkish Model, viewed Aliyev’s goal of stability with relief. Ercan Ozer of the Turkish MFA stated that the years of ‘soul-searching’ were now over, and that the leaders of both Turkey and Azerbaijan had understood that ‘regionalism without realism will not work’.62 Yet not everything was clear-cut and simple in Turkish-Azerbaijani relations. Although Ankara had scaled down the scope of its regional

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ambitions, Azerbaijan came to be entrenched in its strategic perimeter and policies pursued in Azerbaijan or towards Azerbaijan came to have a bearing on Turkey.63 The country had also emerged as an area of interest and concern for the Turkish military, and Ankara became reluctant to see Baku re-enter Moscow’s exclusive sphere of influence.64 Indeed, the fear of losing its influence in Azerbaijan prompted Turkey to recognise the Aliyev government quickly following the change of power in Baku. In the course of his first official visit to Ankara on 7–9 February 1994, Aliyev sought to reassure the Demirel government that ‘friendly and brotherly relations that ha[d] already been established between Turkey and Azerbaijan [would] be neither torn nor shattered’.65 Far from wishing to rupture relations, Aliyev hoped to stop the war with Armenia – with Turkish help. Unlike Elchibey, he pinned his hopes for Turkish support on the fact that Azerbaijan’s newly normalised relations with Russia would make Turkish involvement more politically acceptable. For this purpose, Aliyev consistently portrayed the conflict as being between Armenia and Azerbaijan, not Armenia and Russia against Azerbaijan, as Elchibey had so often done in the past. It is unlikely that this tactic would have worked in the past; it was even less likely to work in the post-Elchibey period, when both Russia and Iran were on the alert, suspecting that Turkish-Azerbaijani cooperation was in fact an attempt to create – with US encouragement and support – an alliance against them. Again, Turkey came to face a dilemma: it did not want to lose its newly acquired influence in Azerbaijan; yet it was wary of encroaching on Russia’s regional interests. As before, it made a choice in favour of tolerating a smallerscale conflict in Nagorno-Karabakh in order to avoid its ‘internationalisation’, a consequence with which Marshal Yevgenii Shaposhnikov threatened the regional powers.66 But Aliyev’s early policy (in late 1993–early 1994) probed the possibility of aligning with Turkey. This aspiration was prompted by the need not only to stop the military conflict but also to regain the lost territories. That the early Aliyev leadership had expectations of Turkey was apparent from a series of speeches that he delivered during his visit to Ankara. In one such speech, Aliyev invoked the ‘bridge of hope’ that

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had opened between Turkey and the Azerbaijani exclave of Nakhchivan in 1992. He said that the expression was not incidental given that ‘for all these long years, for 70 years, Azerbaijanis looked up to their Turkish brothers with admiration and hope’.67 Aliyev then emphasised that the Azerbaijani army was still at the incipient stage of development: Although in general we favour a peaceful settlement to the conflict, we are waging a just war to free our lands. We need to see, to have negotiations and consultations with Turkey, our brother and our friend. I believe that during this visit we will speak of creating ties in economic, trade, technological, educational, humanitarian and other spheres.68 The first and the last sentence in that quote suggest that, during that visit, military consultations rather than educational exchanges were the key item on Aliyev’s agenda. The aim of the visit was made more explicit when Aliyev admitted that he intended to raise the question of ‘Armenian aggression and ask the advice of the Turkish leaders’.69 The expectation of military support was reinforced in his concluding statement, when he said: ‘If you get offended by someone, if you pin hopes on someone, that means you expect help from them. We have come to you with these feelings and these thoughts and we hope that you will understand us correctly.’70 Aliyev was sending an unambiguous signal: despite the earlier disappointments, Azerbaijan continued to see Turkey as its most obvious – indeed only – ally, to which it turned in times of need. Aliyev’s enthusiasm was thinly concealed when he stated, ‘I have no doubt that our brother, our friend [would] not spare us its support. It is with these hopes that I await the continuation of our negotiations and the signing of new agreements.’71 In his diplomatic plea, Aliyev appealed to Turkey at several levels simultaneously. Firstly, he addressed the Turkish public when he mentioned the ‘admiration’ of the Azerbaijani people for their ‘Turkish brothers’. Secondly, he appealed to President Demirel personally by invoking their 25-year-old friendship. Thirdly, he flattered the government by referring to Turkey as a ‘great state’ and placing it in the same rank as the USA and Russia.

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Nevertheless, the Turkish government remained true to the understanding that Prime Minister Çiller reached with Russian President Yeltsin in September 1993. Its essence was that Turkey would not interfere in the conflicts of the former Soviet Union, thereby acting as a ‘guarantor of regional stability’.72 Another factor that the Turkish government could not afford to neglect was the warning of Russian Defence Minister Pavel Grachev that Russia would stop selling weapons to Ankara if it became engaged on the Azerbaijani side.73 Aliyev’s statements in the aftermath of the negotiations in Ankara contrasted with his earlier discourse. There were no more references to Turkish aid, except in international forums and by peaceful means only: I would like to ask that in the future Turkey continue to help Azerbaijan to solve this problem [Karabakh] peacefully and through agreements in the international organisations, the CSCE and its Minsk Group. I am confident that Turkey will not deprive us of this help. Meanwhile, we will gather all our might to fight, to strive for the liberation of our occupied territories and we will restore Azerbaijan’s state and territorial integrity.74 Aliyev could scarcely conceal his disappointment. Yet the earlier use of neutral terms, such as ‘consultations’ and ‘advice’, allowed him to maintain good relations with Ankara as well as other regional states when negotiations failed. A ceasefire with Armenia was negotiated with Russian help in May 1994, although the situation remained precarious. Moreover, Aliyev cleverly did not make cooperation in other areas – especially oil pipelines – contingent on Turkish assistance in the conflict.75 Turkey remained Azerbaijan’s only link to the West, and, in an effort to forge ties with the Western countries further afield, Aliyev turned his attention to the project of oil pipelines that would carry Azerbaijani oil via Turkey to international markets. Negotiations with foreign investors over oil production from the ACG fields had already been under way for some time. The criteria that Aliyev used to select investors for the international consortium and the terms of the contract, which was subsequently dubbed the

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‘Contract of the Century’, advanced Azerbaijan’s goal of not falling back into the Russian sphere of influence. This is discussed in detail in the next chapter. Here suffice it to say that the unsuccessful negotiations with Turkey in February 1994 led Baku to put even more emphasis on oil as a diplomatic instrument. Oil now came to be seen as ‘the fundamental vehicle from which international political support could be derived and national independence from Russia secured’.76 From 1994 onwards, negotiations over oil production would be complemented with the diplomacy of oil pipelines. By October 1994, the idea of an oil pipeline to the Turkish terminal of Ceyhan had been revived, attracting Turkish and some US interest. Turkey gradually transformed its earlier Turkic world policy into a trans-Caspian policy, in which Azerbaijan was a key state. Unsurprisingly, Baku actively promoted it.

Pipeline friendship Excellent working relations with Turkey were necessary if the idea of a westward pipeline to Ceyhan was to take root. The reason for this was that the so-called Contract of the Century, signed in September 1994, considered the Turkish route for evacuating Azerbaijani oil merely as an option, not a contractual commitment. This flexibility had been built into the contract to satisfy the foreign investors. The Turkish option, which Baku preferred, competed seriously with the northern Russian route via Novorossiysk which, to be sure, Baku also believed to be necessary. However, from Baku’s perspective, the capacity of the Russian pipeline was to be limited and serve primarily the political goals of maintaining stable relations with Russia and receiving de facto recognition of Azerbaijan’s offshore development. The latter was crucial in the absence of a settled legal regime in the Caspian Sea. Eventually, both the Russian and the Turkish routes were implemented, but Turkey became the country to export the bulk of Azerbaijan’s oil – the so-called main oil. This outcome was the result of Aliyev’s vision of where most of Azerbaijan’s oil had to flow and how the interests of other parties – first and foremost Russia – could be kept sufficiently satisfied to allow

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the bypass project to go ahead. But the implementation of this vision encountered opposition from a number of quarters, including, in 1994, from the AIOC, in which several foreign companies objected to investing in a new pipeline when the existing one to Russia could be used to deliver main oil to the international markets. Upgrading the existing oil infrastructure connecting Azerbaijan to Russia and reversing the pipeline, which in the Soviet era had been used to transport Russian crude to Azerbaijani refineries, was far cheaper than building a new pipeline even to Georgia, let alone Turkey. However, it did not satisfy Baku’s main criterion in oil diplomacy – independence from Russia. To make the route via Turkey more appealing to foreign investors, Aliyev sought to reduce regional transit risks to the West by establishing strategic ties with Georgia and Turkey. This created a contrast between the western option for evacuating Baku’s main oil and the Russian route, part of which was immediately affected by the war in Chechnya. Indeed, the proximity of the western route to NagornoKarabakh was also a source of risk, but a ceasefire had been negotiated, and preserving it became of strategic importance for the conduct of Azerbaijan’s oil diplomacy. It remains equally paramount to the present day, as the security of the oil and gas infrastructure built over the past decade depends on regional stability. Moreover, the prospects of the EU-backed Nabucco gas pipeline are also influenced by whether a military conflict can be kept at bay. Aliyev understood that strategic brotherhood with Turkey would widen Azerbaijan’s manoeuvring space and enhance its bargaining position with key AIOC investors. Ultimately, it would allow Baku to distance itself from Moscow by acquiring greater independence in exporting its strategic commodity to international markets bypassing Russia. Baku and Ankara shared the understanding that a pipeline through Turkish territory was in their bilateral strategic interest. From Ankara’s perspective, it would not only meet Turkey’s energy demands but also enable it to act as ‘an indispensable partner [of the USA] in regional energy cooperation projects and geopolitical arrangements in and around the Caspian Basin’.77 From the Azerbaijani perspective, the pipeline would provide a physical link to the West and reduce its economic and political dependence on Russia. If the pipeline attracted

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US interest, it would enhance Azerbaijan’s goal of securing an extraregional great power ally. After a confidential meeting with Demirel in late October 1994, Aliyev declared that Azerbaijan recognised Turkey’s ‘indisputable right’ to construct a strategic pipeline running through its territory.78 Demirel reacted by officially proposing the Caspian-Mediterranean Pipeline Project in December. The proposal envisaged routing Kazakh and Azerbaijani oil through two interconnected pipelines from the Kazakh field of Tengiz and Baku’s ACG fields to the Turkish export terminal of Ceyhan on the Mediterranean.79 The pipeline would have a capacity of 45 million tonnes (20 million tonnes of Kazakh and 25 million tonnes of Azerbaijani crude) and an estimated length of 2,500–2,700 km. The Baku-Ceyhan leg of the pipeline was estimated at 1,500–1,700 km. Turkey declared that it would not object to the pipeline crossing either Georgia or Armenia, thereby leaving the final decision to Azerbaijan. But Turkey wanted firm guarantees that the pipeline for main oil would go through its territory and not Russia’s. Aliyev could not provide such guarantees because of the contractual specifications: ACG reserves had to be proven as bankable before any commitment was made regarding the main export pipeline. Under the minimum obligatory work programme set out in the ACG production-sharing agreement (PSA), the AIOC had committed to studying a variety of route options and to report at the end of 36 months on its preferred option. The uncertainty may have had a positive effect in that it made Turkey lobby the USA harder for its – and Azerbaijan’s – preferred pipeline route. The results of this lobbying began bearing fruit in late January 1995, when the US ambassador in Ankara, Marc Grossman, announced US support for the pipeline. He stated that Baku-Tbilisi-Ceyhan would form part of the Caspian Basin Initiative with multiple pipelines from the Caspian region. With US encouragement, some discussion took place on building the pipeline through Armenia as an incentive to induce a compromise on the question of the status of NagornoKarabakh.80 Normalising relations with Armenia would have significantly reduced Russia’s leverage over Azerbaijan. The idea, however,

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did not take root for several reasons, including Moscow’s pressure on the Armenian policy establishment.81 Meanwhile, the Turkish government increased Azerbaijan’s policy options by coming up with an alternative plan. It proposed to support a pipeline to the Georgian Black Sea port of Supsa as ‘a first step to the establishment of Baku-Ceyhan line’.82 The plan was the brainchild of Emre GÖnensay, Prime Minister Çiller’s newly appointed chief pipeline coordinator. In GÖnensay’s opinion, the reconstruction of the BakuSupsa line with a limited capacity of 6 million tonnes would considerably heighten the chances of Baku-Ceyhan line.83 On GÖnensay’s advice, the Çiller government offered to purchase all early oil that would reach Supsa, extend political risk guarantees and finance a 120-km pipeline segment between Baku and Tbilisi estimated to cost $250 million. But this offer was conditional. Ankara demanded that the pipeline to Russia be abandoned, the pipeline to Supsa capped at 120,000 barrels a day (b/d) and a contractual commitment extended by Azerbaijan and the AIOC that the BTC pipeline would be built. These conditions contradicted the terms set out in the ACG PSA and went against the preferences of foreign partners in the consortium. The offer was therefore rejected. However, Turkey’s pipeline planning had increased Azerbaijan’s diplomatic manoeuvring space by raising the international profile of the western pipelines and attracting US support for them. In a 1995 interview, the director of International Energy Policy at the US State Department, Glen Rase, stated: ‘The Turks have come forth with a program that looks quite viable to us. We favor a pipeline that could pass through Georgia and ended in the Black Sea if that were viable and met the environmental concerns of the Turkish Straits.’ 84 Indeed, Terry Adams recalls that before GÖnensay’s proposal was rejected, the Amoco chairman received a phone call from the US State Department, instructing him to ensure that the shareholders would support the Turkish position. Adams describes the episode as ‘unprecedented political interference’ from Washington. Although the shareholders refused to submit to pressure on that occasion, in December 1995, the Aliyev government announced that it would pursue the Georgian route and seek the signing of a contract between Azerbaijan, Turkey, Georgia and the AIOC by the end of January 1996.85

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Turkey did much of the lobbying for the pipeline, which Azerbaijan could not have done on its own for lack of diplomatic resources. Without this lobbying, the AIOC is unlikely to have approved the westward pipeline to Georgia. On 12 August 1995, Prime Minister Çiller sent a letter to US Energy Secretary Hazel O’Leary outlining Turkey’s support for the Georgian route. O’Leary wrote back on 27 September, expressing US endorsement of the Turkish solution and crediting Çiller with the idea. ‘Your proposal,’ O’Leary wrote, ‘has a great deal of merit and we applaud your direct approach to the companies [in the AIOC] and the governments of Azerbaijan, Georgia and Russia.’86 Furthermore, O’Leary assured Çiller that the USA had a considerable role in the decision. ‘With US firms comprising almost half of the international operating company, we will remain in close contact with the companies as they complete their commercial and technical analyses of the various options, including the Turkish proposal,’ O’Leary said in her letter.87 In the same week, the US ambassador in Baku, Richard Kauzlarich, publicly announced that the US government would prefer if there were ‘not one but multiple routes for the oil pipelines’.88 The AIOC internal discussions reached a climax at a meeting outside London on 4 October 1995. Russian pressure increased steadily and the BP operating company, which doubted the profitability of the western route, stated that it favoured reversing the Novorossiysk pipeline. On learning of this outcome, GÖnensay made a phone call to Washington. The result was a demarche from Assistant US Secretary of State Richard Holbrooke.89 The USA was adamant that there be a line through Georgia, and it took just a few hours to return the AIOC to the two-pipeline solution.90 On 9 October 1995, the AIOC finally made a decision to opt for a two-route solution for early oil, with Ceyhan becoming ‘the eventual exit point for the main pipeline’. 91 The episode revealed not only the critical importance of US support for the eventual success of the Georgian line but also the indispensable role that Turkey played in acting as a communication and lobbying channel between Azerbaijan and the USA. Underpinning these developments was the unwavering determination of Azerbaijan as a small state to construct pipelines bypassing Russia that would enhance its independence.

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Excellent bilateral relations between Baku and Ankara were essential for this synergy to work. The Turkish enactment of a series of regulations in 1994 to limit the passage and navigation of vessels through the Bosphorus propped up Azerbaijan’s position. Firstly, it increased the chances of a land route to Ceyhan. The Turkish government argued that the Straits could not cope with the increasing volume of traffic without an exponential rise in the risk of accidents and environmental catastrophes for the densely populated city of Istanbul.92 Foreign Minister Ismail Cem told the oil companies to give serious attention to the option of sending Caspian oil via the Baku-Ceyhan pipeline in view of the limitations on the amount of oil that Turkey would allow to be shipped through the Straits from 1999.93 The Turkish government’s firmness on the issue of the Bosphorus enhanced Azerbaijan’s bargaining position with Russia. Baku could now argue that the Turkish national legislation prevented BakuNovorossiysk from becoming the main export pipeline, as this route depended on the Bosphorus for the final connection to international markets. Russia protested against the legality of the Turkish attempts to regulate tanker traffic by pointing to the 1936 Montreaux Convention, under which Turkey was obligated to allow free passage through the Straits to all ships, regardless of size and cargo.94 Turkey, however, claimed that the measures were in compliance with the documents of the International Maritime Organisation (IMO).95 It based its defence on a resolution adopted in 1994, which stated that the IMO’s measures were established for the safety of navigation and protection of the environment, and all national measures had to be in conformity with those aims – IMO Resolution A.857(20).96 Turkey was successful in its attempts to gain the IMO’s approval for many of the initially suggested measures. However, thanks in part to vociferous protests from the Black Sea states, most notably Russia, not all shipping regulations have been stringently enforced, with only a small number of vessels that pass through the Straits reporting their cargo. The legal department of the Russian MFA argued that the Turkish actions were directly linked to its pipeline initiatives and that Ankara had previously shown little interest in the safety of the Straits, as

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demonstrated by their failure to install radars along the route.97 Radars and surveillance cameras were installed in 2002, to ensure better compliance with regulations and, later that year, Turkey enforced a provision, originally considered in 1994, that large tankers be allowed to pass through the Straits during daylight hours only while traffic from other directions was suspended.98 Russian shipping companies heavily criticised the regulations, which directly impinged on their interests: in the mid-1990s, Russian shipping comprised almost a quarter of all traffic through the Straits. With the development of oilfields in Russia and other countries of the Caspian region, the number of tankers loaded with oil routed via the Bosphorus has increased and will continue to increase to 2030. Turkey’s ability to implement the Bosphorus provisions, overriding Russia’s legal objections, has raised Moscow’s awareness of the potential for further tightening of the regulations in the future. The outcome of this legal and political battle fought between Turkey and Russia strengthened Azerbaijan’s position on the desirability of exporting main oil via an overland pipeline to Ceyhan. Azerbaijan’s extremely constrained space for action and the resultant reliance on Turkey are explained by the absence of even formal communication channels, such as embassies, through which the Azerbaijani government could convey its position to the West. During his first official visit to Turkey in February 1994, Aliyev asked his Turkish counterpart to allow him to meet foreign ambassadors and representatives of diplomatic missions to Turkey in order to explain to them the direction and priorities of Azerbaijan’s foreign policy.99 The meeting was noteworthy in two respects. Firstly, it underlined the country’s institutional constraints and dependence on Turkey for communicating with the outside world. Secondly, it reaffirmed Azerbaijan’s continued pro-Western foreign policy – a signal that was aimed at dissipating Western fears of the reversal of Azerbaijan’s policy course in the light of Aliyev’s past affiliation with the Soviet Politburo. Thus, even in circumstances of extremely limited policy implementation capacity, Azerbaijan’s foreign policy was not predetermined, with the leader’s perceptions playing a formative part in formulating and implementing a foreign policy that could either stall or facilitate the

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initiatives of the country’s much more powerful – and internationally well-known – neighbours. The BTC pipeline option was strongly promoted by Aliyev; a government with different foreign policy priorities might have settled for the Baku-Novorossiysk line. But as successor to the vociferously proTurkish Elchibey, Aliyev needed to overcome Turkey’s suspicions of his intentions by convincing Ankara that he was serious about building both stable relations and a pipeline to the West. This was essential if Turkey was to lobby for the pipeline to Ceyhan. In the mid-1990s, Aliyev still publicly emphasised Turkish ‘attention and magnanimity’, as well as Baku’s continuous need to use Turkish embassies around the world.100 Remarkably, however, Aliyev had gradually moved from highlighting Azerbaijan’s reliance on Turkey to underscoring the mutually beneficial nature of the friendship. This nuanced rhetoric reflected the political reality of the day. When awarding an oil stake to Turkish Petroleum Corporation (TPAO), Aliyev noted: Turkey has asked us to do this. The Turkish president, our dear friend and brother, the respected Suleyman Demirel, sent us a letter and expressed a special request. And Prime Minister Tansu Çiller has also asked me about this. So taking these requests into account, as well as the friendly relations that exist between Turkey and Azerbaijan, and wishing to see their future development, our republic has agreed to transfer 5 per cent from its own stake to Turkey.101 Speaking to Turkish journalists about the signing of the two-pipeline agreement, Aliyev pointed out: ‘What you will or will not let pass through the Turkish Straits is your business. But our goal is to take the pipeline to Ceyhan. And you also want that.’102 From 1995 onwards, Aliyev did not miss a chance to indicate that friendship with Azerbaijan was not without benefits to Turkey – this theme gradually became integral to the structure of Azerbaijani-Turkish relations. In 1994–7, the basis of Azerbaijan’s relations with Turkey was redefined, from sentimental notions of ethnic solidarity, to a strategic

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friendship sealed by common, and highly pragmatic, pipeline interests. This friendship was further enhanced by the common, albeit frequently unspoken, goal of securing US engagement in the region. The two-states-one-nation rhetoric continued to dominate the discourse, but Aliyev’s diplomacy eschewed any fanciful ideas of a Turkic alliance and was geared towards establishing stable and direct relations with the West.

Strategic friendship of the later years: 1997–present From 1997, relations with Turkey became less important than in earlier years, as Azerbaijan focused its efforts on developing direct relations with the USA. Baku no longer needed Ankara to act as an intermediary between itself and Washington – its much-wanted great power ally. The change from the Elchibey government, which considered Turkey to be a great power and a natural ally, was strikingly apparent. It reflected the development of Azerbaijan’s foreign policy, which came to be characterised by greater pragmatism, and a better understanding of regional and international politics. By 1997, Baku had shifted to regard Turkey as a reliable partner, with which it was relatively easy to maintain good-neighbourly and working relations. By the mid-2000s, the relationship was redefined further, with Turkey being seen increasingly as a consumer of Azerbaijani gas and a beneficiary from hydrocarbons exports from the Caspian region – both current and future. Direct negotiations between Azerbaijan and Kazakhstan assumed a greater role in shaping the regional dynamic with regard to future oil flows, but emblematic of its reduced influence, Turkey has been notably excluded from this process. Nevertheless, reliable and predictable relations with Turkey have been and will remain important for two reasons. Firstly, in the conflict-ridden Caucasus region, they were vital to attract investors, which needed guarantees from the host governments that they would support the project, ensure freedom of transit for oil and provide security for the pipeline. These terms, later written into the inter-governmental agreement underpinning the BTC pipeline, had to be in place before any hydrocarbons produced could be evacuated from land locked

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Azerbaijan. Today, when oil and gas flow out of Azerbaijan in several directions, it is often forgotten that the early question with which Baku had to grapple was whether oil exports were at all possible from this land-locked region, with the Nagorno-Karabakh conflict to the west, which complicated exports to Turkey, and the Chechnya conflict to the north, which complicated exports to and via Russia. Secondly, Azerbaijan needed Turkish cooperation to implement regional energy projects consistently and keep the issue of Russia bypass pipelines on the US agenda. Despite this, relations between the two states were repeatedly tested. For instance, accusations that Turkey attempted to depose Aliyev in the March 1995 coup dealt a serious blow to Azerbaijani-Turkish friendship. On her visit to Baku, Çiller personally apologised to Aliyev for the activities of ‘the uncontrollable right-wing group’, but denied that Turkish officials were in any way responsible.103 Suspicions persisted, however, and speaking in December 1996, Aliyev, without naming anyone directly, asserted that ‘some Turks’ had been involved in the coup. But the good personal relationship between Aliyev and Demirel played a significant role in solidifying inter-state relations. Their friendship had grown over the years of presidency and was even said to be ‘much stronger than friendship between their peoples’.104 By contrast, the election of President Ahmet Necdet Sezer (2000–7) saw a downturn in bilateral relations, not concealed even by the laying of the foundation of the BTC pipeline in September 2002. The suspicions of conspiracy left a mark on the character of Turkish-Azerbaijani relations and undermined the trust that had existed between high-ranking officials in the two governments. Nevertheless, working relations were not ruptured thanks to the continued importance of the energy pipeline that figured prominently on the agenda of both states. As one analyst remarked, ‘it is on this platform that Azerbaijani-Turkish relations are being built. Ankara has waited quite long to see the realisation of this economic project, and Azerbaijan remains interested in Turkey’s friendly attitude for the same reason.’105 Throughout April–October 1998, the presidents of Turkey, Georgia and Azerbaijan repeatedly confirmed their determination to build

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the westward pipeline. These political declarations came at a time of record low oil prices, when companies were most doubtful about the economic profitability of the Turkish route. Azerbaijani negotiators insisted that the AIOC was in a position to make recommendations on the route of the main export pipeline, but the final veto rested with the government in Baku.106 Having successfully lobbied for the pipeline, Turkey and Azerbaijan now received US assurances of support, clearly expressed in the course of Aliyev’s visit to the USA in July 1997. When asked what made the construction of the BTC pipeline likely, Demirel stated: ‘Azerbaijan is determined, Georgia and Turkey are determined, and the USA is backing the project.’107 This support enabled Azerbaijan to insist on building BTC despite concerns about the economic viability of the project at a time when the international price of oil plunged to $10/ barrel. The political will and determination that Azerbaijan displayed throughout the 1990s in insisting on not having the main export route go through Russia paid off when the price of oil began to rise. The project became more attractive to investor companies, and given that this event had been preceded by years of negotiations, in which the parties’ demands and preferences became entrenched, the agreements on BTC were finalised in quick succession. A factor that goaded this process was the three host governments’ unambiguous commitment to the pipeline.

More than a pipeline – and more than one pipeline The relationship between the Baku-Tbilisi-Ceyhan Pipeline Company (BTC Co) and the host governments came to be documented in four core agreements: the IGA and three host government agreements (HGAs). The first was signed in November 1999; the other three – between BTC Co and the governments of Azerbaijan, Georgia and Turkey – followed on 17, 18 and 19 October 2000, respectively.108 With these documents signed, the construction of the pipeline began in summer 2002. However, three important ancillary documents were signed to support and elaborate on the original structure. The first was the Joint Statement, signed between BTC Co and each host government, in May

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2003 to clarify and restate the parties’ interpretations of the HGAs. This was followed in July 2003 by the Security Protocol, which outlined the ways in which the host governments would meet their security commitments under the HGAs (e.g. pipeline protection). Finally, in September 2003, the Human Rights Undertaking was signed, committing BTC Co to a particular interpretation of the HGA.109 The pipeline’s original start date was set for the second quarter of 2005: Azerbaijan’s section was due to be completed in December 2004; Georgia’s in February 2005; and Turkey’s in March/April 2005. The schedule slipped, however, and the inauguration of the Azerbaijani section of the line took place on 25 May 2005. The 1,076-km Turkish section, the Ceyhan terminal and the BTC system as a whole were opened on 13 July 2006. Along its route, BTC crosses 1,500 rivers and very mountainous terrain, with its highest point at 2,800 metres, before returning to sea level at Ceyhan. Speaking at the ceremony of filling the pipeline, President Ilham Aliyev stated: ‘Some doubted the realisation of this project; others tried to interfere but failed. The partnership between Azerbaijan, Turkey and Georgia, the support of the USA to all regional energy projects, the activity of BP and other companies gave us an opportunity to make this legend a reality.’ The first cargo of Azeri Light was lifted at the Ceyhan terminal on 4 June 2006, marking the first oil exports via BTC. It was delivered to the Italian port of Savona five days later, thus establishing Azerbaijan’s direct physical link with West European markets. To be realised, the 1,768-km pipeline had to overcome formidable geopolitical and commercial challenges, and its construction was a victory for Azerbaijani diplomacy. The pipeline’s initial capacity of 600,000 b/d was raised to 1 million b/d following the installation of two pumping stations on the Turkish stretch of the pipeline. In mid-2008, BP reported that the pipeline had reached its full capacity, and in March 2009, this capacity was expanded to 1.2 million b/d (through the use of drag-reducing agents).111 The 400th tanker was loaded at the Sangachal terminal near Baku in March 2008, while the 1,000th tanker was loaded already in December 2009, giving an idea of the rate of production growth in Azerbaijan. The primary source of oil that enabled the achievement

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of these milestones was the ACG complex of fields where production rose steadily from 472,000 b/d in 2006 to 708,000 b/d in 2007 and 817,000 b/d in 2009. The estimated recoverable reserves of the ACG fields stand at 5.8 billion barrels. The five key producing platforms are Chirag-1, Central Azeri, West Azeri, East Azeri and Deepwater Guneshli. The ACG programme involves a phased development of the fields located 120 km offshore in water depths of 119–175 metres.112 The first to start producing was the refurbished Soviet-era Chirag-1 platform, which, launched in November 1997, came to be known as the Early Oil Project. Phase I of development followed with the construction of a platform at Central Azeri, which produced first oil in February 2005. Phase II followed in quick succession, and involved the development of the western and eastern parts of the Azeri field. Consequently, two platforms were installed in October 2005, with production at West Azeri beginning in December 2005 and East Azeri in 2006 – four months ahead of the initial schedule. Phase III began in April 2008 with the start of the Deepwater Guneshli field, which in late 2009, was still producing at only half of its estimated plateau output of 320,000 b/d. The three phases of development have required the construction and installation of new fixed platforms, each with a steel jacket and topside, as well as the construction of over 1,000 km of interconnecting lines between the platforms.113 Platform installation and the start of production had to be carefully streamlined, so that the volumes of crude flowing through BTC continued to rise in line with the expansion of the pipeline and to compensate for falls in production at rapidly maturing fields from the earlier stages of development. In 2010, of the five platforms in operation, output at two – Chirag-1 and Central Azeri – was in decline. Production at the West and East Azeri fields continued to grow. Yet the bulk of production increases was to come from Deepwater Guneshli. Together with condensate from the Shah Deniz field, it was to bring Azerbaijan’s production capacity to the threshold of 1 million b/d. Discovered in 1999, Shah Deniz came online in December 2006, but due to technical problems, production did not start in earnest until February 2007. Shah Deniz, with its 1 trillion cubic metres (tcm) of

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estimated recoverable gas reserves, is a key field that could provide baseload to the Nabucco pipeline projected to run from the Caspian/ Middle East region via Turkey, Bulgaria, Romania and Hungary to Austria. But the field also contains significant gas condensate reserves – 200 million tonnes on current estimates. Its production in 2009 reached 35,800 b/d. Overall, in 2007–9, the field exported just over 35 million barrels of condensate via BTC to international markets. This output is expected to grow on an annual basis to 45,000 b/d in Phase I of the field’s development. The start of Phase II, which has been delayed several times and is currently not expected until the fourth quarter of 2017 will see a further expansion in the output of condensate. Shah Deniz field has therefore become a regular contributor to BTC’s throughput. Moreover, in October 2008, Tengizchevroil (TCO), the Chevron-led consortium operating Kazakhstan’s Tengiz field, began to move some 150,000 b/d of crude from Kazakhstan’s port of Aktau across the Caspian to Baku. This volume was shipped by tankers and fed into BTC. But in December 2009, the parties failed to reach agreement on transit fees and TCO opted for the cheaper rail route to Batumi. Official BP projections previously showed that the output plateau of 1 million b/d at ACG would only be sustainable in 2010–12. However, the approval of a new $10 billion investment package in the Chirag field is now expected to prolong the production plateau to 2019.114 First oil from West Chirag, as the new platform is to be called, is due online in 2013. It will produce 183,000 b/d, allowing the recovery of additional 360 million barrels of Azeri Light.115 But the production of 1 million b/d from ACG does not translate into maximum flow rates via BTC. This is because of the allocation of some of the ACG output to the Baku-Supsa pipeline and the BakuBatumi railway. The former was closed for refurbishment (October 2006–November 2008) when BTC first opened, but is now operational requiring some 6.5 million tonnes of oil per annum.116 US companies ExxonMobil (an 8 per cent shareholder in AIOC) and Devon Energy (5.6 per cent) are not members of BTC Co. They therefore prefer to ship their share of oil via the Baku-Supsa line, with additional production railed to Batumi. The total volume of oil exported via BTC in 2009 was 38 million tonnes (285 million barrels) as opposed to its

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total throughput capacity of 50 million tonnes. Importantly, of ACG’s reserves of 5.8 billion barrels of oil, some 1.4 billion had been produced by the end of 2009. The maturation of Azerbaijan’s key offshore fields raises the question of the long-term prospects of the BTC pipeline. The answer lies in the Kazakh fields of Tengiz and Kashagan. The idea of a CaspianMediterranean pipeline that would take crude from the fields in Kazakhstan and Azerbaijan, first mooted by Turkey in 1994, lingered throughout the 1990s, cropping up in speeches and inter-state memoranda.117 Negotiations continued in March 2003, but proved to be, in the words of one participant, ‘arduous and complex’. Kazakhstan agreed provisionally with the terms of the IGA signed between BTC Co and the host governments of Azerbaijan, Georgia and Turkey. SOCAR estimated that Kazakhstan could supply about 142,000 b/d to BTC in 2005–7. However, for years, negotiations failed to yield concrete results owing to complex geopolitical considerations on the part of Astana, such as the need to balance Russian political interests while overcoming Moscow’s resistance to the expansion of the Caspian Pipeline Consortium (CPC) to Novorossiysk, and receiving greater support for its initiatives in the West. This was coupled with repeated delays in starting extraction at the Kashagan field where four partners – Eni, Total, ConocoPhillips and Inpex – are also BTC partners with a combined stake of 15 per cent, giving them 150,000 b/d of capacity in the line.118 In 2006, Azerbaijan proclaimed that it was capable of filling the BTC pipeline without Kazakh crude. Subsequently, sources in the policy establishment and the AIOC admitted that doing so would put the country at risk of rapidly depleting the ACG reserves. Kazakhstan’s contribution will be essential for BTC, as Kashagan alone holds recoverable reserves of 11.3 billion barrels. First oil at the field is now expected in December 2012, although the final deadline is December 2013. Output will reach 150,000 b/d in the first year of production, rising to 300,000 b/d by 2014.119 The challenge of finding an outlet for Kashagan oil is coupled with the need to accommodate rising production at the Tengiz field. Although the decision on CPC, which ships 75 per cent of Tengiz oil, was finally reached in December 2009, the pipeline’s expansion to 1.4 million b/d will not be completed until 2014.120

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Even when the CPC expansion takes place, Kazakhstan will require other export routes. Peak production at Kashagan alone is projected to reach 1.5 million b/d in 2019. By then, Kazakhstan’s overall annual oil production will almost double from the current 70 million tonnes to 120 million tonnes.121 The maturation and decline of Azerbaijan’s ACG complex of fields will coincide with the development of Kazakhstan’s reserves, which, coupled with Astana’s multi-vector foreign policy, supports the continuous use of BTC in the long run. Therefore, given both Baku’s and Astana’s understanding on the need to achieve a positive outcome, negotiations on Kazakhstan’s participation in BTC continued. On 16 June 2006, an agreement was signed between the presidents of Azerbaijan and Kazakhstan, ‘On support and cooperation in transporting oil from Kazakhstan via the Caspian Sea and the territory of Azerbaijan to international markets using the Baku-TbilisiCeyhan pipeline.’ The agreement envisages the upgrading of the port of Aktau and the construction of a new port in Kuryk. Known as the Kazakhstan Caspian Transportation System (KCTS), this project seeks to enhance the loading and discharging capacity of the terminals on both sides of the Caspian, thus circumventing the need to construct undersea pipelines. The nature of the project is characteristic of Kazakhstan’s foreign policy: it is politically palatable to Russia as it avoids the contentious issue of Caspian pipelines; yet it is expedient, as the implementation period is likely to be shorter than an attempt to construct a Trans-Caspian oil pipeline. Moreover, unlike a pipeline, port facilities will diversify Astana’s options in sending its oil, as it will be able to ship volumes not only to Baku but also to the Russian port of Makhachkala and the Iranian port of Neka. Initially, the handling capacity of the KCTS will be approximately 500,000 b/d. This volume will increase in two steps: to 750,000 b/d and 1.2 million b/d once the system is fully operational. In the long run, the Kazakh government expects Kuryk to emerge as the main loading point for Kazakh oil en route to Baku. In the light of this, the port is due to be connected to the producing fields via a 739km Yeskene-Kuryk pipeline. A fleet of tankers will be required to transport Kazakh oil to new and expanded loading facilities near

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Baku, which will link to BTC. To demonstrate their commitment to the project, on 24 January 2007, the sides signed a memorandum of understanding on the KCTS and the transportation of oil, extracted primarily at the Kashagan and Tengiz fields, across the Caspian Sea to international markets.122 The source of oil for the Yeskene-Kuryk pipeline was therefore established. The system’s completion was envisaged for 2012; however, in June 2009, Kazmunaigaz and shareholders in the Tengiz and Kashagan projects failed to agree on several clauses and postponed the building of the Yeskene-Kuryk pipeline, although Astana insisted that the deal was ‘generally acceptable’.123 The delay may not be crucial given the approval of the West Chirag project by the AIOC in Azerbaijan, which will support plateau volumes from ACG beyond 2012. But the oil from Kazakhstan will remain of paramount importance to Baku as it progressively transforms itself from a predominantly producer state into a regional hub transiting Caspian crude. One notable element of the above discussion is Turkey’s absence from promoting an idea that it initially pioneered. Today, inter-state negotiations between Azerbaijan and Kazakhstan, followed by talks between their governments and foreign companies, shape regional events. Although the concerns of the neighbouring larger states are taken into account, as symbolised by the KCTS, the mutual interests of Azerbaijan and Kazakhstan take centre stage, with the parties involved in a regular direct dialogue with each other as well as with the extra-regional actors, such as the USA and EU. This situation is a far cry from the early 1990s when the first US diplomats in Baku had to borrow typewriters from the Turkish embassy.124 It is also vastly different from the mid-1990s, when Turkish good offices were indispensable in promoting the energy projects that Baku understood would shape its future regional position and autonomy in foreign policy. The critical function that Ankara performed throughout the better half of the 1990s, of acting as an intermediary between Azerbaijan and the West, shrank rapidly following Aliyev’s first visit to the USA in 1997. The signing on 12 March 2001 of the agreement on the BakuTbilisi-Erzurum (BTE) gas pipeline further redefined the nature of the Azerbaijani-Turkish partnership. Turkey, which was to receive

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89.2 bcm of gas from Phase I of the Shah Deniz field, was now seen as a consumer of Azerbaijani gas and a transit state that benefited from having the longest section of the pipeline on its territory.125 Turkish assistance in promoting regional energy projects was seen as self-interested, while at the same time, Baku grew sceptical of Ankara’s ability to profoundly influence the political situation in the region.126 Moreover, Turkey’s position on the Nabucco pipeline has been seen as problematic and, at times, unacceptable by Azerbaijan. For instance, Ankara’s demand for a 15 per cent off take at the border at subsidised prices was rejected by Baku, which felt it had other options for exporting its gas – including to Russia. Indeed, selling the 16 bcm of Shah Deniz gas from Phase II to Russia would have a number of drawbacks, such as Gazprom’s apparent lack of scruples in breaking long-term contracts at times of low demand, which it demonstrated with regard to Turkmenistan in 2009. Baku privately regards this option as less desirable than exports through Turkey to Austria via Nabucco, or Greece and Italy via the Interconnector Turkey-GreeceItaly (ITGI) system. But the availability of this alternative gives it a significant measure of control over the situation by providing a tool in negotiations with Ankara. Indeed, to show its preparedness to act on its words, Baku began in January 2010 to export gas to Russia via the reversed Soviet-era Baku-Novo-Filya pipeline. In that year, it supplied Russia with some 1 bcm of gas. No upper limit for Azerbaijani exports has been fixed, and, with Russia offering to buy out the entire output from Shah Deniz Phase II, Baku finds itself in the position to make decisions on the future direction of its gas. Sending small quantities of gas to Russia is consistent with Baku’s strategic design. The contours of this design were revealed several years earlier when prior to making the final decision on the BTC pipeline to the West, Baku ensured that lesser volumes flowed to Novorossiysk. The underpinning idea has thus been to partially accommodate Russia before sending the bulk of hydrocarbons to the West via Turkey. To implement this strategic manoeuvre, stable and predictable relations with Turkey have been necessary. Cultural affinity between the peoples has been reinforced by strategic friendship between the governments, providing an outlook of solid and lasting

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partnership. In a volatile region, this kind of an outlook has been reassuring to investors. Pipelines, such as BTC and BTE, have bypassed Russia, enlarging Azerbaijan’s decision-making space in foreign and energy policy. Their existence has strengthened Baku’s bargaining position on new pipelines from the region. Indeed, Baku’s position has improved not only vis-à-vis its European partners and consortia but also vis-à-vis Turkey. With four projects vying for Shah Deniz Phase II gas (Nabucco, ITGI, TAP and White Stream), Azerbaijan has the luxury of choice. This luxury would have been unimaginable without strategic manoeuvring, which, in turn, would have been impossible without the geographical and political presence of Azerbaijan’s natural ally – Turkey.

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CHAPTER 7 THE WESTER N DIMENSION OF AZER BAIJAN’S STR ATEGIC M ANOEU VR ING

By the time of the collapse of the Soviet Union, Azerbaijan’s oil had generated some interest in Western business circles. But the uncertain political climate, difficulties associated with transporting it to the market from a landlocked region and disintegrating infrastructure left from the Soviets were among the significant deterrents to largescale capital investment. Although resource estimates from the early and mid-1990s tended to compare the Caspian Sea to the Gulf, with the media frequently dubbing the region a new Middle East, it soon became clear that the scale of reserves was more comparable to the North Sea. This, it should be emphasised, is far from insignificant. While oil production in many parts of the world has already entered a period of decline, for the Caspian region, the peak is not yet imminent. In fact, exploration has continued with considerable success, raising the outlook for long-term production. The proven reserves of the Caspian region have grown steadily since 1999 when the three littoral states (Azerbaijan, Kazakhstan and Turkmenistan) were estimated to hold only 26.7 billion barrels of oil. A decade later, their combined proven reserves rose to 47.4 billion. Although Kazakhstan holds the largest reserves of the three (39.8 billion barrels), it was Azerbaijan that experienced the biggest percentage growth. Its reserves increased almost six-fold: from 1.2 billion barrels in 1999 to 7.0 billion in 2010,

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putting Azerbaijan on a par with Norway (7.1 billion barrels in late 2009). Gas reserves in the region have also experienced rapid growth. Estimated at 5.6 trillion cubic metres (tcm) in 1999, they subsequently doubled to 11.2 tcm. Turkmenistan holds very sizeable reserves of gas, which the BP Statistical Review of World Energy 2010 put at 8.1 tcm. These, however, could prove to be far greater if and when the probable and possible reserves of the South Yolotan-Osman and Yashlar fields are prospected enough to be moved into the proven category. The results of an international audit carried out by Gaffney, Cline and Associates have set the fields’ potential at between 4 and 14 tcm, while proven reserves are understood to be in the order of 2.8 tcm. These fields, like most of Turkmenistan’s giant and super-giant deposits, are located onshore. Yet the legal and regulatory difficulties of working in Turkmenistan are by and large appreciated by international investors. By contrast, Azerbaijan, whose most attractive fields are offshore, has a more permissive investment environment and has seen capital investment in gas for well over a decade. The discovery of the Shah Deniz field in 1999 became a find of international significance, adding over 1 tcm of gas to Azerbaijan’s reserves and propelling it into the international arena as an exporter of gas. By the mid-2000s, Shah Deniz became significant not only economically as a tangible addition to the Caspian’s reserves but also politically, as it gave a new impetus to the EU’s strategy of reducing dependence on Russian gas by building alternative pipelines. Since the discovery of Shah Deniz, Azerbaijan gradually came to replace Iran as key prospective supplier to the Nabucco pipeline, even though that project was first put on the map with the intention of tapping into the large Iranian reserves, which, it was hoped, would soon be turned into production. However, the worsening of the political situation around Tehran’s nuclear programme and the tightening of international sanctions meant that Iran’s participation in the project became highly controversial. In addition, Iran’s massive reserves have failed to translate into production, as the investment climate has been deemed unfavourable even by those Western oil majors that are generally not risk-averse. The deterioration of the situation in Iran has been paralleled with the signing

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of yet another production-sharing agreement (PSA) in Azerbaijan. In October 2010, BP and State Oil Company of Azerbaijan (SOCAR) agreed to jointly explore and develop the Shafag-Asiman structure in the Azerbaijani sector of the Caspian, estimated to contain 300–500 bcm of gas. These geopolitical and energy developments have in combination stimulated Western interest in Azerbaijan, and high-profile international delegations have become frequent visitors to Baku. But when did all this begin? After all, in the early 1990s, Azerbaijan was known as the centre of the First Oil Boom, which took place in the late nineteenth century, but years of ruthless exploitation under the Soviets were understood to have depleted reserves and left the industry in dire need of investment. The euphoria that led many to equate Caspian reserves with those of the Middle East originated predominantly in Western political circles. Widely supported by the media, the idea of finding an alternative to Middle East oil gained popularity. Yet the oil and gas industry remained far more conservative in its estimates and aware of the high risks of operating in a little-known environment with no legal investment regime and with even the most basic policy institutions still in the process of formation. Geological data on the volume of remaining reserves were also a significant impediment: they were often incomplete or unavailable, and, in those rare cases where availability was not an issue, difficulties of assessment arose from the considerable material differences that existed between Soviet and Western reserves classification methodologies. These numerous obstacles undercut the commercial attractiveness of Azerbaijan as an investment destination. The situation was further aggravated by Russia’s unwillingness to allow the development of Caspian offshore reserves, the unsettled status of the Caspian Sea (which represented yet another source of legal risk) and the geographical proximity to Iran, for which Western and particularly US penetration into its northern neighbourhood was a security concern. Chapter 5 has demonstrated how pro-active diplomacy on the part of Azerbaijan fended off the threat that Russia posed to the formation of the Azerbaijani International Oil Consortium (AIOC). It then engaged in a complex and multi-faceted relationship with Russia that ultimately facilitated the process of breaking away from its ambit. This chapter

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focuses on the Western dimension of this strategy of manoeuvring, which enabled Baku to attract foreign companies and governments to a country that by all political, economic and legal standards was understood to be high risk. The successful implementation of strategic manoeuvring led to an increase in the country’s oil output to 279,000 barrels per day in 1999, 452,000 in 2005, and 1,033,000 in 2009. It also enabled Azerbaijan to emerge as an exporter of gas to Georgia, Turkey and – by January 2010 – even Russia. Foreign and energy diplomacy had therefore placed Baku in a position to choose its export markets. With the EU and Russia competing for the output from the second phase of Shah Deniz, Azerbaijan has sought to maximise its leverage in negotiations and announced a delay to the launch of new output from the field until the fourth quarter 2017. Strategic manoeuvring between Russia and the West has brought revenue from hydrocarbons exports, enhanced Azerbaijan’s profile internationally and widened its foreign policy space. Crucially, it has precluded Azerbaijan from allying with Russia – the strongest regional state, an alliance with which has been perceived to be detrimental to the small state’s independence. This chapter examines the diplomacy behind Azerbaijan’s engagement with the West. It analyses the key diplomatic initiatives on the part of Baku that have enabled the US-Azerbaijani partnership to progress to the level at which it is today. It looks at some of the key factors behind the construction of the Baku-Tbilisi-Ceyhan (BTC) pipeline, and argues that, despite having been hailed as a success of US diplomacy, the project’s implementation would have been impossible without an astute strategy from Baku, which it pursued with remarkable consistency and tenacity since the early 1990s. The discussion is couched in the framework of Azerbaijan’s evolving relations with the West more broadly.

Early relations with the West: The Turkish connection In the early days after the disintegration of the Soviet Union, the ‘Turkish Model’ of development received attention from the USA, Turkey and the burgeoning states of Central Asia and the Caucasus.

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The Model, in some of its interpretations, was supposed to present Turkey as an example of a Muslim yet secular state that neighboured Russia but was firmly within the NATO bloc. In other interpretations, it was aimed at allowing Turkey to position itself actively as an independent power-broker in a region where few Western states had an interest, creating a new political and cultural pole for attracting the new Muslim states of Eurasia. Meanwhile, others believed that the Model was meant to cast Turkey in the position of a Western envoy to a part of the world where it had cultural affinities and linguistic connections. There was perhaps a complex mix of all of the above, but the exact remit and purpose of the Model were not formulated in any official policy documents and thus remained open to interpretation. Discussions took place at a high level – primarily between US and Turkish officials, and, later, between Turkish policy-makers and their counterparts in Azerbaijan and Central Asia. But all sides continued to view the unfolding situation differently, producing diverging understandings of the purpose that the Model was to serve and the role that they were to play in implementing the Model. For the Popular Front (PFA), the policy of alliance-building was reinforced by the West’s perceived strong support for Turkey. Baku was prepared to follow the Turkish lead because that was heavily in line with its own policy preferences and predispositions. But this policy was strengthened by the perception of Western support that it believed would be forthcoming if Azerbaijan followed the Turkish Model. Several factors accounted for Baku’s perception of Western support behind Turkey. Firstly, the messages that the USA was sending seemed to promise diplomatic and material aid to all successor-states of the Soviet Union and particularly those that did not abandon political-economic reforms. In this context, Turkey was perceived to be acting together with, and sometimes on behalf of, the West. Turkey was widely regarded as part of the Western world, and, from this perspective, aligning with it was equivalent to de facto aligning with the West. These perceptions, albeit very simplistic, were not unjustifiable. At a conference in January 1992, President George Bush Senior stated that the USA would not hesitate to extend support and material assistance

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to those new states which chose to ‘adopt the ideas that America initiated, advocated, and protected’.1 Secretary of State James Baker echoed that argument when he said that it was important to send ‘a message of hope’ to the peoples of the former Soviet Union that ‘the democratic world . . . was really prepared to help them in the complex process of solving their problems’.2 NATO Secretary-General Manfred Woerner stated that NATO intended to concentrate on assisting the new states with those tasks that neither their governments nor international institutions had the capacity to handle.3 These messages resonated favourably with the PFA leadership because they reinforced the liberating, magnanimous and benevolent image that it held of the USA and the West more broadly. At the same time, Washington appeared to be sending signals that prompted the southern states of the former Soviet Union to embrace the Turkish Model. The rationale for advocating the Model was complex and intended, among other things, to address US concerns about the spread of Islamic fundamentalism across the vast, predominantly Muslim areas of the Caucasus and Central Asia. In 1990, Graham Fuller of the influential RAND Corporation cautioned that ‘50 million Soviet Muslims would be entering the broader Muslim world, creating an entire new calculus of Muslim power and regional blocs’.4 Scholarly reports, which argued that the Soviet system had never succeeded in eradicating religion among the Muslim peoples of the south, were picked up by influential newspapers, such as The New York Times and Washington Post, and given a sense of urgency.5 The notion that the collapse of the Soviet empire had generated a power vacuum in the region that needed to be filled was a prognosis that could not pass unnoticed. It worked to galvanise the US policy-making community, and the conclusion presented itself: the USA preferred the power vacuum to be filled by a secular ally like Turkey rather than a fundamentalist antagonist state like Iran. The USA consequently urged Turkey to use its geopolitical location and cultural connections to become a ‘linchpin’ in geopolitical extensions of Europe and a ‘carrier of Western values’ to the Caucasus and Central Asia. This was, as Chapter 6 has argued, the mandate that Ankara had been seeking for itself: it hoped that an active role in

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the region would reinvigorate its geostrategic position in Europe and strengthen its bilateral relationship with the USA. Following consultations with Ankara, Washington undertook more direct efforts to make its presence felt in the former Soviet south. For instance, from February 1992, the US administration encouraged US companies to find Turkish partners for joint ventures in the region and urged politicians and bureaucrats of the Turkic republics to travel to Turkey ‘to see a modern country at work’.6 In the same month, Baker toured the area to convey the message of US support for Turkey’s new role directly to the Turkic-speaking republics. In Baku, the official visit of the US secretary of state and his explicit mention of Turkey as a role model for the region were interpreted as an intention to support Azerbaijan if it followed the ‘Turkish path.’7 This interpretation created a set of understandings and expectations of the US regional role, which contributed to the PFA’s attempts to ally with Turkey. The inexperienced PFA government failed to see the larger picture: in the post-Soviet era, the US policy community continued to pursue a ‘Russia First’ approach. Next came the Baltic states, whose transition to democracy received considerable attention from the US policy community in the light of the area’s historical developments. Everything else in the former Soviet space appeared to fall into a broad third category, to which Azerbaijan belonged and for which no consolidated policy emerged for an extended period of time.8 Indeed, the absence of embassies, qualified diplomats, experts and high-level regular contacts with any of the Western states hampered the PFA’s ability to assess the situation correctly. The statements of support voiced by prominent diplomats and policy-makers were therefore taken at face value. Incidentally, Washington was not alone in propagating the Turkish Model for the region. For instance, European Commissioner Frans Andriessen stated in April 1992 that Turkey could be regarded as a ‘corridor to the Central Asian and Transcaucasian states’.9 During her trip to Central Asia in July 1992, Catherine Lalumiere, secretarygeneral of the Council of Europe, declared that ‘Turkey provided a valid model of development for many newly independent countries in Central Asia’.10 The period 1992–3 abounded in laudatory comments

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from EU senior officials and diplomats who came out in support of Turkey’s new role in the area. In a way, Western governments seemed to consider Central Asia and the Caucasus as ‘a relatively cost-free way of heaping praise on Turkey at the time when, in other policy areas, relations were often problematic’.11 Unaware of the intricacies of EU-Turkish relations, the PFA leadership in Baku received an external confirmation for its beliefs and images, and continued with a policy of intense balancing against Russia with Turkey. The importance that the PFA attributed to the USA as a prospective great power ally can be inferred from the assessment given by the PFA’s foreign minister, Tofik Gasymov, who stated that ‘the most important achievement of the period [1992–3] was the establishment of Azerbaijani-American relations’.12 While regarding Turkey as an immediate and natural ally, the PFA’s long-term strategic objective was to ally with the USA. As the two were seen as acting in tandem, the short-term goal of forging close ties with Turkey was consistent with, and contributed towards, the long-term objective of allying with Washington. To balance against Russia, Azerbaijan needed only a glimmer of hope that the Russian threat to its security would be neutralised. Meanwhile, the direction in which US policy was evolving made the likelihood of developing any ties between Azerbaijan and its much-desired great power protector far from certain. Despite the inauguration of the Turkish Model in February 1992, the months between April and October witnessed intense lobbying from the US Armenian lobby, which led to legislative actions in Congress. The Freedom for Russia and Emerging Eurasian Democracies and Open Markets (FREEDOM) Support Act, originally passed to stimulate and enlarge US bilateral relations with the newly independent states (NIS), was undermined in its application to Azerbaijan by the passage of Section 907 (22 USC 5812 note) that proscribed any US assistance to the government of Azerbaijan. The amendment was adopted at the height of the war in Nagorno-Karabakh, under pressure from the US Armenian diaspora.13 It read: RESTRICTIONS – United States assistance under this or any other act (other than assistance under title V of this act) may not

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be provided to the government of Azerbaijan until the president determines, and so reports to the Congress, that the government of Azerbaijan is taking demonstrable steps to cease all blockades and other offensive uses of force against Armenia and NagornoKarabakh. Without a comparable Azerbaijani lobby and with very little knowledge about the country, Congress failed to respond to the occupation by Armenian forces of the Azerbaijani regions outside the NagornoKarabakh enclave in 1993–4. Although Section 907 was a Congressional act, not supported and subsequently opposed by the US administration, it put Azerbaijan in a different category from all its neighbours.14 For the next ten years, it severely limited the scope of US-Azerbaijani interactions, particularly in the political and economic arena. Indeed, in 1992, Washington attached little value to bilateral relations with Azerbaijan because the nature and extent of its interests in the then little-known area remained largely undefined. By the time the US interests came to the fore, the administration found itself constrained in the forms of assistance it could offer Azerbaijan. Active diplomacy on the part of Azerbaijan was indispensable if relations were to develop, and Baku’s policy towards Washington evolved in scope and sophistication to focus on building and promoting its value as a regional ally of the USA. It was not long before the US administration came to regard Azerbaijan as a partner in the region.

Phases in Azerbaijan’s Western policy Azerbaijan’s policy towards the West can be divided into four phases. The first phase (1992–3) was pursued only briefly under the PFA, but the premises on which it rested differed strikingly from those adopted under President Heydar Aliyev. The second phase (1993–7) began with President Abulfaz Elchibey’s ousting from power and was characterised by a reversal of policy, which became highly pragmatic, more geographically balanced and explicitly devoid of nationalistic overtones. Although throughout these two phases the leaders sought to

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conclude oil contracts with Western majors, Aliyev’s policy was geared to a much greater extent than that of Elchibey towards using energy as a political means to advance Azerbaijan’s strategy of consolidating independence. The signing of the ‘Contract of the Century’ and protracted negotiations over the routes for new export pipelines intensified Baku’s contacts with Western capitals, and intricately intertwined the state’s foreign and energy policies. This enmeshing was a choice, not a coincidence, and by 1997 Baku had successfully placed itself on Washington’s agenda. The new level of attention from the USA unveiled a third policy phase (1997–2008), which at its apex witnessed the opening of the BTC pipeline. Hailed as a triumph of US diplomacy in the region, this pipeline was the success of Azerbaijan’s strategy. The course of negotiations reveals that it was a product of the perseverance with which the small state mobilised its political and energy resources to promulgate a goal that was unpalatable to Russia and which for years elicited only a lukewarm response from most partners in the AIOC. Without Baku’s own determination to achieve the implementation of BTC, Washington had a slim chance of seeing the pipeline built. It had no strong relationship with Azerbaijan and thus no real carrotand-stick incentives to induce Azerbaijan’s compliance. The example of Turkmenistan provides a comparison. Despite promoting a TransCaspian pipeline for years, Washington has failed to produce results, as the policy has been in dissonance with Ashgabat’s goals. Azerbaijan, by contrast, saw BTC as a key energy policy goal as well as a means to achieve its foreign policy objective of strengthening the relationship with the West. By the time the pipeline was inaugurated, Azerbaijan’s Western diplomacy had grown, acquiring new dimensions and extending beyond energy pipelines. But the Russian-Georgian war of August 2008 sent ripples throughout the Caucasus. While Moscow’s military victory over an aspiring NATO member on the periphery of Europe has in all likelihood had a psychological effect on the alliance’s enlargement process, it has confirmed to policy-makers in Baku that a more geographically balanced and less vocal approach to alignment with the West is a safer option.

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The fourth phase of Azerbaijani policy towards the West (2008– present) has therefore broadly continued with the approach initiated earlier, but the point of balance in strategic manoeuvring has tilted slightly eastwards. Despite the continued lack of trust, Baku has intensified security cooperation with Moscow but has tried to keep negotiations largely on a commercial footing. Still, Russian-Azerbaijani cooperation has been at the expense of Western presence. The Conventional Forces in Europe (CFE) Treaty received particular attention from Azerbaijan’s policy-making community at two points in time: in 1997 and 2008. At first, Baku had to decide whether joining the treaty agreed with its national interests; then, it needed to reevaluate its regional standing after Russia had unilaterally suspended the treaty in December 2007. The prospect of allying (as opposed to merely aligning) with the West and acceding to NATO featured prominently in Baku’s calculations in both instances. The question of whether after the Russian-Georgian war, Azerbaijan even has a policy option of openly allying with the West – in the light of its location in a geopolitically sensitive region where every large power has interests that are or can be mutually exclusive with those of its neighbours – has to all appearances received a negative response. This has resulted in a more moderate, if less agile, policy towards the West. But despite a downturn in the political relationship with the USA, Azerbaijan has remained a committed ally in providing logistical support to US and NATO military operations in Afghanistan and Iraq. A stable internal situation and balanced foreign policy differentiate Azerbaijan from many states in the broader Central Asian region.

Oil without diplomacy – Phase I Setbacks in Nagorno-Karabakh and the sheer burden of having to run a state without institutions inundated the agenda of the PFA government. Without recourse to strategic thinkers capable of focusing on the wider picture, conducting day-to-day operations and responding to international and domestic events that were unfolding to Azerbaijan’s disadvantage consumed both decision-makers’ time and the resources of the nascent state. The lack of experience in running, let alone setting

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up, a state, resulted in inability to formulate a cogent policy towards the West while balancing the numerous domestic and foreign needs and concerns. This level of strategic and operational prowess is a high standard to meet even for larger and more established states, especially if they are struggling to survive under the duress of war. Yet without integrating its available political and economic means into a wider strategy, the small state did not have much of a chance to survive – not without being relegated into the category of a failed state. To be sure, the PFA attributed significant weight to Azerbaijan’s energy potential. However, it viewed energy contracts primarily as an economic means of state development and showed readiness to negotiate contracts with Western oil companies without establishing diplomatic relations with the states that those companies represented.15 Negotiations on oil projects got under way long before Azerbaijan sent its ambassadors to Western capitals, which reduced the political impact of those negotiations. Throughout 1992–3, the government chose not to politicise the issue of oil. Though determined to exclude its perceived political foes – Russia and Iran – from the oil consortia that were then forming, it did not use the contracts pro-actively to attract the political support of its much-desired Western allies. Indeed, even as the first oil agreements were being signed with international majors, Baku still did not have a clear idea of its political objectives towards the West. In early September 1992, Baku signed the first deal with the BP/ Statoil alliance for the exploration of the Shah Deniz area and the exploration of the Dostlug (former Kaverochkino) deposit. This was followed by a second agreement in October 1992, concluded with Pennzoil over the Guneshli deposit. But Elchibey delayed the signing of the contract on the major undeveloped fields, which under Aliyev were consolidated into a single Azeri-Chirag-Guneshli (ACG) contract. The efforts of his foreign relations adviser, Vafa Guluzade, to convince Elchibey to sign the contract’s framework agreement early were met with objections from the head of SOCAR, Sabit Bagirov, who insisted that the contracts were ‘not ready yet’.16 In Guluzade’s opinion, the framework agreement needed to be signed as a political priority, even before all legal and technical details had been ironed

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out. Explaining his position in an interview in the mid-2000s, Guluzade contrasted the PFA and Aliyev’s approaches. He stated: ‘Signed in 1994, the contracts were not ready either. But Aliyev went ahead and signed them anyway, which came as a total surprise to Russia.’17 Many in the PFA government believed that once the contracts began to materialise, they would speak for themselves, securing Azerbaijan’s economic recovery, and guaranteeing political recognition and protection from the West.18 The economic boom brought on by the oil contracts was expected to transform Azerbaijan into ‘a second Kuwait’. The comparison with Kuwait is remarkable not only for the obvious parallel with a small state that prospered thanks to its oil riches, but also because it was drawn in the early 1990s, soon after the First Gulf War (August 1990–February 1991), in which the UN mandated decisive action against Iraq’s occupation of its neighbour. Economic sanctions and a naval blockade were followed by an effective military campaign, in which a US-led coalition force from 34 states ejected the aggressor and restored the territorial integrity of Kuwait. An analogy with Azerbaijan suggested itself, and Baku repeatedly appealed to the UN, securing between April and November 1993 the passage of four UN Security Council resolutions that called on the ‘occupying forces’ to withdraw from the Azerbaijani districts of Kelbajar, Agdam, Fizuli, Jabrayil, Qubadli, Zangilan and the town of Goradiz.19 The resolutions emphasised the sovereignty and territorial integrity of Azerbaijan, with the fourth calling explicitly upon ‘the government of Armenia to use its influence to achieve compliance by the Armenians of the Nagorno-Karabakh region of the Azerbaijani Republic with Resolutions 822 (1993), 853 (1993) and 874 (1993), and to ensure that the forces involved are not provided with the means to extend their military campaign further’.20 Yet, despite acknowledging that the occupied districts and the Nagorno-Karabakh enclave itself formed part of Azerbaijani territory, the UN Security Council did not invoke Chapter VII of the UN Charter. Article 39 of this chapter determines the existence of ‘a threat to the peace, breach of the peace, or act of aggression’, while Articles 41 and 42 provide for the use of such non-military and military measures

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as ‘may be necessary to maintain or restore international peace and security’.21 The intervention to restore Kuwait’s territorial integrity was undertaken under the provisions of Chapter VII. Though Azerbaijan’s appeal to the UN to restore peace and territorial integrity was highly justifiable, any analogy with Kuwait failed to place the invasion in the broader context of US policy in the Middle East. As the situation in Kuwait escalated, US concerns over the perceived Iraqi threat to Saudi Arabia became more pronounced, causing consternation that a successful move against Riyadh would give Saddam Hussein control over most of Middle Eastern oil reserves.22 This scenario acted as a major stimulus to action for the USA and the international community at large. Azerbaijan in the 1990s was no Kuwait either in terms of its relationship with the USA, its geostrategic position in the wider region or the volume of its proven hydrocarbon resources. If Azerbaijan was ever to become a second Kuwait, its government had not only to use diplomacy to welcome exploration and production by foreign investors in the country’s dilapidated oil sector; it also had to prove its value as a Western ally in a region traditionally dominated by Russia.

Oil diplomacy – Phase II Aliyev shrewdly capitalised on the PFA government’s foreign policy blunders. Immediately after Elchibey fled to the village of Keleki, Aliyev – then still head of the Azerbaijani parliament – accused the government of incompetence, and used this argument to postpone the signing of the final oil contract. Aliyev also pointed to the lack of coordination within the PFA government, which, in his opinion, was the reason for the delay in preparing the contract.23 The economic and financial analysis report prepared by SOCAR was said to contain a number of ‘technical errors’.24 This led Aliyev to approach Deutsche Morgan Grenfell (which later became Deutsche Bank) with a request for an expert examination.25 While this was being done, Aliyev conducted radical purges of SOCAR structures before reinstating its status in early February 1994 through a presidential decree.26

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In his memoirs, first AIOC President Terry Adams gives the following assessment of the situation: Initially the negotiations were led for Azerbaijan by an external consultant, Dr Marat Manafov. The process proved to be fatally flawed when corrupt proposals were presented to the investors. This led to their total disengagement from all contract negotiation. These were only restarted when the SOCAR senior management team was appointed by the president [Aliyev] to represent state interests. This proved remarkably successful, and after prolonged, effective and intensive effort, the ChiragAzeri-Deepwater Guneshli production-sharing contract was signed in Baku on September 20, 1994. The Contract of the Century was born.27 The appointment of his son, Ilham Aliyev, to the post of SOCAR vice-president enabled the president to follow oil negotiations on a continuous basis, supplementing his personal close involvement in the process.28 Aliyev’s ascent to office was characterised by the disappearance of the divide between the political and economic aspects of oil. In negotiations, in particular, these two facets became mutually reinforcing, as Aliyev sought to use oil contracts to secure diplomatic recognition for Azerbaijan in the international arena. A multi-dimensional approach, with a pronounced political component, was adopted when distributing shares in oil consortia – primarily, the AIOC, but subsequently, also in many smaller partnerships. Adams describes the delicate balance that was reached when formulating criteria for the selection of AIOC investors: They had to have the technical capacity and professional skills to do the work quickly and efficiently, as well as cater for muchneeded technology transfer. However, of particular importance was the ability and willingness of the investors to self-finance the early project work. The Baku risk environment was such that conventional project financing was not an option. It was a

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given that the contract would include material work and financial commitments, and would address the issue of local national employment and use of Azerbaijani goods and services. But the president primarily saw such a broad range of foreign investors with a diversity of national interests as being the mechanism from which he could build Azeri foreign policy and secure national stability.29 Aliyev used the contracts to gain formal invitations to West European capitals. In the absence of embassies, these visits became instrumental in shaping Western views about Azerbaijan, and Aliyev prepared thoroughly for each of them.30 Aliyev’s early advantage over his predecessor was that he was better known internationally, and his political career as a leader of Soviet Azerbaijan and Politburo member had been noted by all regional observers. In addition, as head of the Supreme Mejlis of the Nakhchivan Autonomous Republic, Aliyev had established direct links with the governments of Turkey and Iran, and, prior to the imposition of Section 907, had reportedly received humanitarian aid from the USA – all bypassing Baku.31 His election to the presidency immeasurably broadened his freedom of action in foreign policy, leading to the pro-active use of oil diplomacy for state building. The direct contacts with political and business leaders that Aliyev established in the course of his foreign visits proved essential for the conduct of strategic manoeuvring. His shrewd stratagem of moving away from Russia without excluding it was applied in different variations in Europe. For instance, he shunned the nationalistic reasoning that Azerbaijan had to abstain from establishing contacts with France because of its alleged pro-Armenian sympathies. In fact, Aliyev’s first official visit was to Paris in December 1993. Foreign Minister Hasan Hasanov explained that this visit was essential for Azerbaijan to make a ‘breakthrough to Europe’ given that France ‘hosts over 200 international organisations’.32 It was with France that Aliyev signed Azerbaijan’s first Treaty of Friendship, Mutual Understanding and Cooperation. Other visits followed in rapid succession. Aliyev held high-level talks in Turkey on 8–10 February, which were concluded with the signing

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of the Treaty of Friendship, Cooperation and Mutual Assistance, along with 15 other documents. This visit was followed almost immediately by an official trip to the UK (22–27 February), during which Aliyev secured the support of the British government for BP’s involvement in the Caspian oil deals. This proved crucial in the face of Russia’s resistance to the finalisation of the contract, as argued in Chapter 5. The UK also formally confirmed its recognition of Azerbaijan’s sovereignty and territorial integrity. According to Thomas Young, UK ambassador to Azerbaijan, the government was keen to demonstrate ‘major political support’ for Aliyev, and Prime Minister John Major raised the question of Russian involvement in Azerbaijan in the context of the near abroad while on his official visit to Moscow a week before hosting Aliyev in London.33 Having received British diplomatic support, Aliyev confirmed the agreement that had been concluded under the PFA, granting BP exclusive rights to the development of the Shah Deniz deposit.34 The tactic of introducing economic and political issues together aimed at encouraging Western governments to factor Azerbaijan’s foreign policy objectives into the equation of mutual cooperation. A firm link became established between the foreign states’ recognition of Azerbaijan’s political interests and the presence that the companies originating in those states were allowed to establish in Azerbaijan’s oil industry. This indicated the emergence, for the first time in Azerbaijan’s history, of an inclusive foreign policy that drew on the country’s resources to elicit a desired response from the international community. When asked to denote the key goal behind his foreign visits, Aliyev stated: ‘Our objective these days is to be heard in the world community and present a true picture of the difficult situation faced by the Azerbaijan Republic.’35 Aliyev and Guluzade assigned weight and value to bilateral treaties, seeing them as important components of the strategy of alignment with the West. The friendship treaties helped institutionalise interstate relations and dismantle the ‘informational blockade, political obstructionism and diplomatic isolation’, which in the official assessment accounted for the West’s indifference to Azerbaijan’s problems.36 Azerbaijan’s position had to be articulated directly and unambiguously

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in order to reverse the attitude of indifference, and energy resources became a tool to engage the West and an incentive that Baku could offer to it in exchange for diplomatic and economic support.37 Both were indispensable for a post-Soviet Azerbaijan seeking to move away from the Russian orbit. Oil majors of the now formally friendly France, Turkey and the UK were invited to participate in the development of new offshore deposits. Aliyev emphasised that Azerbaijan was open to investment from the countries with which it had inter-governmental agreement packages in place. Investors from those states were promised favourable treatment and assured that their assets would be placed ‘under government protection’ and remain ‘guaranteed by the state and its president’.38 There is no question that the formalisation of inter-state relations favourably affected investors’ views of Azerbaijan, stimulating their more active involvement and development of economic relations with the West between 1994 and 1998. The emphasis on the politics of oil was publicly revealed in the keynote address that Aliyev delivered in the USA, a week after signing the AIOC contract. He stated: It is characteristic that the signing of this contract has a direct relation to the state bodies of the countries, to which these oil companies belong, and it can be said that the contract, besides its economic importance for Azerbaijan, is of great importance from the point of view of the establishment of close links between Azerbaijan, the USA, UK, Norway, Turkey, Russia and Saudi Arabia.39 The high-level recognition that Azerbaijan received from the leading Western states became a political landmark in Baku’s relations with the outside world. It strengthened the small state’s ability and determination not to bandwagon with Russia, and proved crucial in helping it to sustain a pro-Western orientation in the face of rising Russian pressure in spring 1994. On 27 April 1994, soon after the establishment of diplomatic contacts with the UK, the Russian Foreign Ministry handed a note to the British

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ambassador, Sir Brian Fall, protesting against the use of the term ‘the Azerbaijani sector of the Caspian Sea’.40 The note said that any project concerning the exploitation or transportation of Caspian oil would have no legal basis without the agreement of all five littoral states. This protest, the note claimed, was motivated by ecological concerns resulting from the structure of the ‘Caspian Lake’. As mentioned in the previous chapter, the letter was given to London but not Baku, and a failure to act could have sent the wrong signal to Russia and the West.41 The value of the direct political contacts that Aliyev had established became apparent when the UK Foreign Office held a series of consultations with the Azerbaijani Ministry of Foreign Affairs (MFA). UK Energy Minister Tim Eggar paid a visit to Baku where he met Aliyev, the management of SOCAR and senior MFA officials. The decision was made ‘not to take the note of the Russian Foreign Ministry into consideration’.42 The UK declared that it intended to continue negotiations with Azerbaijan on joint development of petroleum deposits in the Caspian offshore.43 In effect, Azerbaijan had brought the weight of a Western power to fend off encroachment on its sovereignty by a hostile regional hegemon. Nevertheless, the extent to which oil contracts could be used as a political tool had its limitations and almost backfired in June 1994. Political criteria in choosing AIOC partners and delays in signing the contract, coupled with high risks, high investment requirements and lack of conventional financing options, stretched the patience of Azerbaijan’s oil partners. Commenting on the situation, AIOC President Terry Adams stated: The political strength of such a large and diverse consortium is self-evident . . . [But] this is the first time that I’ve ever seen an international consortium of such complexity. There are so many different national agendas that must be taken into account and recognised . . . Consequently, pressures are placed on the foreign oil investors.44 In summer 1994, the AIOC Western partners declared that, if the contract was not signed soon, they would leave Azerbaijan altogether.45 Baku took the threat seriously and the signing ceremony took place on

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20 September 1994. The shares were distributed as follows: SOCAR – 20.0 per cent; BP – 17.1 per cent; Amoco – 17.0 per cent; Lukoil – 10.0 per cent; Pennzoil – 9.8 per cent; Unocal – 9.5 per cent; Statoil – 8.6 per cent; McDermott – 2.5 per cent; Ramco – 2.1 per cent; TPAO – 1.8 per cent; and Delta-Nimir (Saudi Arabia) – 1.6 per cent. With Western energy ministers in attendance, the Contract of the Century was as much a political landmark as an economic accomplishment. US Energy Secretary Hazel O’Leary delivered a message from President Bill Clinton, congratulating Azerbaijan on this major achievement. Less than a week later – on 26 September – Aliyev met the US president for the first time. After the meeting, Aliyev stated that he was ‘deeply impressed by President Clinton’s serious attention’. According to Aliyev, Clinton had promised to raise Baku’s foreign policy concerns in his upcoming meeting with his Russian counterpart, Boris Yeltsin.46 The tactic of using oil contracts to place issues that were of importance to Azerbaijan on the great powers’ agenda had started to yield results. This tactic also enabled Baku to establish a direct policy dialogue with Washington, making energy cooperation the cornerstone of the Western dimension of its strategic manoeuvring.

Pipeline diplomacy – Phase III From his early days in office, Aliyev’s foreign policy was driven by the belief that he could engage Western states to such an extent that they would be prepared to extend Azerbaijan diplomatic support in its relations with Russia. The slow pace of development of the US-Azerbaijani partnership, hindered by the notorious Section 907, was partly compensated for by the institutionalisation of relations with West European capitals.47 Indeed, as early as in 1994, Baku’s ‘contract diplomacy’ prompted London to side with Baku against Moscow. What might be called ‘soft protection’ was exactly what Baku had been aspiring to in its alignment with the West. This section will look at how Aliyev succeeded in using pipeline diplomacy to secure US political support, despite the continued existence of Section 907. Divergent perceptions of what constituted the main source of threat for the area lay at the bottom of certain misunderstandings between

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the USA and Azerbaijan. The problem that emerged when the Aliyev government invited Iran to join the AIOC was solved on US terms in order not to jeopardise the policy of strategic manoeuvring. Initially, Iran was not a state-participant to the AIOC contract. It was invited to join when SOCAR found itself unable to make its first payment of $1.9 billion to start up the project. None of the AIOC partners offered to bail out SOCAR, leading Baku to consider seriously Iran’s proposal to make the payment in exchange for a 5 per cent stake in the consortium. In November 1994, Baku signed a memorandum of participation with the government of President Akbar Hashemi Rafsanjani. This move offered it the prospect of rescue from financial straits and would have led Tehran implicitly to recognise the legality of the Caspian shelf deal – just as Russia had done several months earlier. But on 24 January 1995, the US ambassador to Azerbaijan, Richard Kauzlarich, held a meeting with Aliyev to ‘express concern’ in connection with Iran’s newly acquired share in the contract.48 The matter, as it turned out, was not limited to concern – Washington reportedly warned that the US companies would withdraw from the consortium if Iran were to drill on the same shelf.49 Faced with relentless pressure from Washington, Baku announced in early April 1995 that it had rejected cooperation with Tehran. To avoid disrupting the schedule of the Minimum Obligatory Work Programme stipulated in the contract as well as for obvious political reasons, SOCAR ceded a 5 per cent stake to Exxon (USA) and another 5 per cent to TPAO (Turkey), which agreed to finance the remaining 10 per cent of SOCAR’s share in the AIOC. Having forced Baku to forgo the Iranian offer, the US government issued on 6 May 1995 an exemption to the executive order that barred trade with Iran. The exemption allowed for oil swaps with Iran ‘in support of energy projects in Azerbaijan, Kazakhstan and Turkmenistan’.50 Although it was presented as beneficial to the Caspian states, this exemption did not rectify the geopolitical balance in the region, and Iran’s exclusion from the consortium led to a rapid deterioration in Azerbaijani-Iranian relations. Tehran was now of the opinion that Baku acted as a political stooge of the ‘Great Satan’ in the Caspian.

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Furthermore, Azerbaijani decision-makers tacitly opposed transporting oil via Iran – an option favoured by some partners in the AIOC consortium at the time – on the grounds that moving the bulk of Azerbaijani oil through that route would increase the country’s dependence on Tehran.51 Any plans to make Iran an important outlet for ACG oil threatened to undermine Azerbaijan’s strategic manoeuvring, of which constructing a pipeline to the West through Turkey was an integral part. Eventually, the US administration did not pursue the implementation of the exemption because it collided with the policy of multiple pipelines devised and introduced by the National Security Council (NSC) in early 1995.52 The emergence of a discernible strategy for the Caspian region marked a period of enhanced US interest towards Azerbaijan.53 The NSC strategy was conceived in anticipation of the Iran-Libya Sanctions Act (ILSA, passed in August 1996) and aimed at precluding Russia from consolidating control over new pipelines from the Caspian once the Iranian route for evacuating oil became unavailable through the actions of Congress. The adoption of the multiple pipelines policy resonated with Azerbaijan’s political preferences for alignment. From mid-1995, US-Azerbaijani relations began to improve steadily. On his visit to the region, the head of the State Department’s energy section, Glen Rase, famously pronounced that Washington did not recognise ‘any spheres of influence in the region’.54 He added that Azerbaijan now comprised a ‘vital interest’ of the USA. For its part, the US State Department published a report that the proven, probable and possible oil reserves of the Caspian Sea could be up to 178 billion barrels.55 US involvement in the region was then presented as critical to the implementation of the policy of diversifying oil sources and pipelines. The figure of 178 billion barrels – frequently rounded up to 200 billion by the media – stood in stark contrast with the modest estimate of 13–20 billion barrels provided by international oil companies.56 The first estimate made Azerbaijan’s oil potential comparable to that of Saudi Arabia; the second, to the North Sea. It is possible that in the light of the limitations imposed by Section 907, the reserves

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statistics provided by the US State Department served the purpose of fending off Congressional criticism. In other words, the administration presented the case that the economic and security stakes were sufficiently large to justify US involvement in Azerbaijan. This involvement would take the form of assisting over 70 US companies involved in the Azerbaijani oil sector; and help the administration meet US regional security objectives, as formulated by the NSC. Increasing difficulties in relations with Russia and the passage of ILSA added a security dimension to the oil-driven nature of US interests in Azerbaijan. The US assistant secretary of defense for international security policy, Ashton Carter, articulated this position in the following terms: Really what I am suggesting is that even if there were no oil in the Caspian, the Caspian would be important to us . . . You don’t have to look too hard around this compass, if you think of this as a place you haven’t heard of and as countries that are difficult to understand and difficult to pronounce. Just look at their neighbours and you will find countries that you do know how to pronounce and that are obviously important to US security.57 Engagement came to be legitimised in terms of US military and energy security, but gradually ideological and moral elements were introduced into the debate. Washington argued that it needed to extend support to a pro-Western small state surrounded by immeasurably more powerful neighbours. Baku capitalised on all three lines of arguments: it played up the scare of Iranian fundamentalism in the region, emphasised its determination not to fall back into Russia’s ambit and demonstrated commitment to West-bound pipelines.58 Aliyev regularly exchanged letters with Clinton, and the two presidents met each other’s envoys on a number of occasions, particularly to discuss issues related to the routes for transporting ACG oil.59 Noteworthy in this regard was the visit to Baku of Zbigniew Brzezinski, formally as the head of a humanitarian mission AmeriCares. The visit coincided with the AIOC’s decision on pipeline routes. Between

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7 and 10 October, Aliyev held three meetings with Brzezinski, two of which took place hours before the AIOC was due to announce its decision.60 He subsequently described Brzezinski as Clinton’s ‘political envoy’.61 On 2 October, Clinton phoned Aliyev directly for the first time, reportedly to assure him of US support on BTC.62 This sequence of events, followed by the decision to opt for the Baku-Supsa pipeline (rather than just the Russian route to Novorossiysk) reinforced Aliyev’s policy of aligning with the West – this time with greater weight attributed to nurturing ties with the USA. Rhetorically too, the emphasis shifted from thanking the US administration for small gestures of attention to outlining grandiose plans for the future. Meeting US policy-makers and senior oil executives in New York just two weeks after the AIOC decision on pipelines, Aliyev stated: I want to assure you – and I have told this to Mr Bill Clinton today – that relations existing between the USA and Azerbaijan . . . will strengthen every day . . . We sincerely want that and . . . I, as president of Azerbaijan, will spare no effort to see our relations develop . . . Our cooperation does not have a temporary character. Azerbaijan aims to build permanent relations with the USA, and it is building these relations. Economic ties and present achievements constitute a firm foundation for that . . . and this is only the beginning.63 Washington’s resolve to tighten sanctions on Iran and loosen its traditional focus on Russia led to the recognition of Azerbaijan as a pivotal state in the South Caucasus.64 The Aliyev government skilfully used the momentum to strengthen and fine-tune its strategy of manoeuvring. By mid-1997, Azerbaijan had been firmly placed on the US administration’s agenda, and Aliyev was invited to Washington on a formal visit in July 1997. The discussion in the course of this eleven-day visit (27 July–6 August) strengthened Baku’s perception that the policy of using oil and pipeline diplomacy to engage Washington was effective. The parties signed an agreement to strengthen bilateral cooperation,

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and Clinton referred to Azerbaijan as a ‘partner-state’ holding a ‘strategic position in the region’.65 Vice President Al Gore delineated the importance of Azerbaijan’s hydrocarbon resources and applauded the establishment of a formal US-Azerbaijani dialogue on energy politics.66 Aliyev, for his part, stressed the role of the USA a great power protector when he said: You have to take into account that there are countries in our region, which have tried to strangle our independence. That’s why we look at the USA as a power to oppose those forces which want to choke us. In other words, we look to the USA as a country, which will help us to preserve our independence.67 That Aliyev’s official visit heightened Baku’s expectations of greater US support in the foreseeable future is obvious from the MFA’s statement, which said that the word ‘strategic’ had been added to ‘partnership relations’ with the USA.68 In a speech at Georgetown University, Aliyev emphasised that, although he had met Clinton on numerous occasions, this visit was different in that its main purpose was to ‘bring Azerbaijani-US relations to a new level – to a higher level of partnership’.69 A White House press release was more toned down, but it also acknowledged that Aliyev’s visit marked ‘a milestone in the partnership’ between the two states and showed ‘the promise of our growing cooperation’.70 Most notably, the signing of four oil contracts in the White House boosted Aliyev’s confidence and gave a new impetus to strategic manoeuvring. He described the occasion in the following words: I asked them [the presidents of Amoco, Chevron, Exxon and Mobil] if they had ever visited the White House. They all said, ‘No’. Don’t forget, some of those companies had been in existence for 100 years or more. I joked with their leaders, asking them whether, of all those contracts they had signed all over the world, they had ever signed one in the White House. They admitted they hadn’t. Well, I did that. I brought them to the White House. It was a momentous ceremony.71

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The presence of the US president at the ceremony was indeed an indication of Azerbaijan’s success at capturing the attention of a great power with numerous competing interests on its agenda.72 The creation of a new ambassadorial post of Caspian energy coordinator in 1998 under the direction of the US State Department – and not the Department of Energy or Commerce – indicated that the USA had begun to attribute political importance to the region in which its political, energy and security interests were now closely intertwined. Baku was in part responsible for this enmeshing through its tactic of linking political and economic aspects of oil and pipelines. Moreover, it successfully capitalised on political opportunities when such presented themselves in the form of the NSC multiple pipelines policy, broadened regional focus by the USA and renewed pressure on Iran. Securing US interest was a vital component of Azerbaijan’s strategic manoeuvring, which aimed at strengthening its negotiating position vis-à-vis Russia on a range of issues, including the outlet for ACG oil. Ultimately, successful negotiations outcomes on the issues deemed strategic to Azerbaijan strengthened the small state’s sovereignty – without it allying with any great power. In 1997–2002, BTC remained the best means available to maintain dialogue with the USA. The pipeline offered an opportunity to break away from Moscow’s ambit by providing a physical link to the West. It reinforced the US policy of multiple pipelines in the region, and from this point of view, served the interests of both states – a fact that promoted bilateral dialogue. But despite the political advantages of BTC, oil companies remained highly sceptical of its economic viability. The AIOC consistently argued that the proven volumes of the ACG fields were insufficient to justify the construction of a $3 billion pipeline with an annual throughput of over 1 million barrels of oil per day.73 The outgoing president of BP Azerbaijan, John Leggate, publicly stated in 1998 that the pipeline was unprofitable, but Azerbaijan surreptitiously indicated its preparedness to veto the decision if it was not to construct a pipeline to Ceyhan.74 In Congressional testimony in 2000, the chairman of the Petroleum Finance Company, J. Robinson West, complained that the oil companies’ choice of routes for ACG oil was severely circumscribed, as Washington pushed them to shoulder

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the ‘financial burden of paying for the US geostrategic agenda’.75 The general consensus among oil experts at the time was that ‘the construction of the BTC pipeline before 2008 appeared untenable, owing to lack of sufficient throughput, unless alternative sources became available’.76 Despite this resistance, Azerbaijan’s intransigence on the BTC issue at a time of record low oil prices scored important tactical victories that subsequently paved the way for the construction of the pipeline. The signing on 18 November 1999 of the intergovernmental agreement (IGA) on BTC by the presidents of Azerbaijan, Georgia and Turkey and in the presence of President Clinton was one of those tactical victories.77 Host government agreements (HGAs) between the BTC Consortium (Co) and the three governments concerned followed in rapid succession in October 2000, setting out the technical, legal and fiscal regime under which the project was to be undertaken. According to the HGA, Turkey recognised the agreement as overriding all domestic laws, present and future. As an additional demonstration of its support, Turkey entered into a lump-sum turnkey agreement, signed by BOTAS, a state entity of the Turkish government, and BTC Co.78 According to this agreement, BOTAS was to design, engineer, procure, construct and put into operation BTC facilities on the Turkish stretch of the pipeline for a fixed price of $1.3 billion (plus $99 million for land acquisition). The Turkish government guaranteed BOTAS’s full financial performance, confirming its political determination to see the implementation of the project and undertaking to pay the difference if the actual cost of the section exceeded the projected estimate of $1.4 billion. For its part, Azerbaijan agreed to use its State Oil Fund, intended primarily for social investment projects, to pay SOCAR’s share of the pipeline’s construction costs.79 In January 2002, US Vice-President Dick Cheney stated that the USA could ‘provide $2.5 billion for Baku-Ceyhan’, to which he referred as a ‘strategic project’.80 Commenting on Cheney’s offer, Azerbaijan’s foreign minister stated that there would be ‘no significant problem’ with the project’s realisation given the ‘political will’ demonstrated by

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Washington.81 Such statements echoed comments made by US Ambassador Stanley Escudero in 2000, when he acknowledged that the USA was providing political support and assistance to the region, and was prepared to do ‘quite a bit more in matters involving pipelines’.82 The BTC project was formally sanctioned on 12 September 2002, with all environmental and social impact assessment studies completed by early December 2002. The initial loan of $125 million, characterised as ‘critical’ to the project’s financing plan, was approved on 30 October 2003, by the International Finance Corporation, the financial arm of the World Bank.83 Further loans from the World Bank and the European Bank for Reconstruction and Development were disbursed in early 2004, reaching $500 million in total.84 This was done without significant delays, despite a 220-page report compiled by NGOs arguing that the project contravened the World Bank’s own lending criteria in 153 ways.85 Throughout this policy phase, Azerbaijan’s confidence in its capacity to influence the course of negotiations was boosted by the perception of the longevity and sustainability of US interests in the region. The turning point here was clearly Aliyev’s visit to Washington in 1997, after which bilateral dialogue became more direct and continuous. Speaking on two separate occasions in 2003 and 2004, Prime Minister Artur Rasizade expressed his conviction that BTC would remain on the map even if much cheaper Iraqi oilfields became operational again, feeding the Kirkuk-Ceyhan pipeline and potentially competing with ACG oil, and that this was so because the USA would ensure the construction of this pipeline from the Caspian.86 The perception of sustained US diplomatic support strengthened Azerbaijan’s bargaining position and affected the outcome of negotiations with both the oil companies and Russia. Decision-makers in Baku believed that to accumulate political clout in US domestic politics, they had to convince US oil companies to lobby on Azerbaijan’s behalf. It was, therefore, hinted to the representatives of US companies in Baku that the government would favour Norwegian, UK, Russian, French and even Iranian oil interests if the USA did not

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repeal Section 907, which treated the country as ‘something of a pariah’.87 SOCAR officials were reportedly instructed to advocate Azerbaijan’s political interests through US oil companies.88 Aliyev himself made his expectations explicit in the course of the 16 meetings he held with US oil chief executives in Houston and Chicago on 2–4 July 1997. The tactic worked in so far as the oil companies emerged as the most influential backers of Azerbaijan in US domestic politics.89 Noting this development, a commentator of the Armenian Assembly of America wrote: ‘This year [1997], major American oil companies are working a lot more closely to further the government’s political objectives . . . They are clearly coordinating very closely with the government of Azerbaijan.’90 In addition to lobbying in Congress, US oil companies active in Azerbaijan hired prominent decision-makers in past administrations to consult them on ‘special international projects’. Involved were two former national security advisers (Brent Scowcroft and Brzezinski), a former White House chief of staff (John Sununu), a former defense secretary (Cheney), a former secretary of state (Baker), a former treasury secretary (Lloyd Bentsen), a former deputy energy secretary (William White), a former US mediator in the NagornoKarabakh conflict (John Maresca) and a former US ambassador to Azerbaijan (Escudero).91 To show they were genuinely committed to raising Azerbaijan’s profile in the US policy-making community, the oil companies invited their prominent consultants to attend meetings with Aliyev. During one such meeting with Unocal President John Imle and Maresca, who had been appointed vice-president of the company’s international relations department, Aliyev stated with unconcealed satisfaction that this appointment would be ‘of great help to our republic’.92 The oil companies’ lobbying in Congress was welcomed by those in the Clinton administration who wanted Section 907 repealed for strategic reasons. In a testimony before the Senate Foreign Relations Committee, US Under Secretary of State Stuart Eizenstat stated: ‘The USA has critical foreign policy interests at stake – the increase and diversification of world energy supplies, the independence and sovereignty of the NIS and isolation of Iran.’93 In February 1998, the administration for the first time

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formally asked Congress to put an end to the restrictions on US relations with Azerbaijan.94 The request was predictably rebuffed but resubmitted in 1998. Senior Azerbaijani officials made no secret of the fact that Azerbaijan could live without US aid assistance, which in 1992–2007 cumulatively amounted to $752.2 million, but insisted that the existence of Section 907 was ‘humiliating’ and did not demonstrate Azerbaijan’s close relationship with the USA.95 In 2001, Aliyev publicly stated that for Azerbaijan repealing the amendment was a ‘political question’.96 To show support, the administration backed the Silk Road Strategy Act initiated by Senator Sam Brownback in 1998, which called for enhanced policy and aid to support democracy, conflict amelioration, economic development and border control for the countries along the Silk Route. The bill was defeated on the floor of the House of Representatives in 1998 but passed in March 1999 as part of the 2000 Foreign Operations Appropriations Act.97 The Aliyev government hailed the act as ‘evidence of successful and correct policy of the Azerbaijani state’.98 Only a year later, the terrorist attacks on the Twin Towers of the Word Trade Center on 11 September 2001 would radically change the policy landscape in Washington. The influence of ethnic lobbies would decline in the context of the war on terrorism – a war in which Azerbaijan would come to feature as a willing and geopolitically important ally of the USA.99

Security diplomacy – Phase IV Since 2001, Azerbaijan has become a tactical ally of the USA. Washington’s goals in the Caspian focus on halting the spread of Islamic radicalism and the movement of terrorists across the Caucasus. Azerbaijan’s geographical location, its predominantly Muslim population and relatively porous borders have enhanced chances for US-Azerbaijani cooperation despite the legislative hurdles. The US administration has put forward these arguments in Congress to promote aid to Azerbaijan, pointing out that the government in Baku has actively opposed external threats, and has done so with some success. The Congressional Budget Justification for Foreign Operations 2009 states that Azerbaijan ‘has the potential to serve as a powerful regional

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model of reform and prosperity’ because it is a ‘secular, pro-Western, majority Muslim state with significant energy resources’.100 Since the September 2001 terrorist attacks, the US administration has activated cooperation in counter-terrorism, and Azerbaijan has reciprocated by engaging in information sharing and granting blanket overflight clearance in support of US and NATO military operations in Afghanistan and Iraq. Although Azerbaijan’s geographical location does not give direct access to Afghanistan, the government has approved numerous landings and refuelling operations at Baku’s civilian airport.101 This type of assistance gained importance, as US relations with Uzbekistan soured following the Andijan massacre of May 2005, resulting in the eviction of US troops from the KarshiKhanabad military base several months later.102 Tashkent allowed use of its cargo airport at Navoi only in May 2009 – amid concerns that the US Manas base in Kyrgyzstan would be closed down.103 Russian pressure on the Kyrgyz government to evict the US base and host the rapid reaction force of the Collective Security Treaty Organisation instead threatened to leave a glaring hole in the Northern Supply Network designed to speed up the delivery of non-lethal cargos to Afghanistan via Russia and Central Asia.104 Internal instability in Kyrgyzstan in 2010 brought the country to the brink of civil war and led to a change of leadership. After a period of uncertainty, the interim government announced the extension of the Manas rent agreement but only for another year with little clarity as to the future status of the base.105 Factors such as susceptibility to pressure from Moscow, a fluid domestic situation and the lack of adequate infrastructure (as is the case in Tajikistan whose territory coalition planes have used for emergency landings and occasional refuelling) create risks in Central Asia that are by and large absent in Azerbaijan. The consistent level of assistance that Baku has extended to the USA, in securing transport corridors, participating in International Security Assistance Force operations in Afghanistan (2002–present) and maintaining a (symbolic) contingent in Iraq (2003–8), has made the continued existence of Section 907 seem even more unjust to the government in Baku.106 To be sure, Section 907 was waived by President George W. Bush in January 2002, after it had been significantly whittled down through

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the extensive use of informal channels by his predecessor. The document authorising – and subsequently, extending – the waiver read that the suspension of Section 907 was necessary to support ‘US efforts to counter international terrorism’ by assisting it in enabling ‘the operational readiness of US armed forces or coalition partners’. It also mentioned that the waiver was ‘important to Azerbaijan’s border security’.107 Yet remarkably, the text stated that it would not ‘be used for offensive purposes against Armenia’. Moreover, despite the waiver, Section 907 has still not been lifted, and its existence, even if now reduced to a mere formality, acts as a reminder of the difficulties that Azerbaijan has encountered in trying to navigate through US domestic politics.

NATO dimension Unlike Georgia, Azerbaijan did not openly announce NATO membership as its chosen policy course. Instead, it gradually laid the groundwork through individual dialogue, capitalising on the opportunities offered by the external environment. Today the programme of cooperation between Azerbaijan and NATO is laid out in Azerbaijan’s Individual Partnership Action Plan (IPAP). This is jointly agreed for a period of two years, covering areas such as the improvement of democratic control of the armed forces, defence planning and budgeting, and the reorganisation of the structure of the armed forces using NATO standards. But it was in 1997 that senior US decision-makers for the first time raised the idea of supporting energy-rich Caspian states through their integration into NATO security structures.108 Baku picked up and reinforced this message by stating its preparedness to use Azerbaijan’s geopolitical location in the ‘east of Europe’ to contribute to security architecture on the continent.109 By placing itself in Europe, the Aliyev government sought to achieve two goals. First, it sought to eliminate potential objections to its eligibility for deeper involvement with NATO on geographical grounds. Second, it aimed to present itself as an alternative – or reinforcement – to Turkey, which had been traditionally regarded as an eastern

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bastion against Soviet/Russian expansion. Just as Turkey sought to use its geography to strengthen its role regionally and within NATO structures, so did Azerbaijan, admittedly from its position of relative smallness and weakness, and still from outside NATO. Yet its aim was to demonstrate its commitment to becoming an important producer of energy that was not a member of OPEC and whose export pipelines were not controlled by Russia. In addition to being an alternative energy producer capable of reinforcing Europe’s energy security, Baku presented itself as a pro-Western Muslim state that could support US in its efforts to counter the spread of Iranian fundamentalism. By 1997, Azerbaijan had already joined NATO Partnership for Peace (PfP) programme. In fact, it did so in May 1994, becoming the fourth CIS state to sign the framework document.110 One of the underlying expectations in Baku at the time of signing was to receive NATO assistance in case of a threat to Azerbaijan’s sovereignty. Foreign Minister Hasanov emphasised the commitment enshrined in the PfP to consult bilaterally if a partner-state perceived a direct threat to its territorial integrity, political independence and security.111 Aliyev stated that his country viewed NATO as a ‘collective security structure’ willing and able to disseminate and defend democratic values in the countries of Eastern Europe and the former Soviet Union.112 By May 1997, Hasanov proclaimed that Azerbaijan had integration into the European and Euro-Atlantic political and security structures as a ‘basic direction in its foreign policy’. He welcomed NATO plans to narrow the gap between partnership and membership,113 and asked NATO to set up ‘advanced partnership’ with the states that had ‘special justified concerns’. He also voiced the idea of NATO signing separate agreements with countries located in ‘sensitive areas’.114 But the issue of Azerbaijan’s membership in NATO, raised in a private conversation with Clinton during Aliyev’s 1997 visit to the USA, failed to elicit an enthusiastic response.115 From then onwards, Aliyev approached the subject cautiously, and his government publicly denied ambitions to join NATO.116 Aliyev frequently reiterated that PfP was not directed against Russia and that Moscow was itself a stateparticipant in this programme. Yet Baku continued to seek enhanced security dialogue with NATO (and the USA), as was apparent from

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Aliyev’s speech at the first meeting of GUUAM, a regional grouping uniting Georgia, Ukraine, Uzbekistan, Azerbaijan and Moldova, in October 1997. At the meeting, he suggested deploying NATO forces to protect the BTC pipeline and its facilities. This proposal was met with approval from the GUUAM states and the USA. This initiative has since been implemented, with battalions trained under the PfP aegis. Emergency plans have also been developed, enhancing cooperation between the regional states. This took place not within GUUAM structures but between state-participants in BTC that had stakes in maintaining the security of the pipeline network. This type of cooperation has helped to strengthen both the BTC and BTE pipelines, while the experience accumulated and trust gained over the past years will have a positive spill-over effect on reducing risk for future pipelines from the region, most notably Nabucco. The BTC proposal suggests that Baku was cautiously probing opportunities to become part of Euro-Atlantic security structures, but until such opportunities presented themselves, it was not willing to allow relations with Russia to deteriorate. One of Azerbaijan’s rare explicit statements denoting Russia as a security threat came in January 1999, from Guluzade, known for his strongly pro-Western stance. He stated that Azerbaijan could only feel safe from Russia if it was brought under the NATO umbrella.117 Guluzade argued that US strategic interests in the Caucasus ‘require[d] a US military base in the region’.118 He even went as far as to propose relocating the Turkish NATO base at Incirlik to Baku under the ‘NATO, US or Turkish banner, as would be convenient to the alliance’.119 Notably, this idea did not come from Aliyev or even receive his prior approval.120 In fact, the statement was made in late January 1999, soon after Aliyev was diagnosed with severe bronchitis in Gulhane Hospital in Istanbul. Guluzade admitted that he chose not to consult the president because he would have been refused permission. Feeling unwell and out of the country, Aliyev would have preferred not to run the risk of antagonising Russia. But, even in good health, he would have arguably refused to accuse Russia openly, as the crux of his strategy consisted of introducing pro-Western ideas alongside limited concessions and verbal assurances to Russia.

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Acting of his own accord, Guluzade made no such balancing attempts, not least because, in his own words, his immediate aim was to ‘place Azerbaijan back in the spotlight of international attention in the face of Russian pressure’.121 He also tried to reaffirm Azerbaijan’s pro-Western orientation at a time when Aliyev’s health was arousing speculation about the country’s future course. Finally, in Guluzade’s expert view, a military base in Azerbaijan was both a highly desirable and unattainable policy objective. Aliyev did not dismiss Guluzade. Instead, he capitalised on the opportunity to remind Russia of its illegal arms shipment to Armenia in 1993–7. This episode demonstrates that the Aliyev government regarded Russia as a threat to the country’s security. The perception of a hostile great power in its vicinity was compounded by apprehension over the military assistance that it was extending to Armenia, with which Azerbaijan was technically at war. This encouraged Baku to deviate briefly from the more prudent policy course and openly invite a NATO presence on its territory.

CFE (Conventional Forces in Europe) dimension From Baku’s perspective, the signals that the USA sent were not always consistent and often at odds with Baku’s policy objectives. For instance, revisions to the CFE Treaty that Russia was trying to enact exacerbated Azerbaijan’s security dilemma. The first adaptations of the treaty to the post-Cold War security environment took place in May 1992. They became enshrined in the Tashkent Agreement, which allocated the quotas of the former Soviet Union among its successorstates: Azerbaijan, Armenia, Belarus, Georgia, Kazakhstan, Moldova, Russia and Ukraine. But Moscow demanded further changes to reflect its new security challenges, and Baku was concerned that formal adaptation amendments to the CFE Treaty, proposed in September 1993, would allow Russia to exceed the limits imposed on the level of military equipment it was allowed to station in the southern flank zone. To be sure, Russia had been in violation of its flank quotas for some time, justifying it with the outbreak of military conflicts in and around the Caucasus, most notably in Chechnya, but also in the neighbouring South Caucasus region. Moscow argued that the treaty needed to be

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adapted to reflect the new geopolitical realities; it also questioned the appropriateness – as well as fairness – of being the only CFE state limited in the stationing of its military forces within its own borders.122 At the same time, concerns were expressed both in the international community and Baku policy-making circles that Russia might seek to redefine unilaterally its military forces in the Caucasus as peacekeepers and announce that the equipment held by those units was not subject to the ceilings imposed by the CFE.123 Baku’s determination to prevent the presence of exclusively Russian peacekeepers in NagornoKarabakh was therefore met with considerable understanding from Washington. In a long private discussion at the Conference on Security and Cooperation in Europe summit in Budapest in December 1994, Clinton reportedly encouraged Aliyev to submit a proposal to deploy multi-national forces in the region.124 The proposal was adopted, marking an important diplomatic victory for Azerbaijan. But in November 1995, a consensus was reached between state-parties to the CFE Treaty to alleviate Moscow’s concerns with regard to stationing more troops in the south. As a result, the Flank Agreement was adopted at the CFE Review Conference in May 1996. Azerbaijan joined with great reluctance. In fact, it was the last state to sign the document because it felt that the revisions institutionalised its vulnerability to Russian pressure. The Flank Agreement redefined the old flank zones, permitting the same equipment to be stationed in a smaller area.125 It also allowed for the relocation of national equipment quotas among successor-states to the Soviet Union. Reiterating the CFE Treaty, the Flank Agreement permitted ‘temporary’ deployment of equipment on the territory of other states – with their permission. At the time of the signing of the agreement, it was widely understood that small southern states in Russia’s vicinity would be pressured, if not coerced, to cede part of their allocation quotas to the regional hegemon. It was also understood that Russia would seek to station troops on the territories of the southern CIS for an indefinite period of time. NATO state-signatories to the CFE preferred to make this sacrifice in order not to jeopardise the treaty as a whole, which had come to be widely viewed as the cornerstone of European security architecture. The USA sought to mitigate concerns of the small states

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by indicating its willingness to mediate any reallocation negotiations. However, the absence of a strong relationship between Azerbaijan and the USA prior to 1997, particularly in the military-security sphere, put Baku in a precarious position. On the one hand, Baku felt that by signing up to the CFE revisions, it was helping to strengthen European security but was offered no guarantees that its own security needs would not be compromised. On the other hand, if it opposed the amendments, it risked losing Washington’s burgeoning predisposition and goodwill.126 That, in the extreme case, could cost Baku support in promoting the BTC pipeline as the main outlet for ACG oil. Despite signing the revisions, Azerbaijan’s senior officials and foreign policy analysts remained privately opposed to the idea of their country being viewed as Russia’s ‘soft underbelly’ where the regional hegemon sought – and was allowed – to raise the number of troops and military equipment.127 Privately, they complained that Baku was facing significant pressure from Moscow to transfer some of its CFE entitlements to the Russian quota. Baku refused, citing its own security needs. The signing of the CFE Final Act in Istanbul on 19 November 1999 was accompanied by and large by the same concerns. Geographically vulnerable, militarily weak, without immediate prospects for NATO membership and still technically at war with the neighbouring state of Armenia, which was understood to receive political and military support from Russia, Azerbaijan faced an unenviable choice. Moreover, Russia’s statement attached to the Final Act stated: In the context of the political commitments and efforts of other states-parties to the Treaty on Conventional Armed Forces in Europe (CFE Treaty), in particular those aimed at further strengthening stability in Central Europe, the Russian Federation will show due restraint with regard to ground TLE [treaty-limited equipment] levels and deployments in the region which includes the Kaliningrad oblast and the Pskov oblast. In the present politico-military situation, it has no reasons, plans or intentions to station substantial additional combat forces, whether air or ground forces, in that region on a permanent basis.128

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In effect, this meant that the southern flank would de jure become the focus of Russia’s military activity. Azerbaijan had partially mitigated its concerns by signing in May 1997 a joint statement with the USA that it would remain free of foreign military presence and no foreign troops would be stationed on its soil without the consent of the government in Baku.129 Aliyev received additional assurances that that the CFE Flank Agreement would not compromise Azerbaijan’s security in the course of his July 1997 visit to the USA. Finally, Baku joined the 1999 Final Act in Istanbul on the understanding that failing to do so would foreclose any prospect of its NATO membership.130 Speaking at a Euro-Atlantic Partnership Council meeting, Foreign Minister Hasanov stated that ‘Azerbaijan considers the CFE Treaty in integral connection to all-European processes in the sphere of security including NATO enlargement’.131 In December 2007, the very existence of the CFE Treaty was cast into doubt after Russia unilaterally declared a moratorium on its participation. As the treaty does not contain a provision for suspension, Moscow’s actions in effect signalled its withdrawal from the CFE regime in response to what it had called foot dragging by NATO members to ratify the adapted version of the CFE Treaty signed in 1999. The withdrawal was also in protest at NATO enlargement. At the same time, Moscow’s withdrawal was not only a step away from a system that it felt had not corresponded to its national interests for a long time. It was also a step towards a more active Russia willing and able to develop and propose major ideas and initiatives on the international arena. In this context, Moscow’s proposal to reconsider the European security architecture was not an isolated act but part of a wider trend in its foreign policy that included the decision not to ratify the Energy Charter Treaty but to seek to reshape European energy architecture, as well as to develop into a regional power – with a direct and immediate effect for the southern CIS.132 Following in Russia’s footsteps, Armenia’s Defence Minister Mikael Harutyunyan stated that Yerevan also considered withdrawal from the CFE regime ‘if Azerbaijan did not stop buying and bringing in large quantities of weapons in contravention of the treaty’. Understanding the implication for its security, Baku also threatened to withdraw,

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explaining that Azerbaijan had ‘specific problems connected to the CFE Treaty’. Foreign Minister Elmar Mamedyarov stated that Baku was particularly concerned by the military situation in the seven districts occupied by Armenian forces where, in his words, Armenia was ‘illegally storing large quantities of weapons and ammunition’. Indeed, a US report commissioned as early as in 1998 stated that neither Armenia nor Azerbaijan were in compliance with CFE Treaty obligations. Yet the report added that the existing non-compliance issues were ‘not military significant’. Although minor in the overall CFE context, the accumulation of weapons by one small state represented a source of serious threat to the other. From Yerevan’s perspective, Azerbaijan’s oil wealth and the inflow of revenue from the realisation of international oil contracts allowed it to increase its military budget to $1.2 billion in 2008 compared to Armenia’s budget of under $300 million. But from Azerbaijan’s perspective, Armenia has been in occupation of Azerbaijan’s territories for over 15 years, which give it a number of tactical advantages in consolidating its stronghold over the area. What is more, the perception has prevailed that Armenia continues to enjoy the support of Russia, which has extended military assistance to its regional ally. Leading Azerbaijani newspaper Ekho commented in 2008: ‘This problem [of Russia’s withdrawal] is bound to affect Azerbaijan – its conventional arms are regulated by the same treaty, and it is in a state of war with Armenia . . . Moscow already has a military base in Armenia and undisclosed amounts of arms on occupied Azerbaijani lands. It is easy to see what arsenals Moscow can redeploy to Armenia.’133 Russia’s decision affected the strategic calculus in the region, rendering the already fragile military-diplomatic balance even more precarious. Armenia’s threats to withdraw from the treaty could not be dismissed as mere provocation, and it was understood that a decision by one of the small states to leave the treaty would lead to the withdrawal by the other. As of late 2010, neither had done so, although the events of that year have served to highlight the vulnerability of the regime. The visit of President Dmitrii Medvedev to Yerevan in August 2010 was marked by the signing of an agreement to extend the lease

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of the Russian military base at Gyumri from 25 to 49 years. In addition, the mission of the 4,000 Russian troops has been reaffirmed and expanded, with the forces now required to ‘protect Armenia’s security together with Armenian Army units’.134 According to President Serzh Sargsyan, previously the base’s operation was limited to the former Soviet Union’s external border, but this restriction has been removed in the latest agreement. It also reportedly expands Russia’s geographical and strategic responsibility, which, in conjunction with the amended version of the text, is likely to mean Russia’s extended mandate to protect Armenia’s borders not only with Turkey and Iran but also Azerbaijan and Georgia.135 This interpretation, if commonly shared by the regional actors, can have deep and long-lasting effect on the politics of the South Caucasus, where small states are still coming to terms with Russia’s decision to go to war against Georgia in August 2008. Commenting on the agreement, Azerbaijan’s Defence Ministry spokesman stated: ‘We now have all the grounds to call Armenia a dependent country. Whether Armenia has earned that status voluntarily does not matter.’136 The reaction of the head of the political department of the presidential administration, Ali Hasanov, captures the essence of Baku’s concerns. He stated: ‘The latest agreement signed by Armenia and Russia is an inter-state issue. The security of the South Caucasus and the deployment of conventional and strategic weapons in the region as well as the question of their quantity is not an issue concerning only the two countries.’ He added that Azerbaijani and Organisation for Security and Cooperation in Europe specialists were verifying whether the agreement were in contravention of Armenia’s quotas specified in the CFE Treaty. By remaining a state-party to the CFE, Azerbaijan was able to draw more international attention to its concerns over Russia’s agreements with Armenia. However, the Western response to these regional developments has remained lukewarm, and the experience from the Russian-Georgian war suggests that military support would not be forthcoming in case of the escalation of hostilities. Moreover, efforts by the international community to extend diplomatic assistance would probably focus not on the restoration of the small state’s territorial integrity but on the

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cessation of hostilities.137 These lessons from the Russian-Georgian August war have left an imprint on the perceptions of regional actors, both large and small, and will influence decision-making processes for years to come. Medvedev’s visit to Baku in September soon after the signing of the deal in Yerevan makes two points very clear. First, Russia has regained initiative in the South Caucasus, and this initiative has come at the expense of Western influence and, possibly, long-term presence. Second, military cooperation between Moscow and Yerevan is expected to increase, and Baku needs to step up its diplomacy with Russia if it does not want to lose the strategic perspective. Moscow’s short and victorious war in Georgia, the US decision not to intervene military and the lack of a coordinated and determined response by European and international institutions to both the war and its consequences have strongly contributed to creating a momentum for Russia’s new bid for leadership in the region. Russia’s increasing dissonance in relations with the West has enabled and, in many ways, complemented its greater activeness as a regional hegemon. Baku’s growing frustration with the USA, matched with inaction when the most pro-Western of the regional states was attacked, has reinforced the perception that a more cautious and balanced foreign policy course was needed to address new geopolitical realities. As the pendulum has swung, the balance that was previously so clearly in favour of the West has begun to tilt towards Russia. While bandwagoning with the regional hegemon is not, from Baku’s point of view, a policy option, Moscow’s offers to sell two of its S-300 Favorit air defence systems have received favourable hearing. Considered to be a rough analogue of the US Patriot missile system, S-300s could be used to protect Azerbaijan’s extensive energy infrastructure and pipeline network. The main source of threat here is usually considered to be Armenia, but it could also be Iran. Estimated to cost $300 million, the sale, if approved, would mark the most expensive single armaments purchase by a former Soviet republic other than Russia.138 Armenia reportedly has an earlier version of the Favorit defence system, S-300 PS, stationed on its territory, and Abkhazia received one in 2010, following Russia’s recognition of its

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independence. Indeed, in both cases, the military hardware was transferred, not bought.139 By contrast, Azerbaijan’s negotiations to buy the missile defence system highlight its continued strategic manoeuvring, as purchasing the equipment would not significantly raise Baku’s political reliance on the regional hegemon. But these negotiations also indicate a fundamental shift in Baku’s perceptions of the West, as it no longer relies for its security on either regional allies, such as Turkey, as in the early 1990s, or extra-regional allies, such as the USA, as in the late 1990s and early 2000s. With a military budget of over $2 billion, Azerbaijan today can afford to invest in the protection of its energy facilities. For Baku, the Russian-Georgian war did not usher in a new era for its foreign policy. Rather, it has provided material evidence to reinforce its existing course that favours continuous manoeuvring between Russia and the West. Indeed, Baku’s policy of restraint in advertising its ambitions to join NATO have paid off, as enlargement to the former Soviet south is no longer considered to be on the table by most of alliance members. Yet the Russian-Georgian war marked the most important regional event since the dissolution of the Soviet Union that affected the geopolitical landscape of the South Caucasus. As such, it could not but lead to some strategic reassessment and adaptation in Baku. The adaptation of the strategic balance has come in a more eastern direction than was previously the case. This is not to say that Azerbaijan has abandoned the West. Equally, there is no sign to suggest that it will do so in the future. Indeed, relations with the West in the energy sphere have strengthened enormously over the years, helping fulfil some of the key objectives of strategic manoeuvring. But Russia’s new bold bid for leadership in the region and the West’s apparent unwillingness to act assertively even in the face of invasion of a regional small state have presently moved the point of strategic balance towards Moscow. This equilibrium may change in the future in response to new circumstances and geopolitical developments. Yet the evolution of strategic manoeuvring over the course of almost two decades shows its versatility and applicability as a strategy for small states that wish to carve out a niche for themselves in the regional and global world order.

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CHAPTER 8 POSTSCR IPT AND CONCLUSIONS: WHAT FUTUR E FOR AZER BAIJANI GAS AND STR ATEGIC M ANOEU VR ING?

Energy security is and will remain a question of international significance that places Azerbaijan on the agenda of great powers, both regional and extra-regional. Speaking of the need for energy diversification, Winston Churchill once said: ‘On no one quality, on no one process, on no one country, on no one route and no one field we must be dependent. Safety and certainty in oil lie in variety and variety alone.’1 These words were not lost on military planners in the West, who throughout the Cold War drew contingency plans for cuts in supplies from the Soviet Union, plans that were enmeshed with strategies for preventing Moscow’s use of critical energy infrastructure to refuel its armoured vehicles in the event of its invading Central and Western Europe. In many respects, the EU was successful in diversifying its oil sources, with Russia supplying only one-fifth of EU oil imports in the late 1990s.2 By contrast, the EU’s dependence on Russian gas continued to grow, reaching 49.6 per cent in 2000. The issue of diversification was raised again, with the EU considering new pipelines from Algeria, such as Medgaz, as well as from the Middle East and Caspian, such as Nabucco.

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The latter was, of course, first put on the map as a project to bring Iranian gas to Europe, but the increasingly complex situation around Tehran, arising from the country’s nuclear ambitions, and the discovery of the Shah Deniz field in Azerbaijan’s offshore led to the replacement of Iran with the Caspian as the primary supplier to the pipeline. Azerbaijan’s pro-Western foreign and energy policy, and its successful implementation of the Baku-Tbilisi-Ceyhan (BTC) oil pipeline project undoubtedly helped to propel it to the forefront of the European energy security debate in the 2000s. The route for Nabucco was altered accordingly, with the pipeline now due to run from Azerbaijan to Turkey via Georgia before reaching Austria via Bulgaria, Romania and Hungary. The existence of energy lines that already link the Caspian region to the West – namely, BTC and the Baku-Tbilisi-Erzurum (BTE) gas pipeline –undoubtedly played a role in selecting a new route. But the momentum for Nabucco was still gathering force, and the project was often criticised for being political but not commercially viable. By and large, the debate went through the same loops as BTC over a decade earlier. Meanwhile, problems with the transit of gas via Ukraine were acquiring an endemic character. The issue of supply disruptions was by no means new; in fact, it arose with the disintegration of the Soviet Union when a unified centrally controlled system of pipelines collapsed and its parts were transferred to the jurisdiction of the newly independent states of Russia and Ukraine. Nevertheless, until the mid-2000s, these disruptions remained contained in scope and geography, and did not receive widespread international attention. Concerns over the safety of gas flows and the EU’s dependence on Russia only resurfaced in earnest following the December 2005–January 2006 dispute between Russia and Ukraine, which had an effect on supply flows to Europe, and was followed by even more severe disruptions in December 2008–January 2009. Adding to this were constant threats of cuts of oil and gas flows from Russia to Europe via Belarus. Against this background, Azerbaijan re-emerged as a reliable supplier to Europe able to introduce an essential element of competition into the European mix of imported gas. In other words, Azerbaijani gas supplied to Europe via either Nabucco or Interconnector TurkeyGreece-Italy (ITGI) or any other proposed regional project, such as the

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Trans-Adriatic Pipeline (TAP) to Italy, would not replace Russian gas. But it would create competition, which, together with liquefied natural gas (LNG) and other sources of pipeline gas, would strengthen the bargaining position of European states in negotiating contracts with Gazprom and forcing down prices. To put the numbers into perspective: Russia supplied over 184.4 billion cubic metres (bcm) of gas to Europe (including Turkey) in 2008, while Nabucco at its full capacity would supply only 31 bcm. Indeed, Azerbaijani gas alone is not sufficient to fill Nabucco, and a second source must be found to fill the pipeline to its projected capacity. Yet Azerbaijan’s gas from the Shah Deniz Phase II could be the primary supplier to the pipeline, enabling the project to break even and justifying the construction of the line, possibly in two stages. Thus, Azerbaijan’s significance in the European energy context is not in the overall volume of gas that it will bring to the market, but in its ability to bring new supplies independent of Russia that would diversify both sources and pipelines. Competition would increase the size and liquidity of the European market, particularly in Central and Eastern Europe, which could, in turn, set in motion the process of revising contracts with Gazprom in a manner favourable to consumers. By January 2009, when Gazprom drastically reduced supplies through Ukraine and the EU struggled to respond, Azerbaijan had already been supplying oil through BTC and gas through BTE for several years. The very existence of these pipelines bypassing Russia served as proof of both Azerbaijan’s determination not to succumb to pressure from the regional hegemon, and its ability to see through the implementation of politically sensitive and technologically complex projects. The first project, BTC, was groundbreaking, and its completion reinforced the implementation of BTE, as the two run in the same corridor. The infrastructure created for BTC and the resolution of land issues prior to its construction had in many ways facilitated BTE and reduced costs. The difficult diplomatic battles of the 1990s that Baku waged to ensure the construction of BTC are now a matter of history. But they have laid the foundations of a new regional order, which has come to be accepted by all regional actors. Despite being in an area where Russia

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officially believes it has ‘legitimate interests’, the states of the southern CIS are now actively diversifying customers for their oil and gas. Turkmenistan’s opening of a pipeline to China in December 2009 and one to Iran in January 2010 highlights the fact that the states of the southern CIS devise and implement energy projects that are consistent with their national interests, while Russia understands that it is not in a position to prevent them from doing so. This is, of course, not to say that Moscow does not seek to shift the regional energy balance in its favour. For instance, in an effort to secure volumes of Turkmen gas in the long term, it has signed inter-governmental agreements with Turkmenistan for the supply of some 80 bcm of gas per annum. However, the economic recession and reduction in European and Russian demand in 2008–10 made both the import and re-export of those volumes unnecessary. Russia slashed imports of Turkmen gas even compared to 2006 and 2007, when it purchased 41 bcm and 50 bcm, respectively. Volumes were due to increase to 60 bcm in 2009, but the actual amount imported from Turkmenistan that year proved to be just over 11 bcm. This was the result of an explosion on the Central Asia-Centre pipeline, which, according to Ashgabat, occurred after Gazprom had stopped taking volumes. The dispute escalated as Gazprom, which, faced with excess production, was also cutting output from its own mature super-giant fields and put pressure on Ashgabat to reduce price. Ashgabat refused, and Gazprom suspended the flows between April 2009 and January 2010 – in violation of the bilateral treaty. The interruptions cost Ashgabat an estimated $1 billion a month.3 The contract was finally revised during Russian President Dmitrii Medvedev’s December 2009 visit to Ashgabat. Gazprom undertook to resume imports from January 2010 at a price tied to the European oil-indexed formula, but only up to 30 bcm/annum.4 By then, Turkmenistan had opened two new lines – to China and Iran – but these only partially compensated for the loss of exports to Russia. If at any stage Azerbaijani decision-makers had been in doubt as to whether Shah Deniz output could be sent to international markets via Russia, the Turkmen episode provided a stark illustration of why the Western route remained preferable.

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Russia has sought to undermine Nabucco by offering to buy output from Phase II of the Shah Deniz field – the main source for the EU-backed line. The difference with the tactics of the past manifested itself in that Russia did not seek to disrupt the construction of Nabucco by raising legal hurdles and political objections, as it did a decade earlier with BTC. Rather, it offered to buy Azerbaijani gas at a competitive price. Gazprom is potentially in a position to offer a better netback price than the Nabucco partners. This is thanks to the existence of pipeline infrastructure between Azerbaijan and Russia and the short distance – just over 220 kilometres (km) – that the pipelines need to cross before reaching the Russian border in Dagestan. The Baku-Novo-Filya and Gazimagomed-Mozdok lines were previously used to supply Russia gas to Azerbaijan and their reversal and upgrade would be far less costly than the construction of a new line. By contrast, Nabucco is expected to be built as a dedicated pipeline – that is, a separate pipeline with transit rights that will not use the existing transportation systems of the host countries, notably Turkey, where upgrades would be necessary to accommodate additional large volumes of gas. Nabucco would, to be sure, use the 692-km existing BTE pipeline as a link in the larger chain, but that pipeline too would need to be upgraded from 8.8 bcm/annum to 23 bcm, and possibly slightly higher if output from other Azerbaijani fields became available for export via this route. However, Azerbaijan is keenly aware that the competitive prices offered by Gazprom for the output of Shah Deniz Phase II gas would not be guaranteed in the absence of access to the EU markets. This understanding stimulates, even drives, Baku’s interest in Western pipelines and will ensure that the bulk of Azerbaijani gas is transported to the EU, most probably via Nabucco. Nevertheless, the public responses of the Azerbaijani authorities have been typical of strategic manoeuvring. Repeatedly, senior officials at SOCAR stated that Baku was considering all export routes and would sell gas at a ‘good price’.5 SOCAR also expressed interest in using Gazprom’s infrastructure for transiting Azerbaijani gas to Europe, possibly in exchange for Gazprom transiting gas to Iran via Azerbaijan. Yet SOCAR President Rovnag Abdullayev is on record as stating that Azerbaijan would not touch the Shah Deniz Phase II gas

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and that SOCAR would use gas from its own fields instead.6 In line with this logic, Azerbaijan and Russia signed an agreement in October 2009 for the sale of Azerbaijani gas to Russia. The contract did not specify the supply of any volumes from Shah Deniz, but at the same time it did not set an upper limit on the amount of gas that might be purchased from Azerbaijan. This pattern is reminiscent of BTC negotiations: prior to implementing a large Western-oriented project, Baku devised a compromise to accommodate Russia’s interests. By doing so in a pro-active manner, it reduced Russia’s opposition to the project and enlarged its manoeuvring space. Moreover, by not setting an upper limit on the volume of gas to be exported to Russia, Baku was able to introduce an element of doubt into negotiations with Western partners over Shah Deniz. In a November 2010 interview, the SOCAR vice-president and chief pipelines negotiator, Elshad Nasirov, stated: ‘We still have more than three options of evacuation of our gas, through Turkey, or across the Black Sea or to other markets in Russia. And as you know, Russia is ready to buy all of our gas. Of course, we consider the Russian offer as very interesting.’7 The uncertainty that Baku was able to introduce and sustain for several months enlarged its policy space by, among other things, pressuring its much stronger neighbour Turkey, on which Azerbaijan is geographically dependent for access to the EU market. It is highly probable that despite its seemingly indecisive public stance, Baku has not seriously considered the sale of Shah Deniz output to Russia. Indeed, in September 2009, a decision was made to postpone the launch of Phase II from 2011–2 until 2016. SOCAR said the reasons were not technical but commercial: the lack of firm commitments on a pipeline via which the gas would be exported as well as the lack of clarity on transit tariffs and the price formula.8 In April 2010, Shah Deniz was delayed by another year – to 2017. In announcing the decision, a senior SOCAR official, Vitaly Baylarbayov, stated that Shah Deniz II could not be sanctioned before an investment decision had been made on the Nabucco pipeline project. Moreover, Baylarbayov stressed that Shah Deniz had to be pushed back because of the absence of an agreement with Turkey on gas prices, volumes and transport. He insisted that Turkey had priority access to Azerbaijani gas, and

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volumes available to Europe therefore depended on an agreement with Turkey.9 This line of argument placed the blame squarely on Ankara. The two-pronged approach – of signing an open-ended contract with Russia and delaying the launch of a key export field – aimed at resolving a number of outstanding issues with Turkey. The first was Turkish intransigence over the issue of buying output from Phase II of Shah Deniz and re-selling it to European consumers. Ankara later publicly distanced itself from this demand and insisted on purchasing a share of output from Shah Deniz Phase II at the Georgian-Turkish border at a discounted price. Nevertheless, it appears to have continued working on developing the first proposal behind closed doors. The second was a dispute over the price payable for the annual export of 6.6 bcm of Shah Deniz Phase I to Turkey. In negotiating the formula, Azerbaijan and Turkey had agreed to tie gas prices to oil (standard practice in most long-term contracts) and set a price ceiling that did not allow gas prices to rise above $120/1,000 cubic metres even if oil prices continued to rise. The fast-rising trajectory of oil prices in 2008 led Baku to seek to renegotiate the formula when the contract expired on 15 April 2008. As the two sides could not reach an agreement, the old agreement remained in effect, but the question of Turkey paying a heavily discounted price became an even greater issue in the light of Turkish-Armenian diplomatic initiatives. Turkish-Armenian rapprochement began in September 2008 with the so-called soccer diplomacy, when Turkish President Abdullah Gul travelled to Yerevan to attend a match between the two countries’ national teams. His visit was reciprocated by Armenian President Serzh Sargsyan, who attended a soccer match in Turkey.10 On 10 October 2009, the parties signed two Armenian-Turkish protocols: ‘On the establishment of diplomatic relations’ and ‘On the development of bilateral relations’. The border was to be opened within two months of the ratification of the protocols by the parliaments of both states and its entry into force. The authorities in Baku regarded the protocols as a betrayal of its national interests and of the founding principles on which Azerbaijan and Turkey had built their partnership since the early 1990s. The statement issued by the Azerbaijani Ministry of Foreign Affairs (MFA)

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said the Turkish decision ‘directly contradicts the national interests of Azerbaijan and overshadows the spirit of brotherly relations between Azerbaijan and Turkey built on deep historical roots’.11 President Ilham Aliyev remained highly diplomatic in his choice of words when he said: I think that if Turkish-Armenian relations normalise before the Karabakh problem is resolved, then the position of Armenia in the talks process will toughen. I am absolutely convinced that these two processes – the regulation of the Nagorno-Karabakh conflict and the opening of the Turkish-Armenian border – should move in parallel. Maybe there is no official connection between these two processes, but there is an unofficial one.12 He stopped short of publicly tying the issue of gas to the TurkishArmenian protocols, but the timing of his statement was highly suggestive, since on 16 October he emphasised that ‘for many years Azerbaijan had been selling its gas to Turkey at one-third of market price’.13 Baku was demonstrating its readiness to reconsider this position in the light of changing political dynamics in the region. Baku pressed the point further when it suggested bypassing Turkey by exporting gas to Russia, or to Europe via Russia. Indeed, four days later, SOCAR and Gazprom signed a contract for the purchase of Azerbaijani gas.14 Exports of gas to Russia began in January 2010 as stipulated in the contract, with Azerbaijan supplying around 1 bcm of gas that year via the reversed Baku-Novo Filya pipeline to Dagestan.15 Moreover, in September 2010, Gazprom Chairman Alexei Miller attended a meeting with Aliyev scheduled in the framework of Medvedev’s visit to Baku. The meeting resulted in the signing of an addendum to the gas purchase and sale contract between Gazprom and SOCAR. According to the addendum, the sides agreed that Azerbaijan would increase the volume of exported gas to 2 bcm/annum from 2011 and to ‘more than 2 bcm’ from 2012.16 By then, the pressure that Baku was seeking to exercise was primarily economic, pertaining to the terms of transiting Shah Deniz gas to Europe. This is because the majority of other

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questions, particularly with Turkey, had been settled – by and large to the satisfaction of decision-makers in Baku. Firstly, in April 2010, Sargsyan issued a decree to suspend the ratification procedure of the Turkish-Armenian protocols.17 In a televised address, he announced that this decision was in response to Turkish procrastination, which was undermining the process of normalising relations between the two states. Although both sides stated that restoring diplomatic ties was not off the table, the process has been stalled, with Turkey now linking the opening of the border to the settlement of the Nagorno-Karabakh question, and Armenia insisting on the recognition of the Armenian massacres of 1915 as genocide. Pressure from Baku was indeed not the only factor that made Ankara change its mind – other events, such as internal opposition to rapprochement in Turkey and the approval by a US congressional committee of a nonbinding resolution to recognise the genocide also contributed to it. Nevertheless, the changing dynamic in Turkish-Armenian relations threatened to affect Azerbaijan negatively, and Baku’s actions in the face of that threat were both prompt and decisive, ultimately becoming the main external driver in restoring the status quo. Secondly, in June 2010, Azerbaijan and Turkey signed a memorandum of understanding (MoU) agreeing on three areas: a new pricing mechanism for gas supplies of 6.6 bcm delivered to Turkey under a 15-year agreement from Phase I of Shah Deniz; the volume that Turkey would receive from Phase II of Shah Deniz; and transit fees for Azerbaijani gas via Turkey to the European market.18 Turkey secured the right to buy 6 bcm of output from Phase II, although its right to re-export part of this volume remained subject to further negotiations. Azerbaijan stated that it would provide some 10 bcm of Shah Deniz Phase II output to Europe, and this is the only volume that Baku’s negotiators have been prepared to guarantee.19 The transit tariff for gas transport was agreed at $2.00–2.50/1,000 cubic metres, although this information was revealed prior to the agreement and by a SOCAR executive who preferred to remain anonymous.20 Turkey also agreed to pay Azerbaijan $1.2 billion in compensation for gas consumed since April 2008. The new price reported at the time of the agreement was $250/1,000 cubic metres, but it is understood

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that it remains oil-indexed and will fluctuate with changes in the price of the oil basket to which it has been pegged. The formula remains confidential, but it is probable that Turkey will retain a discount in its gas imports from Azerbaijan relative to those from Russia.21 The MoU, though imperfect, marked a significant step forward in that it formalised an agreement in principle that had been reached in April and resolved a key problem for Southern Corridor pipelines. Remarkably, Baku held its nerve until June and was able to secure an agreement that reinforced its strategy of diversification without succumbing to the demands of its more powerful neighbours. Throughout these negotiations, Azerbaijan has sought to assure Western investors of its intention to export Shah Deniz gas to the West. For instance, Energy Minister Natig Aliyev stated that, although Azerbaijan took up the opportunity in 2010 to deliver to Russia more gas than the 0.5 bcm as originally envisaged, Russia was not ‘the main direction’ for its gas in the future.22 Moreover, in mid-2010, it became known that the consortium developing the Shah Deniz field would choose buyers for Phase II through bilateral negotiations rather than tenders.23 According to Statoil, a leading member of the Shah Deniz consortium, a number of potential customers have been identified and prequalified for negotiations. In contrast to the position that Statoil took in May 2009, when it suggested that selling gas to Russia or Europe could be equally attractive, this time there was no indication that Gazprom could emerge as a buyer. Indeed, at the Gas Infrastructure World Caspian conference held in Baku in September 2010, SOCAR exports director, Kamal Abbasov, stressed that priority was being given to European buyers and that there were no talks with Gazprom for the purchase of Shah Deniz gas.24 The idea of marketing gas from a strategically significant field through bilateral negotiations is remarkable, as it allows for non-commercial factors to become an inherent part of the decision-making process. Once again, the parallel with BTC is undeniable. At the same time, the position of the Azerbaijani government has evolved visibly since the 1990s. Firstly, SOCAR agreed with the consortium partners in Shah Deniz that it would take a leading role in talks – in contrast to Phase I of the project, in which Statoil oversees

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the sale of gas.25 Secondly, the sense of urgency that accompanied the signing and implementation of contracts with Western companies in the 1990s and even 2000s was no longer present when making a decision on the Southern Corridor pipelines. This was in part the result of steadily inflowing revenues from the projects already in operation, and Baku’s perception that it would secure a better deal by negotiating with several potential European partners offering to transport Azerbaijani gas and leveraging them against each other. Among the options considered have been Nabucco, ITGI, TAP, White Stream (to Romania via Ukraine) but also the possibility of transporting Azerbaijani gas in a compressed (CNG) or liquefied (LNG) form to markets in the Black Sea region.26 It became clear fairly early on that economics did not support the construction of LNG facilities (the CNG position is less clear-cut) in a landlocked region, while White Stream and possibly even TAP lacked the necessary level of political support and visibility.27 Nabucco and ITGI became the strongest contenders, but in private discussions, it appeared that Nabucco was regarded as the preferred option. It is then not surprising that ITGI, fearing the loss of the most likely source of gas from the region, proposed a compromise solution of linking the Italy-Greece section of the pipeline with Nabucco by building Interconnector Greece-Bulgaria (IGB). The Nabucco consortium welcomed this as an option that would allow ITGI to benefit from dedicated transit capacity through Turkey and access to gas supplies.28 Yet the Azerbaijani government kept all options on the table, as this widened its manoeuvring space. Baku made its demands clear. Firstly, whatever new gas infrastructure was built to the West from its territory, Baku insisted on securing access to European markets. This was made explicit by Nasirov when he stated: We want the right to sell our gas to the nearest markets. We do not consider the idea of Nabucco merely transporting our gas from Baku to Baumgarten. We demand from the Nabucco consortium access to the nearby markets. We are not limiting ourselves to the participating countries only.29

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Secondly, Baku insisted on Nabucco providing it with competitive tariffs. Otherwise, Azerbaijan reminded the Nabucco consortium, it had other options to Europe, such as ITGI. Thirdly, Azerbaijan would not pay for the empty capacity in Nabucco in case a second supplier to the pipeline was not found, or assume the risks associated with the failure of a selected second supplier to deliver the necessary volume. In Nasirov’s words: We will pay transport costs for our 10 bcm as if the pipeline is full. The EU is supporting Nabucco, but it is not supporting Nabucco financially in the case of a half-empty pipeline. Somebody has to take that risk and it will definitely not be us. If we agree on a half-empty pipeline, Nabucco will lose the stimulus for finding a second source. If we have to pay elevated tariffs for transport through a very expensive Nabucco pipeline, we cannot sell our gas to European consumers against a higher price . . . The costs will be reimbursed at the expense of the producers and in the long run at the expense of Azerbaijan as the host country. And we are not willing to do that.30 Thus, the second source to the pipeline had to be found by the Nabucco consortium, which had to assume the risks if Turkmen, Iraqi or any other second supplies failed to materialise. Legitimate as they were, Baku’s demands reflected its wealth of options. Baku was confident and aware of its ability not just to shape the situation. While strategic manoeuvring remained at the foundation of Baku’s conceptual approach, the tone and style of its energy negotiations in 2010 differed starkly from the early 1990s. Compared with those early years of independence, Azerbaijan’s state sovereignty no longer depended on the prompt realisation of contracts, either oil or gas. *** Despite its acquired strength in energy negotiations, Azerbaijan remains intrinsically a small state, which needs to remain extremely sensitive and attuned to changes in its external environment. Russia’s active

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diplomacy in the region was in part the result of a much-discussed but largely hollow attempt to improve (and later reset) US-Russian and, more broadly, Western-Russian diplomatic relations in 2008–10. This failure led to Moscow’s greater activism in the south, as demonstrated by energy diplomacy but also the war in Georgia. Analysing the impact of the Georgian-Russian war on risk perception in Baku policy-making circles, one analyst at the Azerbaijan MFA wrote: One should recognise that after the August events [of 2008] serious changes have taken place in the geopolitical picture of the South Caucasus. Here, the factors of risk have significantly intensified. Now, in diplomatic activities, it is considered that the geopolitical situation in this region has become very febrile and can lead to unexpected events . . . In undefined situations, arising at the regional level, one must conduct a balanced foreign policy in order to guarantee our state interests.31 This was more than a mere reaffirmation of Baku’s traditional policy of non-alliance and non-bandwagoning. The events in Georgia left a deep imprint on the political psyche of the policy-making elites. Previously, the idea that the USA was keen to support regional states to keep Russia’s expansionist ambitions in check enjoyed widespread acceptance in Baku. Support from Washington was important when Baku sought to secure the construction of new infrastructure to transport oil and gas to international markets bypassing Russia. Washington also backed Georgia’s openly pro-Western aspirations and was a key supporter of its bid to join NATO. But when Russia overran Georgia’s borders by force, the USA ruled out any kind of military response. Moreover, Washington did not even try to mobilise a common Western response or negotiate with Moscow, leaving Tbilisi to rely on the EU, which was deeply divided in its support for Georgia’s Western aspirations.32 In brief, Moscow had decided to break a cardinal rule of post-Cold War European peace – not to violate, at least openly, the territorial integrity of another state – and Georgia’s great-power ally chose not to escalate the conflict by assuming an active part in it. To Baku, this

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emphasised that, even with the dissolution of the bipolar world order, geography and structural weaknesses remained the key determinants of the options available to small states in foreign policy. From Baku’s perspective, Georgia’s openly stated ambitions of allying with the USA did not bring the support it desired; nor did they result in Georgia’s membership in NATO. Despite a broad consensus that Moscow’s actions were unacceptable, Georgia’s Western allies preferred a quick restoration of peace to the restoration of Georgia’s territorial integrity. The Russian-Georgian war thus provided Baku with a wealth of empirical evidence to reinforce its traditional strategic manoeuvring. Alliance with Russia was never on the table for Baku, but the need to accommodate Russia’s interests to the extent that it would not feel marginalised and excluded acquired new significance. On the other hand, the array of interests that Western powers had developed in Azerbaijan over the course of two decades was by and large a tribute to Baku’s ability to influence and shape the regional and international context. This was accomplished by, among other things, formulating strategic goals in a way that engaged the interest of larger states. The BTC project, its conception and the diplomacy behind its implementation, serve as a vivid illustration of Baku’s ability to create common interests with much stronger regional and extraregional powers. Once created, common interests had to be sustained on the agendas of Turkey, the UK and USA through active diplomacy. Commitment therefore created issue-specific power, which compensated for Azerbaijan’s lack of aggregate structural power. Azerbaijan’s influence over outcomes was much greater than may have been expected of a small state located too far from the Western states that it regarded as benevolent and supportive, and sandwiched between regional states that it knew had overlapping and often conflicting interests on its territory. In building its relationship with Washington, Baku skilfully promoted its geostrategic position not only in the Caucasus but the much wider region. In testimony in June 2009, Assistant Secretary of State Philip Gordon emphasised Azerbaijan’s role as ‘an important partner of the United States on regional security (especially counterterrorism)’ and of ‘our European allies in diversifying their supplies of

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natural gas’.33 Writing a year later, a prominent commentator on South Caucasus politics, Thomas Goltz, observed: There has been no murmur of a threat to close or restrict the Azerbaijan corridor [to Afghanistan], but even the remote possibility that the Azerbaijanis would do so has apparently worried Pentagon contingency planners – enough so that a decision was made to show Baku some respect, in the form of a personal letter from President Barack Obama to Azerbaijani President Ilham Aliyev.34 This ‘art of creating power’ through a successful implementation of strategy reveals that international politics is not like chess where ‘the various pieces have a constant defined value’. Rather, it is like cooking, in which fusing together potentially innumerable ingredients that exist in international and domestic contexts can enable a state, however small, to enhance its freedom of action and geopolitical weight.35 Maintaining the initiative in dealing with great powers is in and of itself a very significant achievement for any small or medium-sized state. It is hindered by the constantly changing international context, the limited political, economic and diplomatic resources that any small state has at its disposal, and the resultant difficulty of managing to stay on the agenda of a great power with which it seeks to create common interests. It is therefore highly significant that Azerbaijan has continuously promoted and raised its visibility as a regional player that does not take its cues from Moscow and acts as a trustworthy ally of Washington, even in the face of legal hurdles such as those posed by Section 907. Despite having accomplished a number of projects that create and promote common interests in the region, the government in Baku remains aware of Azerbaijan’s tactical and, consequently, most likely temporary, significance to Washington. It has become more of a source of discontent since 2008 than it was in the past. The official attitude has shifted to placing greater emphasis on demanding acknowledgment and respect from Washington, which Baku believes needs to start thinking of Azerbaijan in terms of Azerbaijan. For instance, the

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post of US ambassador to Azerbaijan had remained vacant for over a year before Obama nominated Matthew Bryza, a career diplomat with years of experience in the South Caucasus, in May 2010. Baku welcomed Bryza’s candidacy, but it had been known all along that his nomination would prove contentious.36 A major hurdle was cleared in mid-September, when the US Senate Committee on Foreign Relations voted 17–2 in favour of confirming the presidential nominee. But a potential roadblock arose afterwards, when Senator Barbara Boxer prevented a full Senate vote by placing a hold on the nomination. Indeed, Boxer, who represents California – the US state with the largest Armenian-American constituency – strongly questioned Bryza at the hearing over why he had not explicitly condemned Azerbaijan for a firefight several months earlier near NagornoKarabakh that left one Azerbaijani and four Armenian soldiers dead. Armenian officials had described the incident as an act of Azerbaijani aggression, while Azerbaijan stated it was a consequence of Armenia’s failure to withdraw from its territory.37 The lobbying of Armenian groups in Congress and Boxer’s statement of the need to ‘speak out forcefully in the face of continued Azerbaijani aggression toward Nagorno-Karabakh’ delayed a favourable outcome for Baku, adding insult to injury by labelling it the aggressor on its own territory.38 On 29 December 2010, the White House issued a memo stating that President Obama had exercised his executive powers to make six recess appointments.39 Matthew Bryza was among the appointees. Although on this occasion the White House was able to circumvent Congress, discontent and frustration have been growing in some Baku policymaking circles that Azerbaijan does not receive sufficient support from the White House. If these perceptions prevail, then issues such as Section 907, which as of late 2010 still remained formally in place, will resurface as real irritants in a relationship that has developed beyond what few could envisage in the early 1990s. US policy in the region contrasts with Russia’s stance, particularly in security, where Moscow is clearly making a comeback. Baku cannot and does not take lightly the signing of an agreement to extend the lease of the Russian military base at Gyumri in Armenia from 25 to 49 years, as well as the expansion of the already 4,000-strong Russian

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mission in a country with which it is formally at war. It is in this context of reduced engagement of the USA and enhanced diplomatic initiative from Russia that Baku gave a favourable hearing to Moscow’s offers to sell two S-300 Favorit air defence systems to Baku. Russia has regained the initiative in the South Caucasus, and Azerbaijan will step up its diplomacy, both bilateral and multilateral, in order not to lose the advantageous regional position that it has earned through the consistent pursuit of strategic manoeuvring. *** Strategic manoeuvring will remain at the foundation of Azerbaijan’s foreign policy for years to come. In its dealings with great powers, both proximate and distant, Azerbaijan will use the three clusters of tactics that have proven their effectiveness in the past. Firstly, it will take advantage of the specificities of the domestic political system of Russia, which it continues to distrust and perceive as a source of diplomatic and potentially military threat. The aim, as in the past, will be to accommodate some of the vested interests within the Russian political system, by giving them stakes to defend against the opponents that Baku may have within Russia. Azerbaijan would then be able to proceed with strengthening its cooperation with the West. Secondly, Azerbaijan will continue to use its energy resources to create areas of common interests with Western powers (as well as Russia). The addition of gas to oil has enlarged Baku’s manoeuvring space, and active diplomacy is likely to be pursued to redefine Azerbaijan from a key producer state in the Caspian into a vital transit state once its own production plateaus. Thirdly, active diplomacy and high-quality negotiators will enable Azerbaijan to maintain commitment and issue-focus. The examples of BTC and, more recently, Nabucco show that the government attaches importance to sending strong negotiators to the table capable of persuading the opposite side to see and accept Azerbaijan’s positions and national interests. Azerbaijan is no longer the inexperienced state it was in the early 1990s, and the accumulating successes are playing to its advantage.

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For two decades since its independence, Azerbaijan has not abandoned the West. There is no sign to suggest that it will do so in the future. Yet pursuing strategic manoeuvring is a difficult exercise that requires vigilance, attention to detail and pro-activeness. Skilfully applied, it has shaped the regional and international context which, at first sight, seemed beyond the reach of a small state on the periphery of the former Soviet Union. Azerbaijan’s strategic manoeuvring has transformed the Caspian into a key energy region, which continuously draws international attention. It has also made the country part of the ongoing efforts to stabilise Afghanistan, helping the South Caucasus shed the image of Russia’s ‘backyard’. Baku’s policy has shown that a multitude of interests can co-exist in the same geopolitical and geostrategic space without resulting in a military confrontation. The timeliness of the Western response will prove crucial in the future; a failure to act could lead to discouragement particularly in the post-war climate between Russia and Georgia. Bandwagoning with Russia will always be on the table for all small states in this great power’s vicinity. The choice of allying with Russia will at times seem attractive and will, if adopted, be easier to pursue than the complicated and risk-prone strategy of manoeuvring. Yet it is also a choice, which, if adopted, would prove detrimental to the sovereignty of the bandwagoning state. It is a choice that the West has the ability to discourage through cooperation and support. For Azerbaijan, as a small state that wished to carve out a niche for itself in the new world order, strategic manoeuvring has proven its versatility. It is a route that can be fruitfully explored and exploited by others.

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Chapter 1 Introduction: Azerbaijan in Great Power politics 1. These works draw essentially on the writing of nineteenth century British geographer Halford Mackinder, who wrote of a ‘distant land in the closed heart of Eur-Asia, which [was] most likely to become the seat of world power.’ (H.J Mackinder, The Geographical Pivot of History (London: Royal Geographical Society, 1904), p. 216.) The term was first introduced into mainstream consciousness by Rudyard Kipling in his 1901 novel Kim. See also Peter Hopkirk’s outstanding book on the nineteenth century struggle, The Great Game: The Struggle for Empire in Central Asia (Kodansha International, 1992). A formal contemporary reformulation of this theory is found in the work of Russian geostrategist Aleksandr Dugin, Osnovy Geopolitiki: geopoliticheskoie buduscheie Rossii (Moskva: Arktogeia, 1997); for a popular interpretation of the theory, see S. Rob Sobhani, ‘The ‘great game’ in play in Azerbaijan’, The Washington Times, 20 February 1997, A13. 2. Ariel Cohen, ‘The “New Great Game” Pipeline Politics in Eurasia’, Caspian Crossroads, vol. 2 (1), 1996, pp. 26–39; M.E. Ahrari, ‘The dynamics of the new Great Game in Muslim Central Asia’, Central Asian Survey, vol. 13 (4), 1994, pp. 525–39; a series of Caspian Watch decision briefs, Publications of the Centre for Security Policy, esp. 2 October 1995; 1 November 1995; 25 February 1997, online http://www.security-policy.org/papers. 3. For a similar critique, especially of the role of international oil companies in the New Great Game, see Laurent Ruseckas, ‘State of the Field Report: Energy and Politics in Central Asia and the Caucasus’, NBR Publications:

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Access Asia Review, vol. 1 (2), essay 2, July 1998, online https://www.ubr.org/ publications/review /vol1no2/essay2.html. 4. See, for instance, Yosef Jaffarov, Between East and West: Is Azerbaijan on the way to independence? (The Harry S. Truman Research Institute for the Advancement of Peace, The Hebrew University of Jerusalem, May 1996). Jaffarov’s realpolitik analysis leads him to conclude, ‘It appear, then, that Azerbaijan’s loss of independence in the near future is the most likely turn of events in light of present realities.’ (p. 17). 5. Lt. General William Odom, ‘The Caspian Sea Littoral States: The Object of a New Great Game?’ Caspian Crossroads, vol. 3 (3), 1998, pp. 12–8.

Chapter 2

How do small states survive?

1. The theory that ‘small is beautiful’ was developed by British development economist E. F. Schumacher. For the report, see Royal Commonwealth Society, The Small States and the Commonwealth: Report of the Annual Conference 1984 (RCS, 1984), p. 8. 2. Robert L. Rothstein, Alliances and Small Powers (New York: Columbia University Press, 1968), pp. 12–3. 3. Jacqueline Anne Braveboy-Wagner, ‘The English-speaking Caribbean states: A triad of foreign policies’, in Jeanne Hey (ed), Small States in World Politics: Explaining Foreign Policy Behaviour (London: Lynne Rienner Publishers, 2003), pp. 31–51. 4. Roderick Pace, ‘Small states and the internal balance of the European Union: The perspectives of small states’, in Jackie Gower and John Redmond (eds), Enlarging the European Union: The Way Forward (Burlington: Ashgate, 2000), pp. 107–19. 5. Ronald P. Barston, ‘Introduction’, in Ronald P. Barston (ed), The Other Powers: Studies in the Foreign Policies of Small States (London: George Allen & Unwin, 1973), pp. 13–28: 14. He also argued that small states were characterised by low levels of socio-economic development and international involvement. Similarly, David Vital sets the limit on the small state by suggesting a population size of less than 10–15 million people in the case of economically advanced states and 20–30 million in the case of developing countries. See The Inequality of States: A Study of the Small Power in International Relations (Oxford: Clarendon Press, 1967), p. 8. 6. Qatar’s GDP had increased from $17.4 billion in 2003 on the back of strong oil and gas prices, and the country’s ability to widen its export base by diversifying into liquefied natural gas (CIA, The World Factbook: Qatar, 2003 and 2008).

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7. Peter R. Baehr, ‘Small states: A tool for analysis?’ World Politics, vol. 27 (3), April 1975, pp. 456–66. 8. Robert Keohane, ‘Lilliputians’ dilemmas: Small states in international politics’, International Organization, vol. 23 (2), Spring 1969, pp. 291–310: 296. 9. Baehr, ‘Small states’, p. 466. 10. Erling Bjøl, ‘The small state in international politics’, in August Schou and Arne Olav Brundtland (eds), Small States in International Relations, Nobel Symposium 17 (Stockholm: Almqvist & Wiksell, 1971), pp. 29–39: 29. 11. Vital was the first to distinguish explicitly between intrinsic (given) and contingent (accruing) resources. See Vital, ‘Small Power Politics’, in Small States in International Relations, pp. 15–27. 12. Hey, ‘Introducing small state foreign policy’, in Small States in World Politics, pp. 1–11, 2; Franz von Daniken, ‘Is the notion of small state still relevant?’ in Laurent Goetschel (ed), Small States Inside and Outside the European Union: Interests and Policies (Dordrecht: Kluwer Academic, 1998), pp. 43–8. 13. Vital, The Inequality of States, p. 33. 14. Braveboy-Wagner, ‘The English-speaking Caribbean states’, p. 32. 15. Rothstein, Alliances and Small Powers, p. 7. 16. Stephen G. Walker, ‘The relevance of role theory to foreign policy analysis’, in Stephen G. Walker (ed), Role Theory and Foreign Policy Analysis (Durham: Duke Press Policy Studies, 1987), pp. 1–14. 17. Judith Goldstein and Robert O. Keohane, ‘Ideas and foreign policy: An analytical framework’, in Judith Goldstein and Robert O. Keohane, (eds) Ideas and Foreign Policy: Beliefs, Institutions, and Political Change (London: Cornell University Press, 1993), pp. 3–30; Geoffrey Garrett and Barry W. Weingast, ‘Ideas, interests, and institutions: Constructing the European Community’s internal market’, in Ideas and Foreign Policy, pp. 173–206; Albert S. Yee, ‘Thick rationality and the missing “brute” fact: The limits of rationalist incorporation of norms and ideas’, The Journal of Politics, vol. 59 (4), November 1997, 1001–39: 1025–7. 18. See, for instance, Chadwick F. Alger and Steven J. Braws, ‘Patterns of representation in national capitals and intergovernmental organisations’, World Politics, vol. 19 (4), July 1967, pp. 646–63. Statistical analysis also came to the conclusion that small states participate in more joint behaviour events than large states. See Maurice East, ‘Size and foreign policy behaviour: A test of two models’, World Politics, vol. 25 (4), July 1973, pp. 556–76: 565. 19. Keohane, ‘Lilliputians’ dilemmas’, p. 294. 20. The small states were particularly enthusiastic about joining the League. Five of the seven European micro-states also applied for membership. Luxembourg was admitted, but Liechtenstein’s application was rejected in

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22.

23.

24.

25.

26. 27.

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the same month. This came as a shock to Monaco, which withdrew its application; San Marino, which failed to respond to the secretary-general’s request for more information; and Iceland, whose application was conveniently forgotten. See Sheila Harden (ed), Small is Dangerous, Report of a Study Group of the David Davies Memorial Institute of International Studies (London: Frances Pinter Publishers, 1985), pp. 14–17. The small states that joined the League did so out of conviction in the principle of collective security. The same states’ participation in the UN has reflected ‘a keen recognition of the operative inapplicability of that concept’. See Efraim Karsh, Neutrality and Small States (London: Routledge, 1988), p. 116. See, for instance, Jacques Rapaport, Ernest Muteba and Joseph J. Therattil, Small States and Territories: Status and Problems, A UNITAR Study (New York: Arno Press, 1971), pp. 114–9. ‘Letter from the Azerbaidjan peace delegation: Admission of the Azerbaidjan Republic to the League’, 20/48/68, Assembly Document 669, 1 November 1920, in Diplomatiya Alemi, Archival Materials section, vol. 1 (2002), pp. 230–8: 232. ‘Letter from the president of the peace delegation of the Republic of Azerbaidjan’, 11/15480/2558, Assembly Document 955, 4 September 1921, in Ibid., vol. 4 (2003), pp. 188–94: 190. ‘Memorandum on the application for the admission of the Republic of Azerbaidjan to the League of Nations: Memorandum by the secretarygeneral’, 20/48/68, Assembly Document 108, in Ibid., vol. 2 (2003), pp. 178–84; ‘Letter from the president of the peace delegation of the Republic of Azerbaidjan’, 20/48/206, Assembly Document 206, 7 December 1920, in Ibid., vol. 3 (2003), pp. 203–9. Interview with Juri Luik, Estonian foreign minister (1994–5), 12 March 1998, quoted in Nicholas Redman, Dilemmas of Engagement: Estonian, Latvian and Lithuanian policies towards Russia, unpublished DPhil thesis submitted to the University of Oxford, 1999, p. 19. Author’s interview with Azerbaijani Foreign Minister Hasan Hasanov, 19 January 2002. By 2004, Azerbaijan had set up only 20 embassies around the world (with a goal of increasing the number to 40) and hosted around 30 foreign embassies on its territory. See interview with Azerbaijani President Ilham Aliyev, ANS News, 2 February 2004. Rapaport, Muteba and Therattil, Small States and Territories, p. 114. Hey, ‘Refining our understanding of small state foreign policy’, Small States in World Politics, pp. 185–95: 188–9. Stephen Krasner, ‘Westphalia and all that’, in Judith Goldstein and Robert O. Keohane (eds), Ideas and Foreign Policy: Beliefs, Institutions, and Political Change (London: Cornell University Press, 1993), pp. 235–64.

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31. Hedley Bull, The Anarchical Society (London: Macmillan Press, 1995), p. 133. 32. Annette Baker Fox, The Power of Small States: Diplomacy in World War II (Chicago: Chicago University Press, 1959). 33. See, for instance, Jacques Freymond, ‘The European neutrals and the Atlantic community’, International Organization, vol. 17 (3), 1963, pp. 592–609. 34. Turkmenistan example is interesting in this regard. Turkmen President Saparmurad Niyazov announced the adoption of ‘permanent positive neutrality’ at the Helsinki Summit in 1992, but has subsequently asked for help against the involvement of ‘foreign hands’ in the country’s affairs. As has been argued above, drawing on external help in peacetime undermines the credibility of the policy of neutrality. Indeed, analysts and policy-makers have expressed scepticism about the viability and substance of this policy. (See, for instance, Paul Brummell, British Ambassador to Turkmenistan, ‘Turkmen foreign policy’, paper presented at Turkmenistan Workshop, St. Antony’s College, Oxford University, 18–19 June 2004.) 35. George Liska, Alliances and the Third World (Baltimore: Johns Hopkins Press, 1968), p. 3. 36. George Modelski, ‘The study of alliances: A review’, Journal of Conflict Resolution, vol. 7 (4), 1963, 769–76. 37. Glenn H. Snyder, ‘Alliance theory: A neorealist first cut’, Journal of International Affairs, vol. 44 (1), 1990, pp. 103–23: 105. 38. Rothstein, Alliances and Small Powers, pp. 263–4. 39. Vital, The Inequality of States, p. 186. 40. Jaquet, in Small States in International Relations, pp. 57–71: 68. 41. For a discussion of Latvia’s perceptions of NATO and EU expansion, see Dirk Crols, ‘Latvia and the construction of a new Europe’, paper presented at the fifth international postgraduate conference at the School of Slavonic and East European Studies (SEES), University College London, Four Empires and an Enlargement: States, Societies and Individuals: Transfiguring Perspectives of Central and Eastern Europe, 6–8 November 2003. 42. Arne O. Brundtland, ‘The Nordic countries as an area of peace’, in Small States in International Relations, pp. 129–145: 140. 43. Author’s interview with Rasizade, 12 January 2004. 44. Evidence exists that East European countries have tended to act together in both NATO and the EU, in presenting an anti-Russian and/or pro-US front. Since the gas dispute of January 2009 between Ukraine and Russia, new EU member-states, which are heavily reliant on Russia gas, have acted together to promote their concerns. As a result, the European Commission

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51. 52.

53.

54.

55.

56.

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has placed new interconnections within the EU on its agenda as a priority project aimed at enhancing energy security, and has allocated funding for this purpose. Earlier examples exist. At the height of the NATO debate over the war in Iraq, East European states took the side of the USA, for which they were publicly rebuked by then French President Jacques Chirac, who stated that new member-states had ‘missed a good opportunity to keep quiet’. (See Oxford Analytica Daily Brief, 19 February 2003 and 17 May 2004.) Rothstein applies this conclusion less to great-small power alliances than to equal partner coalitions, Alliances and Small Powers, pp. 262–3; p. 50. Keohane, ‘Lilliputians’ Dilemmas’, p. 302. Vital, Inequality of States, p. 5. Michael Handel, Weak States in the International System (London: Franc Cass, 1990), p. 68. Marshall Singer, Weak States in a World of Powers: the Dynamics of International Relationships (New York: Free Press, 1972). See, for instance, Handel, Weak States in the International System, p. 72; Fox, The Power of Small States, pp. 1–13; Karsh, Neutrality and Small States, pp. 43–58; 136. Peter Katzenstein, Small States in World Markets: Industrial Policy in Europe (Ithaca: Cornell University Press, 1985). William Mark Habeeb, Power and Tactics in International Negotiation: How Weak Nations Bargain with Strong Nations (London: The Johns Hopkins University Press, 1988). Commitment is often the small state’s strongest card given that its stakes are much higher than those of a large state. See Habeeb, Power and Tactics in International Negotiation, pp. 22–23; Alexander L. George, Bridging the Gap: Theory and Practice in Foreign Policy (Washington, DC: United States Institute for Peace Press, 1993), p. 111. Although this offer was subsequently rejected by AIOC shareholders, Turkey’s lobbying for the pipeline did much to raise the visibility of the ‘Western’ route for Azeri oil via Georgia and to promote BTC as the outlet for main oil. For further discussion, see Chapter 5. ‘Azerbaijan to stop oil exports through Russia on January 1’, MosNews, 7 December 2006, online http://bakudot.blogspot.com/2006_12_01_archive. html. Exports via the Baku-Novorossiysk line subsequently resumed, but the capacity of the pipeline was not doubled, as initially envisaged, because of the existence of other outlets for Azeri light. Charles Lockhart, Bargaining in International Conflicts (New York: Columbia University Press, 1979), p. 92.

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57. Robert O. Keohane and Joseph S. Nye, Power and Interdependence (New York: Longman, 1989), p. 21. 58. John Odell, ‘Latin American trade negotiations with the United States’, International Organization, vol. 34 (2), 1980, pp. 207–28. 59. Stephen Walt, The Origins of Alliances (Ithaca: Cornell University Press, 1987). 60. Jack Levy, ‘The causes of war: A review of theories and evidence’, in Philip E. Tetlock et al (eds), Behaviour, Society, and Nuclear War (New York: Oxford University Press, 1989), p. 231. 61. Kautilya, Arthashastra, Rudrapatnam Shamasastry (tr), vol. 4 (Mysore, 1923), p. 2. 62. Walt, ‘Alliances, threats and US grand strategy: A reply to Kaufman and Labs’, Security Studies, vol. 1 (3), 1992, pp. 448–82: 471. 63. Miriam Fendius Elman, ‘The foreign policies of small states: Challenging neorealism in its own backyard’, British Journal of Political Science, vol. 25 (2), 1995, pp. 171–217: 177. 64. Walt, ‘Alliances, threats and US grand strategy’, p. 472. 65. John J. Mearsheimer, ‘A Realist Reply’, in International Security, vol. 20 (1), 1995, pp. 82–93. This article was published in response to the four pieces that disagreed with Mearsheimer’s original article ‘The False Promise of International Institutions’, in International Security, vol. 19 (3), 1994–95, pp. 5–49. 66. Eric J. Labs, ‘Balancing vs. bandwagoning: Do weak states bandwagon?’, Security Studies, vol. 1 (3), 1992, pp. 383–416: 393. 67. In each of the three historical cases that Labs examines, he looks at a set of ideational factors. In the case of the Danish war, he concentrates on the expectations that Denmark held of Britain; in the case of the small German principalities caught up in the Austro-Prussian war, he examines the beliefs of the weak that Prussia would ultimately be defeated by Austria; and in the case of the small German principalities faced with an imminent Prussian threat, he examines their will to preserve independence and their subsequent choice to fight for it. Nevertheless, Labs claims that he seeks to contribute to the neorealist literature and does not introduce an assumption on the role of ideational factors, which creates inconsistency between his methodology and analysis. 68. Nikolaos Zahariadis, ‘Nationalism and small-state foreign policy: The Greek response to the Macedonian issue’, Political Science Quarterly vol. 109 (4), pp. 647–67. 69. Jerel A. Rosati, ‘A cognitive approach to the study of foreign policy’, in Laura Neack, Jeanne Hey and Patrick J. Haney (eds), Foreign Policy Analysis: Continuity and Change in Its Second Generation (Englewood Cliffs: Prentice Hall, 1995), pp. 53–82.

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70. See, for example, Richard Snyder, H.W. Bruck and Burton Sapin, Foreign Policy Decision-Making (New York: Free Press, 1962). 71. Charles Reynolds, The World of States: An Introduction to Explanation and Theory (Aldershot: Edward Elgar, 1992). 72. Graham Allison, Essence of Decision: Explaining the Cuban Missile Crisis (Boston: Little, Brown and Company, 1971); Jutta Weldes, ‘Constructing national interest’, European Journal of International Relations (September 1996), pp. 275–318; Krasner, ‘Are bureaucracies important? (or Allison Wonderland)’, Foreign Policy, vol. 7, Summer 1972, pp. 159–79. 73. Andrew Moravscik, ‘Taking preferences seriously: A liberal theory of international politics’, International Organization, vol. 51 (4), 1997, 513–53. 74. Kenneth Waltz, Theory of International Politics (Reading: Addison-Wesley, 1979), p. 18. 75. Author’s interview with Sabit Bagirov, 18 February 2004. 76. Robert Jervis, Perceptions and Misperceptions in International Politics (Princeton: Princeton University Press, 1976), p. 16. 77. This paragraph draws heavily and elaborates on William A. Scott, ‘Psychological and social correlates of international images’, in Herbert C. Kelman (ed), International Behaviour: A Social-Psychological Analysis (London: Holt, Rinehart and Winston, 1966), pp. 71–103: 73–4. 78. The 1996 denunciation was a product of the increasingly confrontational nature of relations between the Russian president and the legislature. Boris Yeltsin, having won the battle against the Supreme Soviet in 1993, threatened to dissolve the Duma for this resolution. A second attempt came in May 1999, when the Duma tried to impeach the president. (See, for instance, Interview with Anatoly Lukyanov, State Duma deputy and former chairman of the USSR Supreme Soviet, ‘Putin follows the lines of Gorbachev and Yeltsin’, Pravda, 25 January 2002, reprinted in Johnson’s Russia List (JRL), 26 January 2002, online (www.cdi.org/russia/johnson/6041–8.cfm), accessed on 12 June 2005. 79. ‘Statement with regard to the annulment by the Russian Federation State Duma of the Belovezhskaya Pushcha”’, 16 March 1996, Musteqilliyimiz Ebedidir, vol. 7 (Baku: Azerneshr, 1997), pp. 456–9. 80. Ibid., p. 459. 81. Karl W. Deutsch and Richard L. Merritt, ‘Effect of events on national and international images’ in International Behaviour: A Social-Psychological Analysis, pp. 132–87: 146; for empirical research, see Leon Festinger, Henry Riecken and Stanley Schachter, When Prophecy Fails (Minneapolis: University of Minnesota Press, 1956), pp. 3–6; 193–233. 82. Yuen Foong Khong, Analogies at War: Korea, Munich, Dien Bien Phu and the Vietnam Decisions of 1965 (Princeton: Princeton University Press, 1992), pp. 28, 44–6.

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83. Deutsch and Merritt, ‘Effect of events’ pp. 157–9. 84. James N. Rosenau, The Scientific Study of Foreign Policy (London: Pinter Ltd., 1980), pp. 18–25. 85. Carlsnaes, ‘The agency-structure problem in foreign policy analysis’, International Studies Quarterly, vol. 36 (1992), pp. 245–70: 256. 86. Alexander Wendt, ‘Constructing international politics’, International Security, vol. 20 (1), Summer 1995, pp. 71–81. 87. Alexander Wendt, Social Theory of International Politics (Cambridge: Cambridge University Press, 1999), pp. 26–40. 88. In his analysis, David Dessler also presents a dynamic ‘transformational model’, which gets its name from the argument that ‘it is only through the actions of agents that structure is reproduced (and potentially transformed)’. See Dessler, ‘What is at stake in the agent-structure debate?’, International Organization, vol. 43 (3), Summer 1989, pp. 441–73. 89. Michael Clarke, ‘The foreign policy system: A framework for analysis’, in Michael Clarke and Brian White (eds), Understanding Foreign Policy: The Foreign Policy Systems Approach (London: Edward Elgar, 1995), pp. 27–59. 90. Vital, The Inequality of States, p. 107.

Chapter 3 Personalities, processes, institutions: Sculpting Azerbaijan’s foreign and energy policy 1. Bakinskii Rabochii, 12 June 1991, p. 2. 2. Neil Malcolm and Alex Pravda, ‘Introduction’, in Malcolm, Pravda, Roy Allison and Margot Light (eds), Internal Factors in Russian Foreign Policy (New York: Oxford University Press for the Royal Institute for International Affairs, 1996), pp. 1–32: 9. 3. Zerkalo, 6 February 1993, pp. 1, 4. 4. Mahmoud El-Said, former head of UN Office in Azerbaijan, ‘Azerbaijan and the UN: Recollections of the difficult years 1992–95’, in Alexandros Petersen and Fariz Ismailzade (eds), Azerbaijan in Global Politics: Crafting Foreign Policy (Azerbaijan Diplomatic Academy, 2009), pp. 85–96. 5. Author’s interview with Dilara Seidzade, head of the Presidential Secretariat (2002-present) and previously Aliyev’s close aide (1994–2002), 29 March 2004. 6. Zerkalo, 6 February 1993, p. 4. 7. El-Said, ‘Azerbaijan and the UN’, p. 90. 8. Die Zeit interview with Vaclav Havel, quoted in RFE/RL Caucasus Report, 9 July 2004, vol. 7(27). 9. Aliyev, speech at cabinet of ministers meeting, 3 May 1995, Musteqillik Yollarinda, vol. 2, pp. 311–37: 313–4.

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10. Aliyev, speech at cabinet of ministers meeting, esp. pp. 311, 313, 317, 318. 11. Both Fuad Kuliyev (1994–6) and Artur Rasizade (1996–2003, 2003–present) matched these criteria. The appointment of Ilham Aliyev as prime minister in August–November 2003 was different in that it was intended to be temporary and helped raise his political profile domestically and internationally. 12. For a typology of various decision structures, see Charles Hermann, ‘Decision structure and process influences on foreign policy’, in Maurice East et al. (eds), Why Nations Act (Beverly Hills: Sage Publications, 1978), pp. 69–102. 13. Guluzade, Sredi Vragov i Druzei: Stat’i, Interv’yu, Vystupleniya (Baku, 2002), p. 11; Interview, Ekho Forum, 1 May 2004. 14. Author’s interview with Guluzade, 22 April 2004; for Bagirov’s point of view, see interview in Ekho Forum, 1 May 2004; for additional insights see author’s interview with Kuliyev, 6 January 2005. 15. Term borrowed from Y.M. Baturin, A.L. Il’in, V.F. Kadatskii, V.V. Kostikov, M.A. Krasnov, A.Ya. Livshitz, K.V. Nikiforov, L.G. Pikhoia, G.A. Satarov, ‘Diplomat N1’, in Epokha Yeltsina: Ocherki Politicheskoi Istorii (Moskva: Vagrius, 2001), pp. 24–5. 16. Author’s interview with Prime Minister Artur Rasizade, 28 December 2004; the same opinion was expressed by former Prime Minister Kuliyev (Author’s interview, 6 January 2005). 17. The theoretical insights draw on Alexander L. George and Eric Stern, ‘Presidential management styles and models’, in Alexander L. George and Juliette L. George (eds), Presidential Personality and Performance (Boulder: Westview Press, 1998), pp. 199–280. 18. Author’s interview with Kazimirov, by correspondence, 30 January 2005. 19. Author’s interview with Kuliyev, 6 January 2005. 20. For an excellent theoretical discussion, see W.L. Bennett, The Political Mind and the Political Environment (Lexington: Lexington Books, 1975), esp. pp. 33–5. 21. Hikmet Hajizade, ‘Elchibey’s death not expected to significantly alter Azerbaijan’s political aspect’, Eurasia Organization, 31 August 2000. 22. For bibliographic details, see ‘Heydar Aliyev: Major career milestones’, Azerbaijan International, vol. 7 (4), Winter 1999; Jeremy Bransten, ‘Azerbaijan: Biography of deceased former President Heydar Aliyev’, a EurasiaNet partner post from RFE/RL, Eurasia Insight, 11 February 2004, online http:// www.eurasianet.org/departments/insight/articles/pp121403.shtml. 23. Aliyev became acting president following Elchibey’s escape to his home village of Keleki. He was elected president on 3 October 1993. 24. For an illustrated chronology of Aliyev’s life, see Nazim Ibragimov and Akif Muradverdiyev, in Nahad Aliyev and Zaur Aliyev (eds), Prezident Heydar

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25. 26. 27.

28. 29. 30.

31. 32.

33.

34. 35.

36.

37.

38.

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Aliyev (in Azerbaijani), printed in Turkey for Azerneshr, Baku (2000), vol. 1, pp. 31–45. Author’s interview with Kazimirov, 29 January 2005. Richard E. Neustadt, Presidential Power: The Politics of Leadership (New York: John Wiley and Sons Inc., 1962), p. 2. Private interview with Nazim Ibragimov, director of GosKomIzdat and former press minister, 17 February 2004. It should be emphasised that Ibragimov referred to this quality as an overwhelmingly positive one. Aliyev, speech delivered at the first meeting with compatriots living in Sweden, 3 February 1995, Musteqillik Yollarinda, vol. 2, pp. 56–65. Musteqillik Yollarinda, vol. 2, pp. 60–61. Rasul Guliyev subsequently went into exile in the USA. Baku repeatedly tried to have him extradited, but the absence of an inter-governmental agreement between the USA and Azerbaijan on extradition led to Washington’s refusal, according to former US Ambassador to Baku Reno Harnish. Alexander L. George, Presidential Decision-Making in Foreign Policy: The Effective Use of Information and Advice, p. 84–6. Interview with Aliyev by Azerbaijani TV channel ANS, 19 February 2002, Heydar Aliyev’s official website, online http://www.heydar-aliyev.org/s05_ interview/_interview_r.html. For investors’ complaints, see the conference on ‘Investment opportunities in Azerbaijan’ at the Adam Smith Institute in London, 29–30 November 1995; also Akhundova, Mgnoveniia Istini, p. 68; and interview with Kuliyev, 1 March 2004. Transcript of meeting of the Cabinet of Ministers, Musteqillik Yollarinda, vol. 2, pp. 70–82. Aliyev, speech delivered at the first meeting of the committee in charge of the implementation of the oil contract, 24 January 1995, Musteqillik Yollarinda, vol. 2, pp. 48–52. Aliyev, speech delivered at a meeting with the representatives of the oil-gas complex of Azerbaijan, 20 September 1995, Mysteqillik Yollarinda, vol. 2, pp. 600–19, 605–6. For theoretical insights, see James A. Robinson and Richard C. Snyder, ‘Decision-making in international politics’, in Herbert C. Kelman (ed), International Behaviour: A Social-Psychological Analysis (London: Holt, Rinehart, and Winston, 1966), pp. 435–63. Numbering 2–7 persons, real-world decision-making groups are generally quite small. Their size is further reduced at times of crises or when crucial choices have to be made. See George, Presidential Decision-Making in Foreign Policy, pp. 82–6; Thomas E. Cronin and Sanford D. Greenberg (eds), The

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39.

40.

41.

42. 43.

44. 45.

267

Presidential Advisory System (New York: Harper & Row, 1969); Victor H. Vroom and Philip W. Yetton, Leadership and Decision-Making (Pittsburgh: University of Pittsburgh Press, 1973); Irving Janis, ‘A preliminary study of the size determinant in small group interaction’, American Sociological Review, vol. 16 (1951), pp. 474–7. Irving Janis, Crucial Decisions: Leadership in Policy-Making and Crisis Management (New York: Free Press, 1989); Helen E. Purkitt, ‘Political decision-making in small groups: The Cuban missile crisis revisited – one more time’, in Eric Singer and Valerie Hudson (eds.), Political Psychology and Foreign Policy (Boulder: Westview Press, 1992), pp. 219–46; George, Presidential Decision-making in Foreign Policy: The Effective Use of Information and Advice (Boulder: Westview Press, 1980), esp. ch. 4, ‘The president and his advisers: Structures, internal processes, and management of small groups’, pp. 81–108. The term was introduced by Irving Janis to explain the pattern of conformity in small group decision-making. He reasoned that conformity could be created as a result of the need of group members to provide psychological comfort and reassurance to each other and, notably, to the chief executive, under conditions of extreme stress common in crisis situations. See Janis, Groupthink: Psychological Studies of Policy Decisions and Fiascos (Boston: Houghton Mifflin, 1982). The number of goals pursued and the amount of information considered in time of stress are significantly reduced, which induces decision-makers to cling harder to their original beliefs and ideas, thereby internalising them. The process of internalisation in this case would proceed faster than in periods of normality, when members of the group are more likely to think critically and question the validity of ideas and/or policies stemming from them. For an instance of PFA members defending their policy course, see the author’s interview with former Interior Minister Iskander Hamidov, who in 2004 continued to insist on the rightfulness of the pan-Turkish course pursued under Elchibey (Ekho Forum, 28 January 2004). Interview with Kazimirov, by correspondence, 30 January 2005. Interview with Mehman Aliyev, general director of the Turan news agency and former head of the Communications Department in the Presidential Administration (March–June 1993), 6 November 2002, Ekho Forum; see also interview with Nair Aliyev, by correspondence, 1 November 2004. Human Rights Watch World Report 1994, Azerbaijan, online at http://www. hrw.org/reports/1994/WR94/Helsinki-02.htm. Aliyev, introductory speech at meeting with parliamentarians regarding the events of 15–17 March and the socio-political situation in Azerbaijan, held

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46.

47.

48.

49.

50.

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in the Respublika Palace on 23–4 June 1995, Musteqilliyimiz Ebedidir, vol. 4 June–November 1995 (Baku: Azernesr, 1997), pp. 22–48: 32–3. Mutalibov was accused of fleeing Azerbaijan on a Russian military aircraft (Ibid., pp. 33–9.); Aliyev, introductory speech at meeting with parliamentarians regarding the events of 3–4 October 1994 and the socio-political situation in Azerbaijan, 28 November 1994, Musteqillik Yollarinda, vol. 1, pp. 799–832; speech at the general meeting of the commission drafting the new constitution, Respublika Palace, Baku, 16 August 1995 (Ibid., vol. 2, pp. 539–71). For instance, Aliyev, interview with CNN Turk Ozel TV Station, 21 September 2001, online http://www.heydar-aliyev.org/s05_interview/_ interview_r.html. Aliyev, introductory speech at meeting with members of the Central Electoral Commission in charge of the parliamentary elections, Musteqilliyimiz Ebedidir, vol. 4, p. 486. For a similar discussion, see Linda Brady, ‘The situation and foreign policy’, in East, Salmore and Hermann (eds), Why Nations Act (Beverly Hills: Sage Publications, 1979), pp. 173–90. The conclusion that simplistic perceptions produce parochial problem definitions and result in conflictual foreign policy are in line with experimental studies in political psychology that posit that decision-makers with high levels of cognitive complexity are more willing and able to find a compromise than their counterparts with relatively low cognitive complexity. See Philip Tetlock, Behaviour, Society, and Nuclear War (Oxford: Oxford University Press, 1989).

Chapter 4 In the name of sovereignty: Azerbaijan’s perceptions and strategies in dealing with Russia’s military might 1. Andrei Kozyrev, Preobrazheniye (Moscow: Mezhdunarodnye otnosheniia, 1994), pp. 160–75. 2. Vafa Guluzade, Sredi Vragov i Druzei, p. 40. 3. Research in political psychology suggests images that states hold of each other are associated with a particular set of responses from which they choose to deal with each other. This was referred to as behavioural attributes of perceptions, and was discussed in Chapter 2. For further analysis, see Richard Cottam, Foreign Policy Motivation: A General Theory and a Case Study (Pittsburgh: Pittsburgh University Press, 1977). 4. Robert A. Mundell, ‘The great contractions in transition economies’, in Mario I. Blejer and Marko Skreb (eds), Macroeconomic Stabilization in Transition Economies (Cambridge: Cambridge University Press, 1997), pp. 73–102: 74.

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5. Yevgenii Primakov, Gody v Bol’shoi Politike (Moskva: Sovershenno Sekretno, 1999), pp. 234–5. 6. Ibid., p. 235. 7. Robert Jervis, Perception and Misperception (Princeton: Princeton University Press, 1976), p. 228. 8. Interview with Hamidov, Echo Forum, 28 January 2004. 9. Ibid. 10. Presidential decree of 5 January 1994. 11. Statement by the Supreme Council of the Azerbaijan Republic, signed by Speaker Rasul Guliyev, 29 March 1994, Baku, official website of the Azerbaijani Embassy in China, online http://www.azerbembassy.org.cn/eng/ jan20_doc10.html. 12. Aliyev’s address to the Azerbaijani parliament, 23 February 2001, Habarlar-L, 27 February 2001. 13. Guluzade, Sredi Vragov i Druzei, p. 27. 14. Parvin Darabadi, D.Sc. (Hist.), professor, Baku State University, ‘Geoistoriia Kaspiiskogo regiona’ [‘The geohistory of the Caspian region’], Diplomatiia Alemi (official publication of the Azerbaijani MFA), vol. 2 (2003), pp. 100–4: 102. 15. Guluzade, Nezavisimaia Gazeta, 27 February 1999, in Sredi Vragov i Druzei, p. 128. 16. Ibid. 17. Interview with Hikmet Hajizade, former Azerbaijani ambassador to Russia (1992–3) and deputy prime minister (1993) 17 December 2003; Aliyev’s meeting with a delegation of Duma deputies, in Azerbaidzhan-Rossiia: Novye Vzaimootnosheniia, Novye Gorizonty [Azerbaijani-Russia: New Relations, New Horizons], a compilation of official speeches made by Azerbaijani and Russian officials, in Russian. Official publication of the Presidential Secretariat (Baku: Azerneshr, 2002), 24 April 1995, pp. 157–9. 18. Diplomaticheskii Vestnik, vol. 1–2, 31 January–15 February 1992, pp. 18–21. 19. ‘Agreement between the Russian Federation and the Republic of Armenia on political consultations concerning international relations problems of mutual interest’, Ibid., vol. 17–18 (15–30 September 1992), pp. 11–12. A similar document was signed under Aliyev on 6 June 1995, Ibid., vol. 8 (August 1995), pp. 27–8. 20. Texts of documents signed and delegations present, in Ibid., vol. 4–5 (29 February–15 March 1992) pp. 61–6; vol. 7 (April 1992), pp. 3–13. 21. Meeting with Russia’s deputy prime minister for CIS affairs, Ivan Rybkin, in Azerbaidzhan-Rossiia, pp. 183–7. 22. Ibid., p. 186.

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23. Emil Danielyan, ‘Russia boosts alliance with Armenia as USA gains foothold in Georgia’, EurasiaNet.org, 9 June 2002. 24. Interview with Aleksei Arbatov, in Trud, vol. 52, 26 March 2005. Arbatov was head of the Russian Academy of Sciences Institute for the World Economy and International Relations (IMEMO). 25. Guluzade, ‘Novaia voennaia dokrina Rossii kak destabiliziruyushchii faktor’, Sredi Vragov i Druzei, pp. 59–61; ‘Pochemu trevozhitsa Aram Sarkisyan [Presidential Adviser to Kocharyan]’, Ibid., pp. 204–5. 26. Today.Az, 6 July 2006. Azerbaijani officials blamed Russia for the occasional violations of the ceasefire in Nagorno-Karabakh, arguing that ‘this was Russia’s way to hold Azerbaijan under constant pressure’. See statement of Azerbaijani spokesman Ramiz Melikov, ‘Azerbaijan blames Russia for clashes with Armenia’, Agence France Presse, 22 June 1999; Guluzade, transcript of the televised debates between Guluzade and Vazgen Manukyan, deputy of the Armenian National Assembly and former Armenian prime minister, in Sredi Vragov i Druzei, pp. 208–13: 210. 27. Interview with Kuliyev, 1 March 2004; Guluzade, ‘Ocherednoye pokushenie mozhet bit’ na Kocharyana’, in Sredi Vragov i Druzei, pp. 107–8. 28. Ibid. 29. Guluzade; Ibid., p. 108; Ibid., ‘Esli Azerbaijan voidet v NATO, to vinit’ nado ne nas’, Nezavisimaia Gazeta, 27 February 1999, in Ibid., 124–8. 30. Azerbaijani Foreign Minister Hasan Hasanov expressed ‘bewilderment’ and ‘concern’ at the provisions of the treaty (RFE/RL Newsline, vol. 1 (108), 2 September 1997, online http://www.hri.org/news/balkans/rferl/1997/97– 09-02.rferl.html. 31. For Aliyev’s reaction, see meeting with Vladimir Lukin, chairman of the Duma Foreign Relations Committee, 3 August 1998, in AzerbaidzhanRossiia, pp. 152–4; for the delivery of the military equipment, see ‘Further four MiG-29s delivered to Armenia from Russia’, Reuters, 22 June 1999; ‘Russia to send S-300 anti-missile batteries to Armenia’, online http://www. aeronautics.ru/s300armenia.htm; Sergei Blagov, ‘Strong ties bind Russia and Armenia at Karabakh talks’, Eurasia Insight, 14 September 2004. 32. BBC, SWB SU/1261 B/11, 21 December 1991. 33. For the text of the agreement, see Diplomaticheskii Vestnik, vol. 2–3, 31 January–15 February 1992, pp. 11–12. 34. BBC, SWB SU/1309 C3/1, 20 February 1992. 35. ‘Agreement on the responsibilities of the highest bodies of the Commonwealth of Independent States with regard to the matters of defence’, 20 March 1992, Ibid., vol. 7, 15 April 1992, pp. 4–7; ‘Agreement on the principles of supplying the armed forces of the member states of the Commonwealth of

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36. 37. 38.

39.

40. 41.

42. 43.

44.

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Independent States with armament, military technology and other material means, as well as on the organisation of scientific-research and experimentalconstruction works’, 20 March 1992, in Ibid., vol. 7, 15 April 1992, pp. 7–9. Armenian President Levon Ter-Petrosyan was noticeably absent from the State Council meeting and, therefore, did not become a signatory to the treaty. Azerbaijan had proclaimed independence on 30 August and ratified this declaration on 18 October 1991. Mutalibov’s communist credentials alone do not explain the rationale behind his strategic choice. After all, Aliyev as well as all the Central Asian leaders (with the exception of Askar Akayev), had risen through the ranks of the Soviet Communist Party but proved very apt at disengaging from their past when the moment presented itself. Other victims included the first deputy minister of land improvement and water resources, Gurban Numuzaliyev; USSR People’s Deputies Vagif Jafarov and Vali Mamedov; Nagorno-Karabakh Autonomous Oblast (NKAO) Procurator Igor Plavski; and the head of the NKAO KGB, Sergei Ivanov. There was also a representative of a group of Russian observers, Mikhail Lukashev; a representative of the Russian MoD, Oleg Kocherov; Russian generals Nikolai Zhemkin and Vladimir Kovalev; Kazakh Deputy Minister of Internal Affairs Sanlal Serikov; and Azerbaijani TV correspondent Ali Mustafayev and cameraman Fakhraddin Shahbazov. See BBC, SWB B/6, 22 November 1991. BBC, SWB SU/1246 B/9, 4 December 1991. ‘Treaty on the creation of the Commonwealth of Independent States’, ‘Protocol to the treaty on the creation of the Commonwealth of Independent States signed on 8 December 1991 in Minsk by the republics of Belorussia, the Russian Federation (RSFSR), Ukraine’ and ‘The Alma Ata Declaration’. For the full text of documents, see Diplomaticheskii Vestnik, vol. 1 (15 January 1992), pp. 3–8. BBC, SWB SU/1266 C1/6, 31 December 1991. Declaration ‘On the principles of cooperation in the Commonwealth of Independent States’ of 14 February 1992; and declaration of the CIS heads of states, ‘On the prevention of the threat or use of force and on resolving disputes by peaceful means’ of 14 February 1992 in Diplomaticheskii Vestnik, special issue, vol. 4–5, 29 February–15 March 1992, pp. 61–2. For Armenia’s statements, see BBC SWB SU/1252 C1/10, 11 December 1991; for Nagorno-Karabakh statements, see SU 1256 B/9, 16 December 1991; for Azerbaijan’s statement, see SU 1259 B/11, 19 December 1991. The chronology demonstrates that Azerbaijan was the last one to declare its intention to join the CIS.

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45. BBC, SWB SU/1264 B/5, 28 December 1991. 46. ‘History of Azerbaijan’, official website of the Azerbaijani Embassy in the UK, online http://www.azembassy.org.uk/sehife.php?lang=eng&page=0105. 47. Human Rights Watch report, Azerbaijan: Seven Years of Conflict in NagornoKarabakh (New York, 1994). 48. Helsinki Watch, Bloodshed in the Caucasus: Escalation of the Armed Conflict in Nagorno-Karabakh (New York, 1992), p. 21. 49. ‘Karabakh: Voina do pobednogo kontsa?’ [‘Karabakh: A war to a victorious end?’], Krasnaia Zvezda, 11 March 1993. 50. Thomas de Waal, Black Garden: Armenia and Azerbaijan Through Peace and War (New York: New York University Press, 2004), pp. 172–3. 51. FBIS-SOV-92–077, 21 April 1992. 52. Elchibey’s meeting with the UN Secretary-General’s representative, Omar Khalim, in BBC, SWB, SU 1555 C2/1, 4 December 1991. 53. Ibid. 54. They were subsequently sentenced to death by the Azerbaijani military tribunal, but extradited to Russia in September 1993, following Aliyev’s return to power. 55. Broadcast on Channel 1 TV, Moscow, 30 April 1992, reported in BBC, SWB SU1370 B/11, 2 May 1992; BBC, SWB SU/1358, 17 August 1992. 56. See, for instance, a statement made by Azerbaijani Interior Minister MajorGeneral Tofik Kerimov, in TASS World Service, reprinted in BBC, SWB. SU/1265, B/5, 30 December 1991. 57. See, for example, statements of the head of the Committee for the Protection of State Borders, Iskender Allahverdiyev, reported by Turan News Agency, 8 and 22 April 1992. 58. Interfax, 6 October 1992, reported in FBIS-SOV-92-195, 7 October 1992. 59. Primakov, Gody v Bol’shoi Politike, p. 402. 60. There existed a unanimous consensus among the PFA leaders on the importance of Russian troop withdrawal from Azerbaijan. See interviews with Elchibey, 19 June 1998; Hamidov, 28 January 2004; Kerimli, 18 June 2004. 61. ITAR-TASS, 9 April 1992, FBIS-SOV-92–069, 9 April 1992; ITAR-TASS, 24 June 1992, in FBIS-SOV-92–122, 24 June 1992; Krasnaia Zvezda, 1 May 1992, reprinted in BBC, SWB SU/1371 C1/1, 4 May 1992. 62 Ibid., 28 April 1992, p. 1. 63. FBIS-SOV-92–084, 30 April 1992; Interfax, 1 July 1992, reprinted in BBC, SWB SU/1423 C2/2, 3 July 1992. 64. Y.M. Baturin, A.L. Il’in, V.F. Kadatskii, V.V. Kostikov, M.A. Krasnov, A.Ya. Livshitz, K.V. Nikiforov, L.G. Pikhoia, G.A. Satarov, ‘Diplomat N1’,

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65. 66. 67. 68. 69.

70. 71. 72. 73. 74. 75. 76.

77.

78.

79. 80.

81. 82. 83. 84. 85. 86.

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in Epokha Yeltsina: Ocherki Politicheskoi Istorii (Moskva: Vagrius, 2001), pp. 445–66. BBC, SWB SU/1222 B/14, 6 November 1991. BBC, SWB SU/1223 B/13, 7 November 1991. Ibid. BBC, SWB SU/1242 B/9, 29 November 1991. Roy Allison, ‘The military background and context to Russian peacekeeping’, in Clive Archer and Lena Jonson (eds), Peacekeeping and the Role of Russia in Eurasia (Boulder: Westview Press, 1996), pp. 33–49: 42. Ibid., pp. 43–4. BBC, SW SU/1369 C2/2, 1 May 1992; Krasnaia Zvezda, 28 April 1992, p. 1. Interview with Aleovsat Aliyev, Ekho Internet Forum, 26 October 2004. Carlotta Gall, ‘The great game: Aliyev inches Azerbaijan nearer NATO’, The Moscow Times, 10 September 1998. BBC, SWB SU/1265 B/6, 30 December 1991. Interview with Hajizade, 17 December 2003. Eric Singer and Valerie Hudson, ‘Perceptions and international relations: An overview’, in Eric Singer and Valerie Hudson (eds), Political Psychology and Foreign Policy (Boulder: Westview Press, 1992), pp. 3–30. Agreement of the heads of states of the CIS, ‘On the armed forces and Border Troops’, signed 30 December 1991, Diplomaticheskii Vestnik, vol. 2–3, 31 January.–15 February 1991, pp. 11–12. ‘Agreement between the states-participants of the Commonwealth of Independent States on strategic forces’, especially Chapter 6, signed on 30 December 1991, in Diplomaticheskii Vestnik, vol. 2–3, 31 January–15 February 1991, pp. 10–11. Kozyrev, Preobrazheniye, p. 114. Alex Pravda, ‘The politics of foreign policy’, in Stephen White, Alex Pravda and Zvi Gitelman (eds), Developments in Russian and Post-Soviet Politics, third edition (Macmillan: Basingstoke, 1994), p. 227. On the neglect of the small states, see Baturin, et al., ‘Diplomat N1’, pp. 467–88. ‘Russian politics complicates Baltic troops withdrawal’, RFE/RL, vol. 1 (46), 20 November 1992. ‘Russia asserts its strategic agenda’, RFE/RL research report, vol. 2 (50), 1993. ‘Basic provisions of the Russian Federation Military Doctrine’, Diplomaticheskii Vestnik, vol. 3, 1993. Interview with Kozyrev, Nezavisimaia Gazeta, 24 November 1993. FBIS-SOV-92-122, 24 June 1992.

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87. Zinin quoted in Captain-Lieutenant O. Polovenko, ‘Kaspiiskaia flotiliia: vchera, segodnia, zavtra’, Morskoi Sbornik, vol. 10 (1996), pp. 9–11, quoted in Steven J. Main, The Bear, the Peacock, the Eagle, the Sturgeon and the Black, Black Oil: Contemporary Regional Power Politics in the Caspian Sea (Swindon: UK Defence Academy, 2005), p. 5. 88. Tri veka Rossiiskogo flota, vol. 3, Moscow, 1996, p. 417, quoted in Main p. 5. 89. Zinin quoted in Ibid. 90. Krasnaia Zvezda, 11 February 1993; BBC, SWB SU/1621 C1/5, 24 February 1993. 91. Elchibey quoted in Laura LeCornu, A Small State’s Struggle for Independence in the Post-Soviet Period: Azerbaijani-Russian relations, 1991–1999, unpublished DPhil thesis submitted to the University of Oxford, 2001, p. 48. 92. Russia used the issue of troop withdrawal to pressure the governments of the Baltic states. See Nicholas Redman, Dilemmas of Engagement: Estonian, Latvian and Lithuanian policies towards Russia, unpublished DPhil thesis submitted to the University of Oxford, 1999, pp. 83–102. Evidence collected in confidential interviews at the MFA as well as indications in Aliyev’s public speeches suggest that his government was aware of this. 93. BBC SWB SU; interview with Hajizade, PFA ambassador to Russia, 17 December 2003. For Baku-Nakhchivan policy differences, see BBC SWB SU/1529 B2/6 and SU/1533 C1/2. 94. In an interview with the Turkish Anatolia News Agency in early December 1991, Aliyev asked for Turkish support for Azerbaijan. See BBC SWB SU/1248 A4/2, 6 December 1991. This plea for help is very similar to the PFA discourse and stands in obvious contrast with the approach of the later more pragmatic Aliyev. 95. Aliyev’s meeting with journalists prior to his first visit to Moscow as interim president, 5 September 1993, Azerbaidzhan-Rossiia, p. 5. 96. LeCornu, A Small State’s Struggle, pp. 78–90. 97. The area has been aptly described as ‘intermestic.’ See Introduction to Noel Malcolm, Alex Pravda, Roy Alison and Margot Light (eds), Internal Factors in Russian Foreign Policy (Oxford: Clarendon Press, 1996), pp. 1–32. 98. Interview with Aliyev, 5 September 1993, Azerbaidzhan-Rossiia, pp. 2–5. 99. Meeting of acting President Aliyev and President of the Russian Federation Yeltsin, 6 September 1993, Azerbaidzhan-Rossiia, p. 6. 100. Aliyev’s meeting with Moscow Mayor Yurii Luzhkov during Aliyev’s visit to Moscow, 17–18 November 1994, Ibid., p. 36. 101. For the text of the memorandum, see Diplomaticheskii Vestnik, vol. 1–2, January 1994, p. 37.

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102. For a summary of the meeting of the CIS heads of states in Moscow on 15 April 1994, see Diplomaticheskii Vestnik, vol. 9–10, May 1994, pp. 37–8. 103. Interview with Kazimirov, by correspondence, 30 January 2005. 104. Aliyev’s meeting with Russian Defence Minister Pavel Grachev, 6 September 1993, in Azerbaidzhan-Rossiia, pp. 8–10. 105. Interview with Aliyev, Azerbaidzhan-Rossiia, pp. 10–12. 106. Ibid., p. 33. 107. Aliyev’s address to the Azerbaijani parliament, 23 February 2001, Habarlar-L, 27 February 2001. 108. Washington Post reprinted in Zerkalo, 29 October 1994. 109. Vice Admiral Masorin, ‘Kaspiiskoi flotille-275 let’, Morskoi Sbornik, vol. 11 (1997), p. 12, quoted in Main, p. 5. 110. Meeting with Rodionov, in Azerbaidzhan-Rossiia, pp. 32–3. 111. Interview with Aliyev, Ekho Moskvy, during Aliyev’s official visit to Moscow, in Azerbaidzhan-Rossiia, pp. 70–6. 112. Zerkalo, 17 June 1994, p. 1. 113. Zerkalo, 29 October 1994, p. 3. 114. This was certainly true of Guluzade, Hasanov and Kuliyev. 115. The term borrowed from Alison, ‘The Military Background and Context to Russian Peacekeeping’, p. 43. 116. Statement by His Excellency Ambassador Hafiz Pashayev at the National War College, Washington, DC, 3 February 2000, reprinted in Habarlar-L, 7 February 2000. According to Hasanov, the West had realised by 1994 that Russia was ‘intent on restoring its old military might’ in the former Soviet space. See Zerkalo, 17 June 1994. 117. Aliyev’s speech at a meeting with Russian diplomats, 4 July 1997, Azerbaidzhan-Rossiia, pp. 63–70. 118. See, for example, Aliyev’s address to the televised meeting of people’s deputies in relation to the socio-political situation in Azerbaijan after 3–4 October 1994, held on 28 November 1994 in Respublica Palace, in Musteqillik Yollarinda, vol. 2, pp. 799–832. 119. On the issue of citizenship in particular, see Aliyev’s press conference in the press centre of the MID, 4 July, in Azerbaidzhan-Rossiia, pp. 60– 70: 68. 120. This differed from earlier suspicions that Turkey was involved in the 1995 coup attempt, as discussed in Chapter 6. Interview with Aliyev, Ekho Moskvy, 4 July 1997, in Azerbaidzhan-Rossiia, pp. 70–6. 121. By mid-1998, the Russian Interior Ministry had handed over 300 people to the Azerbaijani authorities. See Rybkin’s report during a meeting with Aliyev, in Azerbaidzhan-Rossiia, pp. 183–7.

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122. Boris Yeltsin, Ispoved’ na Zadannuyu Temu (Leningrad: Sovetskii Pisatel’, 1990), p. 111. 123. Interview with Kazimirov, 29 January 2005. 124. Ibid. 125. Interview with Dilara Seidzade, 29 March 2004. 126. The statements were made following the resignation of Armenian President Levon Ter-Petrosyan, Azerbaidzhan-Rossiia, p. 153. 127. ITAR-TASS, 26 January 2000. 128. ITAR-TASS, 11 April 2000. 129. Putin’s speech before Milli Mejlis, 10 January 2001, in AzerbaidzhanRossiia, pp. 105–7. 130. Speech before Milli Mejlis, 10 January 2001. 131. Igor Ivanov, Novaia Rossiiskaia Diplomatiia: Desiat’ let vneshnei politiki strany (Moskva: Olma Press, 2002), pp. 44–5. 132. ITAR-TASS, 10 January 2001. 133. Diplomaticheskii Vestnik, vol. 2, January 2001, pp. 46–8. 134. Ibid, p. 46; Ivanov, Novaia Rossiiskaia Diplomatiia, p. 224. 135. Despite the claims, Azerbaijan did not agree to a joint scientific enquiry into the ecological damage caused by the GRS until Putin’s visit to Baku. See Zerkalo, 5 January 2002. 136. Interview with First Deputy Prime Minister Abbas Abbasov, in Zerkalo, 17 January 2002; interview with Rasizade, 7 February 2004; Zerkalo, 4 January 2003. 137. ‘Missile shield “threatens Russia”’, BBC News Europe, online http://news. bbc.co.uk/1/hi/world/europe/6286289.stm. 138. Transcript of Russian President Vladimir Putin’s prepared remarks at the 43rd Munich Conference on Security Policy, Munich, 10 February 2007, online www.kremlin.ru. 139. AzerTadj, 7–8 May 2007. 140. AzerTadj, 15 May 2007. 141. AzerTadj, 21–22 May 2007. 142. Rovshan Ismayilov, ‘Azerbaijan ready to discuss Russian-US use of radar station’, Eurasianet.org, 7 June 2007, online http://www.eurasianet.org/ departments/insight/articles/eav060807.shtml. 143. Trend News, 26 July 2007. 144. Rovshan Ismayilov, ‘Analysts: Chances slim for US-Russia radar station’, EurasiaNet.org, 28 August 2008, online http://www.eurasianet.org/departments/insight/articles/eav082907.shtml. 145. Interview with the US ambassador to Azerbaijan, Reno Harnish, in Simon Ostrovsky, ‘USA working to boost sea forces in oil-rich Caspian: envoy’, Agence France Presse, 21 September 2005; ‘21 September

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147. 148. 149.

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2005: Two radar stations become operational in Azerbaijan under the US-funded Caspian Guard initiative’, Azerbaijan Profile, NTI, updated in June 2008, online http://www.nti.org/e_research/profiles/Azerbaijan/ export_control.html. S. Mamedov, ‘V Azerbaidzhane zarabotali amerikanskiye sistemy slezheniia. Vashington usilenno okhraniayet zonu svoikh natsional’nykh interesov na Kaspii’, Nezavisimaia Gazeta, 10 October 2005. NTI. D. Mamedov, ‘Interesy. Nam vidno i slyshno vsye’, Voyenno-promyshlennyi Kur’er, vol. 39, 19–25 October 2005, quoted in Main, p. 14. ‘Russian military is working to enhance precision targeting and early warning capabilities’, WMD Insights, December 2007–January 2008, online http://www.wmdinsights.com/i21/i21_ru1_russianmilitary.htm.

150. Vitalii Denisov, ‘Problemy kosmicheskiye i zemnye’[‘The problems of space and land’], Krasnaia Zvezda, 14 August 2007. 151. Interfax, 23 August 2007. 152. Marianna Grigoryan, ‘Armenia: Opposition blasts Russia’s proposed 49-year lease on military base’, EurasiaNet.org, 12 August 2010, online http://www. eurasianet.org/node/61730. 153. Thomas Goltz, ‘Bad blood in Baku: The angry ally Obama can’t afford to lose’, Foreign Policy, 11 June 2010.

Chapter 5 Mining, pipelines and deals: Strategic manoeuvring with Russia on the Caspian 1. For Turkmenistan’s potential claims to the Azeri and Chirag fields, see ‘Caspian border dispute poses Europe gas supply questions’, Platts, 27 July 2009. 2. ‘Kyapaz deal dissolves’, FSU Energy, 15 August 1997. 3. Statement by Deputy Foreign Minister Khalaf Khalafov, ANS News, 10 July 2009. 4. For a summary of Turkmenistan’s legal position, see ‘Turkmenistan-Azerbaijan Caspian dispute: The legal position’ News Central Asia, 6 September 2009, online http://www.newscentralasia.net/moreNews.php?nID=374. 5. Musteqillik Yollarinda, vol. 1, p. 916; see also, Rosemarie Forsythe, The Politics of Oil in the Caucasus and Central Asia: Problems, Prospects, and Policy (London, IISS, 1996), p. 10. 6. Quoted in Yuri Fedorov, ‘Russia’s policies toward Caspian region oil: Neoimperial or pragmatic?’ Perspectives on Central Asia, vol. 1 (3), October 1996.

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7. Y.M. Baturin, A.L. Il’in, V.F. Kadatskii, V.V. Kostikov, M.A. Krasnov, A.Ya. Livshitz, K.V. Nikiforov, L.G. Pikhoia, G.A. Satarov, ‘Diplomat N1’, in Epokha Yeltsina: Ocherki Politicheskoi Istorii (Moskva: Vagrius, 2001), pp. 467–88: 480. 8. Quoted in Clive Schofield and Martin Pratt, ‘Claims to the Caspian Sea’, Jane’s Intelligence Review, vol. 8 (2), 1 February 1996, p. 75. 9. Geologically, the Caspian possesses characteristics typical of both a lake and a sea. The Soviet Geographic Encyclopaedia referred to the Caspian as ‘the largest sea-lake in the world’, thus providing little guidance to jurists. 10. The clause on the Caspian was included in the Soviet-Persian Friendship Treaty of 1921, which abrogated the 1828 Turkmenchai Treaty and gave Persia the right of equal access to and navigation in the sea. In an exchange of diplomatic letters in 1940, the Soviet Union and Iran referred to the Caspian as an ‘Iranian and Soviet sea’ (25 March 1940). 11. ‘The position of the Russian Federation regarding the legal regime of the Caspian Sea’, Letter of 5 October 1994 from the permanent representative of the Russian Federation to the UN, addressed to the secretary-general, UN Doc A/49/475 (1994), in International Organisations and the Law of the Sea: Documentary Yearbook (The Hague: The Netherlands Institute for the Law of the Sea, 1995), pp. 195–6. 12. Ibid., p. 196. 13. Ibid. 14. To be sure, Aliyev did not explicitly name Russia, saying instead that, ‘various countries raised the issue of the need to decide the legal status of the Caspian’. (emphasis added). Aliyev’s meeting with the editors-in-chief of the Russian media, 15 July 2001, in Azerbaidzhan-Rossiia: Novye vzaimootnosheniia, novye gorizonty [Azerbaijani-Russia: New relations, new horizons], a compilation of official speeches made by Azerbaijani and Russian officials, in Russian. Official publication of the Presidential Secretariat (Baku: Azerneshr, 2002), pp. 562–8. 15. Hafiz Pashayev, Azerbaijani ambassador to the USA, ‘Presentation at the Turkish-American Association Assembly’, 24th Annual Convention, Washington D.C., 31 January 2004. 16. Farid Shafiyev, third secretary of the Mission of Azerbaijan to the UN, ‘The legal regime of the Caspian Sea: Views of the littoral states’, Prism (The Journal of the Jamestown Foundation), vol. 7 (6), 30 June 2001. 17. Bing Bing Jia, The Regime of Straits in International Law (Oxford, Clarendon Press, 1998), pp. 23, 40–68, 187. 18. Vafa Guluzade, interview to Daily News, 3 November 2000.

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19. Guluzade, a series of interviews under the rubric ‘Kaspii – yabloko razdora’, in Sredi Vragov i Druzei (Baku: Oka Ofset, 2002), pp. 58–69; Aliyev’s speeches; author’s interviews with Artur Rasizade, Fuad Kuliyev and Dilara Seidzade. In this context, the term ‘protectorate’ was used by Guluzade. 20. For Kalyuzhny’s statement, see ITAR-TASS, 9 November 2000. This indirect indicator can be used to infer just how pervasive this idea was in Azerbaijani strategic thinking throughout 1994–2003. 21. ‘Statement by the Ministry of Foreign Affairs of the Azerbaijani Republic adopted on 10 December 1998’, in Letter of 11 December 1998 from the permanent representative of Azerbaijan to the UN addressed to the secretary-general, 14 December 1998, UN Doc A/53/741, para 6, International Organisations and the Law of the Sea, vol. 14 (2000), pp. 279–80. 22. Ibid. 23. ‘Statement by the Ministry of Foreign Affairs of the Azerbaijani Republic adopted on 10 December 1998’, Ibid., p. 280, para 5. Customary law was also mentioned in paras 3, 4 and 7. 24. Aidyn Mekhtiyev, ‘Chernomyrdin has no complaints against the “Contract of the Century”, Nezavisimaya Gazeta, reprinted in The Current Digest of the Post-Soviet Press, vol. 46 (41), 9 November 1994, p. 26. 25. Aliyev’s speech at the meeting with First Deputy Foreign Minister Boris Pastukhov, 27 March 1998, in Azerbaidzhan-Rossiia, pp. 202–5: 204; Aliyev’s meeting with the editors-in-chief of the Russian media, 15 July 2001, Ibid., pp. 562–8. 26. Shafiyev, ‘Legal regime’. 27. ‘Baku joint statement on Caspian Sea of 16 September 1996’, Letter of 18 October 1996 from the permanent representative of Azerbaijan and Kazakhstan, UN Doc A/51/529, 21 October 1996, in International Organisations and the Law of the Sea, vol. 12 (1996), pp. 188–90: 189, para 4. 28. Part IX of the 1982 United Nations Convention of the Law of the Sea, Article 122; for a compilation of legal documents on enclosed and semi-enclosed seas, see Gary Knight and Hungdah Chiu, The International Law of the Sea: Cases, Documents, Readings (London: Elsevier Applied Science, 1991), pp. 325–30. 29. Bernard H. Oxman, ‘Caspian sea or lake: What difference does it make?’, in Caspian Crossroads, vol. 1 (4), 1996. 30. Jia, The Regime of Straits, pp. 23–5. 31. Part IX, UNCLOS III, Article 123. 32. For the application of Article 15 of UNCLOS III to the Caspian, see Shafiyev, ‘Legal regime’. 33. Letter of 14 March 1997 from the permanent representatives of Kazakhstan and Turkmenistan (Joint Statement on issues relating to the Caspian Sea),

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34.

35.

36. 37.

38. 39. 40.

41. 42. 43. 44.

45.

46. 47.

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17 March 1997, UN Doc A/52/93, para 1, 4 and 6. International Organisations and the Law of the Sea, vol. 13 (1997), pp. 155–7. Scott Horton and Natik Mamedov, ‘Investment in Azerbaijan’s upstream requires attention to legal details’, World Oil, April 1996, p. 88; Horton and Mamedov, ‘Legal status of the Caspian Sea’, in Hooshang Amirahmadi (ed), The Caspian Region at a Crossroad (New York: St. Martin’s Press, 2000), p. 268. Some advocated taking the issue to the International Court of Justice. (See, for example, the opinion of Zardusht Alizade, co-chair of the Azerbaijan Social Democrat Party, in ‘Azerbaijan must appeal to the International Court for the Caspian’, 525-ci Qazet, 6 December 2001.) Shafiyev, ‘Legal regime’. For the interpretation of these notes in Soviet law, see William E. Butler, The Law of Soviet Territorial Waters: A Case Study of Maritime Legislation and Practice (London: Praeger, 1967), ch.8. The opposite was also true: Soviet warships had to receive permission prior to entering Iran’s territorial waters. Guive Mirfendereski, A Diplomatic History of the Caspian Sea: Treaties, Diaries, and Other Stories (Palgrave, New York, 2001), pp. 186–90. ‘Edict of the Presidium of the USSR Supreme Soviet concerning the continental shelf’, Article 1, adopted 6 February 1968, in William E. Butler (tr), International Legal Materials, vol. 7 (1968), pp. 392–4. William E. Butler, ‘Notes and comments: The Soviet Union and the continental shelf’, The American Journal of International Law, vol. 63 (1969), pp. 103–7. P. D. Barabolia et al., Voenno-morskoi mezhdunarodno-pravovoi spravochnik, Moscow, 1966. A. S. Bakhov, Voenno-Morskoi mezhdunarodno-pravovoi spravochnik [Naval international law handbook], Moscow, 1956. Joseph J. Darby, ‘The Soviet doctrine of the closed sea’, San Diego Law Review, vol. 23 (3), 1986, pp. 685–99; on military aspects, see Paul Murphy (ed) Naval Power in Soviet Policy (Washington, D.C., United States Government Printing Office, 1978). This reasoning for the need to have a closed sea regime was put forward by S. A. Malinin, ‘K voprosu o pravovoi klassifikatsii vodnykh prostranstv” [‘On the question of the legal classification of water expanses’] Informatsionnyi Sbornik. Morskoe Pravo [Information handbook. maritime law and practice], vol. 46 (1960), pp. 13–19). Malinin, ‘K voprosu o pravovoi klassifikatsii vodnykh prostranstv’, quoted in Butler, The Law of Soviet Territorial Waters, p. 21. Azerbaidzhan-Rossiia, pp. 206–10: 208.

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48. Aleksandr Maryasov quoted in ‘Military muscle a new impediment to Caspian solution’, The Economic Bulletin, Caucasus and Central Asia, No. 030502, 4 May 2002. 49. Dr. Terry D. Adams CMG, ‘Baku oil diplomacy and ‘early oil’ 1994–8: An external perspective’, in Azerbaijan in Global Politics, pp. 225–56: 234. 50. William E. Butler, The Soviet Union and the Law of the Sea (Baltimore, Johns Hopkins University Press, 1971); Lewis M. Alexander, ‘Special circumstances: Semi-enclosed seas’, in John King Gamble Jr. and Giulio Pontecorvo (eds), Law of the Sea: The Emerging Regime of the Oceans (Cambridge: Ballinger Publishing Company, 1973), pp. 201–15. 51. Dr. Terry D. Adams CMG, ‘Baku oil diplomacy and “early oil” 1994–8: An external perspective’, in Alexandros Petersen and Fariz Ismailzade (eds), Azerbaijan in Global Politics: Crafting Foreign Policy (Azerbaijan Diplomatic Academy, 2009), pp. 225–56: 234. 52. Mahmoud Ghafouri, ‘The Caspian Sea: Rivalry and cooperation’, Middle East Policy, vol. 15 (2), summer 2008, pp. 81–96: 89. 53. ‘New twists in the legal battle over Caspian resources’, Jamestown Monitor, Fortnight in Review, 15 November 1996. 54. Ghafouri, ‘The Caspian Sea’, p. 87. 55. Khvalynskoye oil and gas field, Offshore Technology, online http://www.offshore-technology.com/projects/khvalynskoye-field/. 56. Ambassador Khalaf Khalafov, deputy minister of foreign affairs and Azerbaijan’s lead negotiator on the status of the Caspian, ‘Azerbaijan in the post-Soviet realm’, in Azerbaijan in Global Politics, pp. 173–93: 177. 57. Ghafouri, p. 89. 58. Russian-Kazakhstan Agreement, Annex III, Article 1, p. 273 (emphasis added). 59. Transcripts of negotiations, in Azerbaidzhan-Rossiia, 29 July 1998, pp. 206–10. 60. Ibid. 61. ‘Bilateral statement of the Russian Federation and the Azerbaijan Republic on the principles of cooperation in the Caspian Sea’, Diplomaticheskii Vestnik, vol. 2 (2001), pp. 48–9. 62. ‘Russia against outside military presence in Caspian – minister’, ITARTASS, 20 October 2005. 63. Russian President Vladimir Putin’s speech in the Milli Mejlis of the Azerbaijan Republic, Baku, 10 January 2001, in Ibid., pp. 50–2: 51. 64. John Helmer, ‘Russia draws fine line in the Caspian Sea’, Opinion rubric, The Russia Journal, 24 May 2002. 65. Guluzade, Sredi Vragov i Druzei, p. 63.

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66. John Roberts, Caspian Pipelines (London: RIIA, 1996), p. 70. 67. Author’s interview with Kuliyev, 6 January 2005. 68. Meeting of Aliyev and Russian Interior Minister Anatolii Kulikov, Moscow, 10 August 1996, in Azerbaidzhan-Rossiia, pp. 33–4. 69. For a series of official statements from the Azerbaijani MFA and MoD, see ITAR-TASS, 27 October 1999; 25 and 26 November 1999; 8, 11 and 26 January 2000; 11 and 17 May 2000; 5 June 2000. 70. Author’s interview with Rasizade, 7 February 2004. 71. Aliyev’s meeting with Chernomyrdin, in Azerbaidzhan-Rossiia, 3 June 1997, p. 55. 72. Zerkalo, 14 January 1995. 73. See, for example, RFE/RL Newsline, ‘Azerbaijan protests Russian shipping restrictions’, vol. 9 (89), 11 May 2005, online http://www.rferl.org/ newsline/2005/05/110505.asp?po=y. For transit routes, see Julia Nanay, ‘Whither the oil industry? The fate of the Caspian hangs in the balance (The dilemma of the transport routes)’, SAIS Review, vol. 19 (1), 1999, pp. 272–81. 74. Zerkalo, 8 August 2009. 75. Speaking at an international seminar in August 2008, the former Armenian ambassador to Canada, Ara Papyan, claimed that both the BTK railway and BTC pipeline were illegal and subject to Armenia’s right to demand transit fees for traversing its historic territories, presently occupied by Turkey. (Railway Technology: Baku-Tbilisi-Kars line, online http://www.railwaytechnology.com/projects/baku-tbilisi-kars/). 76. Ibid. 77. Aliyev indicated this in his speeches with the Azerbaijani diaspora in the West. It is possible that he felt less constrained in expressing his suspicions of Russia in discussions with the Azerbaijani diaspora abroad because those speeches were not televised or quoted in newspapers. (See, for instance, Heydar Aliyev, Speech delivered at the first meeting with compatriots living in Sweden, 3 February 1995, in Musteqillik Yollarinda, vol. 2, pp. 56–65.) 78. Adams, Baku oil diplomacy, p. 242. 79. Ibid., p. 243. 80. Caspian Energy, vol. 16, April-May 2002, online http://www.caspenergy. com/bbulsocar02.html. 81. On the determination of the Azerbaijani government, see interview with a senior SOCAR official, Ibragimov, in ITAR-TASS, 1 October 1997. 82. Aliyev’s meeting with Deputy Prime Minister Boris Nemtsov, 11 July 1997, Azerbaidzhan-Rossiia, 174–5; ITAR-TASS, 1 July 1997.

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83. Statements by Prime Minister Rasizade, ITAR-TASS, 1 October 1997. 84. Statement by Ilham Aliyev, then vice-president of SOCAR, in ITAR-TASS, 7 April 1999; for background, see ‘Troubling prospects for oil pipeline’, Centre for Russian Studies NUPI, online (http://www.nupi.no/cgi-win/ Russland/krono.exe?2338). 85. For Kalyuzhny’s statement, see ITAR-TASS, 17 June 1999. 86. See the statement by the president of Transneft, Dmitry Savelev, in ITARTASS, 17 June 1999. 87. ITAR-TASS, 7 July 1999. 88. Aliyev’s meeting with Deputy Prime Minister Nikolai Aksenenko, 5 November 1999, in Azerbaidzhan-Rossiia, pp. 178–80. 89. Ibid., p. 178. 90. FSU Energy, 12 November 1999 and 18 February 2005. 91. Pastukhov’s speech on 27 March 1998, in Azerbaidzhan-Rossiia, p. 204. 92. Aliyev’s speech on 27 March 1998, ibid., p. 206. 93. Energy and Politics, vol. 21, 11 June 1998; interview with the deputy prime minister and co-chairman of the Russian-Azerbaijani inter-governmental committee for economic cooperation, Viktor Khristenko, in CNA Brief Newsline, Caspian News Agency, online http://www.eurasianet.org/resource/ azerbaijan/hypermail/200111/0030.html; ‘Transneft to increase transit of Azerbaijani oil through Russia’, Pravda, in English, 14 October 2002, online http://english.pravda.ru/cis/2002/10/14/38099.html. 94. MEES, 25 October 1999. 95. MEES, 17 May 1999. 96. FSU Energy, 14 July 2000. 97. FSU Energy, 23 January 2004. 98. FSU Energy, 31 March 2006. 99. For historical volumes of gas deliveries, see ITAR-TASS, 25 September 2000. 100. The explosion took place in Refahiye in Erzincan province in north-eastern Turkey. 101. FSU Energy, 22 August 2008. 102. FSU Energy, 29 August 2008. 103. Ibid. 104. Ibid.

Chapter 6 From Euphoria to pragmatism: The evolution of Azerbaijan’s policy towards Turkey 1. Author’s interview with Zardusht Alizade, co-chair of the Social Democratic Party of Azerbaijan, 3 February 2003.

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2. The historical preservation groups got their name from their stated objective of ‘drawing public attention to the need to preserve the Republic’s territorial integrity and its ancient history and culture’. They became popular after, in 1988, one of its members circulated a manuscript rebutting historical claims to Nagorno-Karabakh advanced by Armenian writer Zori Balayan. That activist was Isa Gambarov, who later changed his last name to Gambar as a symbol of shedding the Russian cultural legacy, and became a co-founder of the Popular Front of Azerbaijan (PFA). In 1988, he was joined by many others including academic historian Suleyman Aliyarov, who together with a famous Azerbaijani poet, Bahtiyar Vahabzade, wrote an open letter contesting Armenian claims to Karabakh. The Popular Front movement that sprang from these cultural-intellectual groups did not proclaim itself a political party until January 1992, when it became part of the Association of Democratic Forces (ADF). On the historical preservation groups, see Audrey L. Altstadt, ‘Azerbaijan’s struggle towards democracy’, in Karen Dawisha and Bruce Parrott (eds), Conflict, Cleavage, and Change in Central Asia and the Caucasus, vol. 4 (Cambridge: Cambridge University Press, 1997), pp. 110–55; on the ADF, see also BBC Summary of World Broadcasts SU/1273 B/17 (35), 10 January 1992. 3. Author’s interview with Ali Kerimov, leader of the PFA, 11 January 2002. 4. See, for instance, the incident when 3,000 special police were sent to crush a demonstration, and ransacked and shut down the PFA premises. (The Current Digest of the Soviet Press, vol. 43 (34), 1991, p. 24.) In a different case, KGB agents disguised as criminals formed a group known as Gardashlyg (Brotherhood), which was sent in to disclose the PFA’s supporters and undermine its activities. (Author’s interview in the Ministry of Internal Affairs, anonymous, 18 February 2003.) 5. Initially, the movement enjoyed strong support among Azerbaijani refugees from Karabakh and Armenia, students and the intelligentsia. Abulfaz Elchibey did not speak good Russian and, having entered Baku State University in 1957, was exasperated by the need to master Russian as a prerequisite to success. In one interview, Vafa Guluzade expressed an opinion that Elchibey’s nationalism stemmed in part from the discrimination he endured for his poor Russian. (Author’s interview with Guluzade, former senior foreign relations adviser to President Elchibey (and later Heydar Aliyev), 14 March 2004.) 6. Interview with Yusif Samedogli, 8 January 2002. 7. ‘President Elchibey’s televised address to the nation’, 23 August 1992. 8. According to a poll conducted by the United States Information Agency (USIA) in November 1992, more Turks favoured building close relations

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10.

11. 12.

13.

14.

15.

16.

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with the countries in Central Asia than with the West. Turkish officials vehemently denied these results and continued to emphasise the importance of Turkey’s American connection. (Morton I. Abramowitz, ‘Dateline Ankara: Turkey after Ozal’, Foreign Policy, vol. 91, Summer 1993, pp. 164–81: 169). For statements on Turkey’s assertive foreign policy in the Turkic states, see Alan Makovsky, ‘The new activism in Turkish foreign policy’, SAIS Review, vol. 19 (1), Winter–Spring 1999; Mustafa Aydin, ‘Turkey and Central Asia: Challenges of change’, Central Asian Survey 15 (2), 1996, pp. 157–77. Interview with Cengiz Israfil, a former senior Turkish Ministry of Foreign Affairs (MFA) official and subsequently adviser to President Elchibey, reprinted in Zerkalo, 19 December 1990, p. 6. Ironically, the title of the article in Zerkalo read, ‘Azerbaijan stretches out to its blood brothers’. Turkish Daily News, 21 January 1990, p. 2; also quoted in Zerkalo, 15 July 1991, p. 1. For evidence that the PFA attributed significance to Turgut Ozal’s visit, see interview with Guluzade, 14 March 2004. It was used by the Turkish side as a ‘proof’ of Turkey’s early involvement in the region ‘on the basis of long-standing cultural and linguistic ties with the republic, which Turkey regard[ed] as a fraternal one’. See, for instance, interview with Volkan Vural, Turkish ambassador to the Soviet Union, reprinted in The Current Digest of the Soviet Press, vol. 43 (45), 1991, pp. 17–8: 18. Turkkaya Ataov, ‘Turkey’s expanding relations with the CIS and Eastern Europe’, in Clement H. Dodd (ed), Turkish Foreign Policy: New Prospects (London: Eothen, 1992): pp. 88–117. See, for instance, George S. Harris, ‘The Russian Federation and Turkey’, in Alvin Z. Rubinstein and Oles M. Smolansky (eds), Regional Power Rivalries in the New Eurasia: Russia, Turkey, and Iran (London: M.E. Sharpe, 1995): pp. 3–25. Former US Deputy Secretary of State Nelson Strobridge ‘Strobe’ Talbott’s recollections suggested strongly that even President Ozal, who in the early 1990s was widely perceived as an outspoken pan-Turkist, had coordinated Turkey’s efforts to project influence into the post-Soviet south with the USA in an attempt to secure Turkey’s continued importance for the West. (Strobe Talbott, ‘US-Turkish relations in the age of interdependence’, Turgut Ozal Memorial Lecture, Washington Institute for Near East Policy, 14 October 1998, online http://www.washingtoninstitute.org/media/turgut/talbott. htm). In March 1991, Secretary of State James Baker held a series of confidential talks with President Ozal and senior Turkish officials in Ankara. (http://www.usemb-ankara.org.tr/bushnato/former.htm). Zerkalo, 5 November 1990, p. 3.

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17. Philip Robins, ‘Between sentiment and self-interest: Turkey’s policy towards Azerbaijan and the Central Asian states’, Middle East Journal, vol. 47 (4), 1993, pp. 593–610: 603. 18. Philip Robins, ‘Turkey’s Ostpolitik: Relations with the Central Asian states’, in David Menashri (ed), Central Asia Meets the Middle East (Portland: Franc Cass Publishers, 1998), pp. 129–49, p. 145. Turkish Teletas and Turkcell became involved in Azerbaijan at a later stage. 19. Milliyet, 24 March 1992, p. 1. 20. Ahmed Rashid, The Resurgence of Central Asia: Islam or Nationalism? (London: ZED, 1994). 21. Ibid., p. 210. 22. Hurriyet, 20 May 1992, p. 2. 23. Zerkalo, 20 August. 1994, pp. 2–4. 24. Insights from several interviews in the Azerbaijani MFA, 18–23 December 2003. 25. Cumhuriyet, 24 February 1992, pp. 1,3. 26. See, for instance, Zerkalo, 8 September 1991; in secondary sources, see Thomas de Waal, Black Garden: Armenia and Azerbaijan through Peace and War (New York: New York University Press, 2003), p. 124. 27. Philip Robins, Suits and Uniforms: Turkish Foreign Policy since the Cold War (London: Hurst & Co., 2003), p. 278. 28. President Elchibey press conference, 20 September 1992. 29. The Current Digest of the Post-Soviet Press, vol. 44 (44), 1992: p. 21. 30. Nezavisimaia Gazeta, 10 September, 1993, p. 3. 31. United Nations Security Council (UNSC) Resolution 822 (30 April 1993), para 1. The first resolution passed after the invasion of the Kelbajar district of Azerbaijan does not name Armenia as the aggressor; it simply calls for the ‘cessation of all hostilities and an immediate withdrawal of all occupying forces from the Kelbajar district and other recently occupied areas of Azerbaijan’. The second UNSC Resolution (853, adopted on 29 July 1993) was passed as a result of Turkish diplomatic initiatives after the occupation of Agdam. 32. The frontier was reopened over the winter to allow passage of humanitarian aid. The partial reopening of the border undermined Turkey’s brotherhood rhetoric in the eyes of Azerbaijani decision-makers and the public. 33. Interview with Altan Karamanoglu, former Turkish ambassador in Baku, Ankara, 15 January 2003. 34. Zerkalo, 29 July 1993, p. 2. 35. Ibid. 36. Financial Times, 7 May 1993, A3.

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37. Quoted in Kemal Kirisci, ‘New patterns of Turkish foreign policy behaviour’, in C. Balim, E. Kalaycioglu, C. Karatas & G. Winrow (eds), Turkey: Political, Social, and Economic Challenges in the 1990s (Leiden: E.J. Brill, 1995), p. 10. 38. Quoted in Idris Bal, Turkey’s Relations with the West and the Turkic Republics: The Rise and Fall of the ‘Turkish Model’ (Aldershot: Ashgate, 2000), p. 147. 39. Author’s interview with Richard Miles, former US ambassador to Baku, 1992–3, 16 April 1992. 40. Altan Karamanoglu, quoted in Phillip Petersen’s interview, transcripts in ‘Security policy in post-Soviet Transcaucasia’, European Security, vol. 3 (1), 1994, pp. 1–57: 45. 41. Author’s interview with Jayhun Mollazade, 8 January 2003. 42. Zerkalo, 29 June 1993, p. 1. 43. Malik Mufti, ‘Daring and caution in Turkish foreign policy’, Middle East Journal, vol. 52, Winter 1998, pp. 32–50; Duygu Bazoglu Sezer, ‘Turkey in the new security environment in the Balkan and Black Sea region’, in Vojtech Mastny and Craig Nation (eds), Turkey Between East and West: New Challenges for a Rising Regional Power (Boulder: Westview Press, 1996), pp. 71–96. 44. In 1995, Turkish-Russian official trade equalled $3.5 billion, while suitcase trade was estimated at $6 billion. (Turkey: Suitcase Trade Part – Trade is lucrative, but numbers are declining, US Consulate General in Ankara, Business Information for Newly Independent States (BISNIS), online www.bisnis. doc.gov/bisnis/country/Turkey.htm; see also Turan Aydin, ‘Turkey’s rising economic capacity’, Perceptions, vol. 1 (3), September–November 1996, online http://www.mfa.gov.tr/grupa/percept/i3/I3–10.htm.) 45. Briefing, 1110, 30 September 1996, p. 20. 46. Zerkalo, 5 November 1990, p. 2. 47. Quoted in The Daily Telegraph in Newspot, 11 February 1993. 48. Zerkalo, 5 August 1993, p. 3. 49. Information in this section draws heavily on an article by the author, ‘Azerbaijan and its foreign policy dilemma’, Asian Affairs, vol. 34 (3), 2003, pp. 271–85. 50. The Current Digest, vol. 44 (36), 1992: 27. 51. In 1990, Azerbaijani Lezghins proclaimed the creation of ‘the national state entity of Lezghistan’, even though Russian Lezghins did not support the declaration. (Pravda, 9 December 1990: p. 1.) 52. The Current Digest of the Post-Soviet Press, vol. 44 (36), 1992: p. 27. 53. Interview at the Ministry of Internal Affairs, anonymous, 14 July 2002. 54. Vafa Guluzade, ‘Kuda Geydar Aliyev vedet Azerbaijan?’, in Zerkalo, 16 May 1998, pp. 11, 14.

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288 55. 56. 57. 58.

59. 60. 61.

62.

63.

64.

65.

66.

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Zerkalo, 8 April 1998, p. 13. Interview at the Ministry of Internal Affairs, anonymous, 18 January 2002. See, for instance, report in Zerkalo, 22 June 1993. There was also speculation in the Azerbaijani media that Russia extended help to Gumbatov, but there seems to be little evidence to support the claim. Russia did not extend Gumbatov political asylum, and his family took refuge in the Netherlands. On 3 September 2004, Gumbatov, who had been sentenced to life imprisonment, was pardoned by President Ilham Aliyev but was stripped of Azerbaijani citizenship. He then flew to the Netherlands to join his family. (‘Azerbaijani president pardons separatist leader’, Central Asia-Caucasus Analyst, 3 September 2004, online http://www. cacianalyst.org/news.php.) This contrasts with cases of deposed President Ayaz Mutalibov and former Prime Minister Suret Huseynov, who staged the unsuccessful 1994 coup against Aliyev. Both sought and received asylum in Russia. Izvestiia, August 18, 1993, p. 2. Interview with President Heydar Aliyev, Azerbaijan International, vol. 4 (2), Summer 1996. Dr Terry Adams, ‘Baku oil diplomacy and “early oil” 1994–8: An external perspective’, in Alexandros Petersen and Fariz Ismailzade (eds), Azerbaijan in Global Politics: Crafting Foreign Policy (Baku: Azerbaijan Diplomatic Academy, 2009), pp. 225–52: 231. Ercan Ozer is deputy general director for multilateral economic affairs of the Turkish Ministry of Foreign Affairs. See Ercan Ozer, ‘Foreign economic policy and relations of Turkey: the regional perspective’, Perceptions, December 1996–February 1997, vol. 1 (4), online http://www.mfa.gov.tr/ grupa/percept. Philip Robins, ‘Between sentiment and self-interest: Turkey’s policy towards Azerbaijan and the Central Asian states’, Middle East Journal, vol. 47 (4), 1993, 593–610: 597. Rovshan Bilkent, ‘Trans-regional linkages in Turkey’s foreign policy: The case of the South Caucasus’, paper presented at a METU Conference, Istanbul; Gareth Winrow, ‘Turkey and the newly independent states of Central Asia and the Transcaucasus’, MERIA, vol. 1 (20), July 1997. Aliyev, ‘Turkey and Azerbaijan – two friendly and brotherly states’, speech delivered at the official greeting ceremony in Ankara during Aliyev’s first official visit to Turkey, 8 February 1994, in Musteqillik Yollarinda, vol. 1, pp. 135–7. For the declarations of Marshal Yevgenii Shaposhnikov, commander-in-chief of the CIS Joint Armed Forces, see The Current Digest of the Post-Soviet Press,

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67. 68. 69. 70. 71.

72. 73. 74. 75. 76. 77.

78. 79.

80.

81. 82. 83.

84.

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vol. 44 (14), 1993, p. 23; also the official statements of the Russian Ministry of Foreign Affairs in The Current Digest of the Post-Soviet Press, vol. 45 (36), 1993, p. 19. Aliyev, public statement made during the official visit to Ankara, 8 February 1994, in Musteqillik Yollarinda, vol. 1, pp. 138–42: 139. Ibid., p. 139. Ibid., p. 140. Ibid., p. 140. Ibid., p. 141; for a similar statement, see Aliyev, address to the Turkish Grand Assembly, during the official visit to Ankara, 8 February 1994, in Musteqillik Yollarinda, vol. 1, pp. 153–64: 162. The Current Digest of the Post-Soviet Press, vol. 45 (36), 1993, p. 18. Alvin Rubinstein and Oles M. Smolansky, Regional Power Rivalries in the New Eurasia: Russia, Turkey, and Iran (London: Sharpe, 1995), pp. 110–35. Aliyev, speech at the signing of documents during the official visit to Ankara, 9 February 1994, in Musteqillik Yollarinda, vol. 1, pp. 151–2. Interview with Guluzade, 14 March 2003. Adams, ‘Baku oil diplomacy’, p. 230. Mehmet Ogutcu, former MFA official, head of the Non-Members Liaison Group and Global Forum on International Investment at the OECD, at the conference at the John F. Kennedy School of Government Caspian Studies Programme on 16 July 2002, online http://bcsia.ksg.harvard.edu/publication.cfm?ctype=event_reports&item_id=99). ‘Caspian oil deal may isolate Russia’, FBIS-SOV-94–203, pp. 35–6. Temel Iskit, former deputy director of the International Economic Relations Department in the Turkish MFA, ‘Turkey: A new actor in the field of energy politics?’, Perceptions, vol. 3 (4), March-May 1996, online http://www.mfa. gov.tr/grupa/percept. John Maresca, former US ambassador to the Minsk Group, ‘A “peace pipeline” to end the Nagorno-Karabakh conflict’, Caspian Crossroads, vol. 1 (Winter 1995), online http://ourworld.compuserve.com/homepages/usazerb/6.htm, accessed on 26 September 2004. This was at least the perception of decision-makers in Baku. (Author’s interview with Guluzade, 2004.) Emre GÖnensay, senior government advisor on pipeline policy, quoted in Turkish Daily News, 3 April 1996. It should be mentioned that not everyone agreed with GÖnensay’s position. For instance, the head of state-owned energy firm BOTAS, Hayrettin Uzun, called GÖnensay’s pipeline policy ‘an error within an error’. Caspian Crossroads, vol. 1 (4), Winter 1995.

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85. Zerkalo, 16 December 1995, pp. 1, 6. 86. O’Leary’s letter was extensively quoted from in Turkish Daily News, 3 October 1995. 87. Ibid. 88. Zerkalo, 30 September 1995. 89. On Holbrooke’s role in formulating a new concept of Turkey as a ‘new front state’, see Richard Holbrooke, ‘The state of Turkish-American dialogue: Do you understand what I am saying?’ Private View, vol. 3 (7), Spring 1999, pp. 40–6. 90. John Roberts, Caspian Pipelines (London: RIIA, 1996), pp. 36–7. 91. Turkish port to gain from the oil deal’, Financial Times, 10 October 1995. 92. Over 167 large-scale accidents occurred in the Bosphorus between 1983 and 1993. In February and March 1994 alone, five collisions took place including one involving the Greek Cypriot tanker Nassia, which caused over 30 deaths, and an oil spill that burned for five days and leaked over 20,000 tonnes of oil into the water. (See, for example, press statement, Turkish Embassy in Washington DC, ‘Transporting Caspian Sea region oil – the Mediterranean route’, 15 September 1994, online.) 93. Speech by Foreign Minister Ismail Cem, Turkish Embassy press release, Washington DC, 24 October 1998, online www.turkey.org/turkey /f_politics.htm. 94. Letter dated 13 November 1995 from the permanent representative of the Russian Federation to the United Nations addressed to the secretary general (Navigation in the Black Sea Straits), UN Doc A/50/754, International Organisations and the Law of the Sea, vol. 11 (1995), pp. 206–8; Letter of 9 January 1996 from the permanent representative of the Russian Federation (Navigation in the Black Sea Straits), UN Doc A/51/57, vol. 12 (1996), in Ibid., pp. 155–8. 95. Letter dated 7 December 1995 from the permanent representative of Turkey to the United Nations addressed to the secretary-general (Navigation through the Turkish Straits), UN Doc A/50/809, vol. 11 (1995), in Ibid, pp. 209–13. 96. For the Turkish perspective, see Yuksel Inan, ‘The current regime of the Turkish Straits’, Perceptions, vol. 6 (1), March-May 2001, online http://www. mfa.gov.tr/grupa/percept/VI-1/inan.06.htm. 97. Russia warns Turkey on Bosphorus’, Platt’s Oilgram News, vol. 72 (168), August 30 1994, p. 5; John Pomfret, ‘In Central Asia, a rush for control of black gold’, International Herald Tribune, 28 April 1995. 98. Christopher Slaney, ‘Turkish concern for Bosporus complicates oil transport scenarios’, Special Report, Washington Report on Middle East Affairs, May 2004, pp. 34–41.

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99. For a transcript of the meeting, see Heydar Aliyev, speech at the meeting with foreign ambassadors and representatives of diplomatic missions to Turkey during the official visit to Ankara, 9 February 1994, in Musteqillik Yollarinda (Baku: Azernesr, 1996), vol. 1, pp. 174–7. 100. Aliyev, press conference with Turkish Prime Minister Tansu Çiller, Baku, Presidential Palace, 11 July 1995, Musteqilliyimiz Ebedidir, an 11-volume compilation of official speeches, vol. 4, pp. 89–95. 101. Aliyev, introductory speech at the signing of the agreement on cooperation in the oil industry between Azerbaijan and Turkey, 12 April 1995, in Musteqillik Yollarinda, vol. 2, pp. 239–43: 239–40. 102. Aliyev, press conference at an Istanbul airport on the way to the USA to take part in the celebrations of the fiftieth anniversary of the UN, 20 October 1994, in Musteqilliyimiz Ebedidir, vol. 4, pp. 377–83: 381–2. 103. Turkish Daily News, 14 April 1995, p. 4. 104. Ekho, 10 March 2001, p. 1. 105. Ibid. pp. 1, 3. 106. Author’s interview with a senior SOCAR official, anonymous, 3 March 2004. 107. Reuters, 12 October 1998. 108. Reha Aykul Muratoglu, project coordination manager, ‘Trilateral agreements: Baku-Tiflis-Ceyhan pipeline case study’, Transit Petroleum Pipeline Department, Turkish Ministry of Energy and Natural Resources (Istanbul, 2002), http://www.iea.org/work/2002/seegas/NMCMURS2. PDF. 109. Harry Boyd-Carpenter (senior associate at Allen & Overy) and Walid Labadi (senior counsel, EBRD), ‘Striking a balance: Intergovernmental and host government agreements in the context of the Baku-Tbilisi-Ceyhan pipeline project’, LIT Online, A Supplement to the Law in Transition, published on http://zgb.ebrd.com/pubs/legal/lit042e.pdf. 110. Statement by Bill Schrader, president of BP Azerbaijan, 17 February 2007. 111. BP Azerbaijan Business Update: 2009 Full Year Results and 2010 Plans, 23 February 2010, online http://www.bp.com/genericarticle.do?categoryId=90 29616&contentId=7059931#7217193. 112. Terry Knot, ‘Setting the standard’, Frontiers, December 2005, http://www. bp.com/liveassets/bp_internet/globalbp/globalbp_uk_english/reports_ and_publications/frontiers/STAGING/local_assets/downloads/bpf14p22– 31standardacg.pdf. 113. Ibid. 114. ‘AIOC gets ready for $10 bln expansion’, FSU Energy, 5 March 2010. 115. ‘AIOC agrees Chirag expansion’, FSU Energy, 12 March 2010.

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116. ‘Supsa terminal and pipeline, Georgia, Azerbaijan’, Hydrocarbons Technology, http://www.hydrocarbons-technology.com/projects/supsa/; V. Guseynov and A. Goncharenko, ‘Energeticheskoye Izmereniye’, Yuzhnyi Kafkaz: Tendentsii i problemy, in V. A. Guseynov (ed), Krasnaia Zvezda, 2008, pp. 55–131. 117. See, for example, Heydar Aliyev’s interview with journalists, quoted in ‘Azeris narrow pipeline choices’, FSU Energy, 20 June 1997. 118. ‘BTC partners think bigger’, FSU Energy, 24 September 2004. 119. ‘NCOC considers its export options’, FSU Energy, 6 November 2009. 120. ‘CPC expansion approved’, FSU Energy, 18 December 2009. 121. ‘Kazakhstan: Caspian transportation system early departure procedure technical assistance project’, estimates of the government of the Republic of Kazakhstan, Aktau, 10 March 2010. 122. Maulen Namazbekov, co-chairman of the Coordinating Committee on EITI, ‘Kazakhstani Oil and Gas Industry: Overview’, KazEnergy Association, http:// www.iene.gr/3rdSEEED/articlefiles/Session_IV/Namasbekov.pdf. 123. ‘Iskene-Kuryk deal delayed’, FSU Energy, 19 June 2009. 124. Dr Robert Finn, ‘Diplomatic beginning in Baku’, in Azerbaijan in Global Politics, pp. 97–105: 98. 125. The agreement was signed in the course of Aliyev’s visit to Ankara. For details of the visit, see Ekho, 10, 12, 13 and 14 March 2001. 126. Elkhan Nuriyev, ‘The ongoing geopolitical game in the Caucasus and the Caspian basin: Toward war or peace?’, presented at the Centre for Russian and Eurasian Studies, Monterey University, 18 February 1999, online www. cns.miis.edu/cres/nuriyev.htm.

Chapter 7 The Western dimension of Azerbaijan’s strategic manoeuvring 1. George W. Bush Senior, speech at the opening of the International Conference on Coordinating Assistance to the Peoples of the Commonwealth of Independent States, 22–3 January 1992, Washington DC, in Diplomaticheskii Vestnik, vol. 2–3 (31 January–15 February 1993), pp. 30–2. 2. Statement of Secretary of State James Baker, in Ibid., pp. 32–3. 3. Statement of NATO Secretary-General Manfred Woerner, in Ibid., p. 33. 4. Graham E. Fuller, ‘The emergence of Central Asia’, Foreign Policy, Spring 1990, pp. 50–63. 5. See for instance, David Nissman, ‘Iran and Soviet Islam: The Azerbaijan and Turkmenistan SSRs’, Central Asian Survey vol. 2 (4), 1983, pp. 45–60. 6. Quoted in Idris Bal, Turkey’s Relations with the West and the Turkic Republics (Aldershot: Ashgate, 2000), p. 115; see also interview with Baker, Caspian Crossroads, vol. 1 (2), Spring 1995.

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7. Interview with Vafa Guluzade, 22 April 2004. Guluzade acted as President Ayaz Mutalibov’s adviser at the time of Baker’s visit to Baku, and the insights gained during this visit pushed him to influence the foreign policy of the Popular Front (PFA) in a more pro-Turkish (and pro-Western) direction. (For insights, see Guluzade, ‘O vremeni i o sebe: professiia diplomat’, Sredi Vragov i Druzei, p. 23.) 8. Analysing retrospectively, this view was expressed by Azerbaijani Deputy Foreign Minister Araz Azimov at a Harvard conference, ‘The USA and the Caspian: Crossroads or barricade?’, Preventative Defence Project, 26 October 1999 (http://ksgnotes1.harvard.edu/BCSIA/Library.nsf/pdpubs/launch). This Russia First policy prevailed in US policy thinking until 1994. 9. Turkish Daily News, 1 April 1992. 10. ‘Council of Europe supports Turkish model for Central Asia’, RFE RL, 136, 20 July 1992. Significantly, Turkish Foreign Minister Hikmet Çetin, who at the time chaired the council’s ministerial committee, accompanied Catherine Lalumiere on the trip. UK Foreign Secretary Douglas Hurd made a similar statement during his trip to Ankara in 1992 (Newspot, 23 April 1992). 11. Philip Robins, Suits and Uniforms: Turkish Foreign Policy Since the Cold War (London: Hurst & Co., 2003), p. 284. 12. Interview with Tofik Gasymov, former Azerbaijani foreign minister, 18 October 1996, pp. 2–3. 13. That the decision was adopted under pressure from the US Armenian lobby and pro-Armenian Congressmen is widely accepted. See for instance, Svante Cornell, Small Nations and Great Powers: A Study of Ethnopolitical Conflict in the Caucasus (Surrey: Curzon Press, 2001), pp. 103–35. 14. Fiona Hill, ‘A not-so-grand strategy: US policy in the Caucasus and Central Asia since 1991’, Politique étrangère, 1 (January–March 2001) p. 2. 15. Only the final oil contract was scheduled to be signed in Abulfaz Elchibey’s presence in London, but that did not take place because by then he had been replaced by Heydar Aliyev. 16. In outlining his priorities, Sabit Bagirov considered stabilisation and increasing production from the developed oilfields to be the government’s ‘immediate task’. Author’s interview with Bagirov, 18 February 2004. 17. Interview with Guluzade, 22 April 2004. 18. Interview with Nazim Imanov, former PFA member and subsequently chief economist of opposition party IMAP, 9 January 2002. 19. UN Security Council Resolution 822 (30 April 1993); 853 (29 July 1993); 874 (14 October 1993); and 884 (12 November 1993). The first two resolutions were passed under Elchibey’s presidency; the latter two in the first months of Aliyev’s return to power.

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20. UN Security Resolution 884 (1993), online http://library.aliyev-heritage.org/ en/7518523.html. 21. Chapter VII: Action with respect to Threats to the Peace, Breaches of the Peace, and Acts of Aggression, Charter of the United Nations, online http:// www.un.org/en/documents/charter/chapter7.shtml. 22. See, for instance, ‘The Operation Desert Shield/Desert Storm timeline’, American Forces Press Service, News Article, online http://web.archive. org/web/20080526135240rn_1/www.defenselink.mil/news/newsarticle. aspx?id=45404; ‘15 years after Desert Storm, US commitment to region continues’, American Forces Press Service, News Article, 22 February 2006, online http://www.defense.gov/news/newsarticle.aspx?id=14792. 23. Izvestiia, 4 August 1993, p. 5. 24. Elchibey had created the State Oil Company of Azerbaijan (SOCAR) by presidential decree on 13 September 1992. The new integrated structure came to replace a number of Soviet-era organisations, such as Azneft and Kaspmorneftegaz, and was given authority to deal with the issues of exploiting, extracting and transporting oil. 25. Zerkalo, 17 June 1995, p. 9. Interestingly, Morgan Grenfell was one of the consultants to the Elchibey government in 1992 and had reportedly examined and ‘torn to pieces’ the proposals of several oil companies, including Pennzoil. (Interview with Bagirov, Elchibey’s chief adviser for strategic programmes and SOCAR president, 1 May 2002, Ekho forum, transcripts online http://www.echo-az.com/board/steno/forum_index.htm.) 26. SOCAR section, Azerbaijan International, vol. 2 (4), 1994. 27. Adams, Baku oil diplomacy, p. 231. 28. Sabit Bagirov, ‘Azerbaijani oil: Glimpses of a long history’, Perceptions, June–August 1996, vol. 1 (2), online http://www.mfa.gov.tr/grupa/percept/ default.htm. 29. Adams, Baku oil diplomacy, p. 234. 30. Evidence collected through numerous interviews indicates the importance attached to each visit to the West. During the trip to the UK, Aliyev acknowledged that ‘it is our fault, we ha[d] not given enough information about our country, our people, our life and our situation. I hope that this visit and this meeting [would] fill in this gap.’ (Aliyev, ‘Speech delivered at the Royal Institute of International Relations’, in Musteqillik Yollarinda, pp. 203–32: 209.) 31. Interview with Nazim Ibragimov, former minister of press and presently head of GosKomIzdat, 17 February 2004. Humanitarian assistance from the USA reportedly came during Armenia’s blockade of Nakhchivan in the early 1990s. (Author’s interview with Dilara Seidzade, 29 March 2004.) This fact could not be independently verified.

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32. Ibragim Shukurov and Nazim Ibragimov (eds), Diplomatiia Mira: On the Results of the Visits of Azerbaijan Republic’s President Heydar Aliyev to Foreign States (Baku: Azerbaijan Press, 1997), p. 19. That privately the Aliyev government continued to perceive France as biased transpired after the Lisbon summit of the Organisation for Security and Cooperation in Europe of December 1996, when France was to co-chair the Minsk Group alongside Russia. 33. Interview with Young, Azerbaijan International, vol. 2 (2), Summer 1994. This episode marked one of the first instances of Western support for a small state of the Caspian region. 34. Aliyev and John Major also signed six documents, including the Treaty of Friendship and Cooperation, and one on ‘Joint action in the petroleum industry’. Geydar Aliyev otkryvaet miru Azerbaijan (Baku: Azerbaijan Press, 1994), p. 32. 35. Interview with Aliyev, ‘Oil contract of the century’, 26 September 1994, Azerbaijan International, vol. 2 (4), Winter 1994. 36. Hasan Hasanov, minister of foreign affairs (1993–6), ‘Azerbaidzhanskaia shkola diplomatii’, Introductory essay in Diplomatiia Mira, pp. 5–16; 8: 14. 37. Ilham Aliyev, the then vice-president of SOCAR, ‘Anticipating a bright future: Azerbaijan in the region’, speech made to the Asia Society in Los Angeles, 30 March 1998, reprinted in Azerbaijan International, vol. 6 (1), Spring 1998. 38. A series of speeches reprinted in Diplomatiia Mira: for example, see ‘speech delivered at the National Centre of French Entrepreneurs’, Paris, 21 December 1993, p. 33; ‘Speech delivered at the Royal Institute of International Affairs (RIIA)’, London, 24 February 1994, p. 83; ‘Speech delivered at the China Committee of International Trade Development’, Beijing, 8 March 1994, pp. 98–9. 39. Aliyev, keynote address at Harriman Institute, Columbia University, USA, 28 September 1994, reprinted in the compilation of speeches by Fatma Abdullazade (tr), New Political Course (Baku: Azerbaijan Press, 1997), pp. 106–18. 40. Quoted in Robert Barylski, ‘Russia, the West and the Caspian energy hub’, Middle East Journal, vol. 49 (2), 1995, pp. 217–32. 41. Khabar Service Information Agency, 7 June 1994, Bulletin 971, p. 6. Concerns that inaction could be taken for weakness were expressed in a private interview with Khalaf Khalafov, deputy foreign minister in charge of RussianAzerbaijani negotiations on the status of the Caspian Sea, 24 March 2004. 42. Quoted in Elkhan Polukhov, ‘Contract of the century (The problem in an historical retrospective)’, Caucasian Regional Studies, vol. 2 (1), 1997. 43. Ibid.

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44. Interview with AIOC President Terry Adams, Azerbaijan International, Summer 1995, vol. 3 (2). 45. Khabar Service Information Agency, 7 June 1994, Bulletin 971, p. 2. 46. Interview with Aliyev, ‘Oil contract of the century’, 26 September 1994, Azerbaijan International, vol. 2 (4), Winter 1994. 47. This Aliyev acknowledged at an internal meeting after his visit to the USA on the 50th anniversary of the United Nations, where, in the course of five days, he held no fewer than 72 meetings with heads of states and senior officials. According to his own words, Aliyev had a special conversation with Clinton about this. (‘Speech delivered at a meeting of the commission in charge of the project of new constitution for the Azerbaijan Republic’, Musteqilliyimiz Ebedidir, vol. 4, pp. 471–98: 486.) 48. The Current Digest of the Post-Soviet Press, vol. 47 (4), 1995: p. 26. 49. Interview with Hasanov, 19 January 2002. 50. Interview with AIOC President David Woodward, 25 July 1999. 51. Guluzade, Sredi Vragov i Druzei, p. 56. 52. Although on the issue of licensing oil swaps the US government had followed through on the policy of isolation, the Clinton administration made occasional overtures to Iran. Thus, on 17 June 1998, Secretary of State Madeleine Albright delivered her landmark speech at the Asia Society in New York, calling for a ‘road map’ to improved relations with Tehran. Despite some inconsistency, the policy of isolation has been steadily implemented with favourable consequences for the development of Azerbaijani-US relations. 53. Interview with Richard Kauzlarich, reprinted in Zerkalo, 23 July 1994. 54. The Current Digest of the Post-Soviet Press, vol. 47 (26), 1995: p. 21. 55. Adil Baguirov, ‘Media Watch: Caspian reserves’, Azerbaijan International, summer 1998, vol. 6 (2), online http://azer.com/aiweb/categories/magazine/62_ folder/62_articles/62_mediawatch.html. 56. For the estimates, see, for example, Tim Cejka, ‘The USA and the Caspian: Crossroads or barricade?’, Preventative Defence Project, Harvard University, 26 October 1999, online http://ksgnotes1.harvard.edu/BCSIA/Library.nsf/pdpubs/ launch. 57. Ashton Carter, co-director of the Harvard-Stanford Preventive Defence Project and former Assistant Secretary of Defense for international security policy (1993–6), ‘The USA and the Caspian: Crossroads or Barricade?”, Preventative Defence Project, 26 October 1999, online http://ksgnotes1.harvard. edu/BCSIA/Library.nsf/pdpubs/launch. 58. Speech delivered at the opening of US Embassy in Baku, 4 May 1995, Musteqillik Yollarinda, vol. 2, pp. 338–40; see also speech delivered at the

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NOTES

59. 60.

61.

62.

63.

64.

65.

66. 67.

68. 69.

70. 71.

72. 73.

297

celebration of US Independence Day at the US Embassy in Baku, 4 July 1995, Musteqilliyimiz Ebedidir, vol. 4, pp. 79–81. Speech at the celebration of Republic Day, Baku, 28 May 1995, Musteqillik Yollarinda, vol. 2, pp. 390–404: 402. ‘Azerbaijan Respublikasinin Presidenti Heyder Aliyev cenablarin fealijetinin salnamesi’, Chronology, January-December1995, Musteqillik Yollarinda, vol. 2, pp. 974–1028: 1014. Aliyev, press conference at Istanbul airport on the way to the USA to take part in the celebrations of the 50th anniversary of the United Nations, Musteqilliyimiz Ebedidir, vol. 4, pp. 377–83. Speech at a meeting of the commission in charge of drafting the new constitution of the Azerbaijani Republic, at Respublica Palace, Baku, 3 October 1995, in Musteqilliyimiz Ebedidir, vol. 4, pp. 312–22. Officially, Aliyev went to the USA to take part in the celebration of the 50th anniversary of the United Nations. However, he masterfully used the opportunity to meet Bill Clinton and other senior decision-makers, as the quotation suggests. (Speech delivered at the official reception organised by the AIOC’s US companies in New York, 24 October 1995, Musteqilliyimiz Ebedidir, vol. 4, pp. 405–9.) For a comprehensive formulation of what constitutes a pivotal state, see Robert S. Chase, Emily B. Hill, and Paul Kennedy, ‘Pivotal states and US strategy’, Foreign Affairs, vol. 71 (1), pp. 33–51: 36–7. ‘Statement of US President Bill Clinton’, in Ilham Aliyev and Akif Muradverdiyev (eds), Azerbaidzhanskaia Neft’ v Politike Mira [Azerbaijani Oil in World Policy], in Russian, vol. 5 (Baku: Azerbaijan Press, 1998), pp. 65–7; see also pp. 44, 56. ‘Statement of US Vice President Albert Gore’, in Azerbaidzhanskaia Neft’ v Politike Mira, pp. 73–5: 53. Interview with Aliyev, Azerbaijan International, 28 July 1997, p. 2. According to Guluzade, Aliyev focused on this issue during his private talks with Clinton. (Interview with Guluzade, 22 April 2004.) Khabar Service Information Agency, 11 August, p. 4. Aliyev also emphasised that it was the first state visit to the USA by the president of independent Azerbaijan. (Aliyev, Speech at Georgetown University, 31 July 1997, online www.president.az/george.htm.) Turkish Daily News, 7 August 1997, p. 3. Interview with Aliyev, Azerbaijan International, 5 August 1997, p. 5. For transcripts of individual talks with the chief executives of the oil companies, see Azerbaidzhanskaia Neft’ v Politike Mira, vol. 5, pp. 80–138. Turkish Daily News, 7 August 1997, p. 3. See, for instance, EIU Azerbaijan Country Report, October 2001.

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298

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74. Statement by John Leggate, 1998, reprinted in Roberts, Caspian Pipelines, p. 58; Interview with Valeh Alasgarov, general manager of the Foreign Investment Division of SOCAR, 13 March 2004. 75. J. Robinson West and Julia Nanay, ‘Caspian Sea infrastructure projects’, Testimony Before the Senate Foreign Relations Subcommittee on International Economic Policy, Export, and Trade Promotion, 12 April 2000, reprinted in Middle East Policy, vol. 7 (3), June 2000, pp. 111–21: 113. 76. EIU Azerbaijan Country Report, October 2001, pp. 23–4. 77. Aliyev, speech delivered at the first meeting of the committee in charge of the implementation of the oil contract, 24 January 1995, Musteqillik Yollarinda, vol. 2, pp. 48–52; Aliyev, opening remarks at the meeting with representatives with the oil and gas complex of the Azerbaijani Republic, 20 September 1995, Musteqillik Yollarinda, vol. 2, pp. 600–19. In both documents, Aliyev emphasised the need to fulfil meticulously the working quotas as specified in the schedule and asked for progress reports to be made directly to him. 78. ‘The BTC inter-governmental and host government agreements’, BP, September 2002, online http://www.bakuceyhan.org.uk/correspondence/ BP_re_legals_sept_02.pdf. 79. Anders Lustgarten, ‘Why campaigners oppose the pipeline?’ The Guardian, 1 December 2002. 80. Quoted in Hurriyet, reprinted in Turkish Press Review, 21 January 2001, online http://www.hri.org/news/turkey/trkpr/2002/02–01-21.trkpr.html#02. 81. Zerkalo, 2 February 2002, p. 2. 82 Interview with Stanley Escudero, Azerbaijan International, vol. 8 (4), Winter 2000. 83. See leaked document, cited in Rob Ewans and Owen Bowcott, ‘World Bank to back controversial Caspian pipeline’, The Guardian, 29 October 2003. 84. Interview with Rasizade, 15 January 2004; see also ‘Prospects 2004: Rose Revolution will not travel far’, Oxford Analytica Daily Brief, 2 December 2003. 85. Oliver Balch, ‘Principles in the pipeline’, The Guardian, 8 December 2003. 86. Interview with Rasizade, 29 August 2003; Ibid., 7 February 2004. 87. David B. Ottaway and Dan Morgan, ‘Former top US aides seek Caspian gusher’, Washington Post, 6 July 1997. 88. Interview with Alasgarov, 13 March 2004. 89. This was true even at the time when the companies were adamantly opposed to the US government-advocated Baku-Tbilisi-Ceyhan pipeline. Presidents of the oil companies assured Aliyev that they would use their influence to induce a pro-Azerbaijani solution to the Nagorno-Karabakh conflict. (For

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NOTES

90. 91.

92. 93. 94. 95.

96. 97. 98. 99.

100. 101. 102.

299

transcripts of the meetings, see Azerbaidzhanskaia Neft’ v Politike Mira, vol. 5, pp. 80–138.) Timothy Jemal, Armenian Assembly Press Release, 6 September 1997. For example, White was president of Frontera Resources, an oil service company working in Azerbaijan; Scowcroft was on the board of directors of Pennzoil; Brzezinski was a consultant to Amoco; and Maresca was appointed vice-president of the International Relations Department of Unocal. Escudero retired from the State Department in 2000, after his posting to Baku (1997–2000), and was immediately offered a position on the board of directors of Moncrief Oil International. ‘Aliyev’s meeting with the president of Unocal’, Azerbaidzhanskaia Neft’ v Politike Mira, vol. 5, pp. 100–4. Stuart Eizenstat, testimony before the Senate Foreign Relations Committee, 22 July 1997. US Secretary of State Madeleine Albright, testimony before the Senate Foreign Relations Committee, 10 February 1998. The estimate includes the Freedom for Russia and Emerging Eurasian Democracies and Open Markets (FREEDOM) support act and agency funds. See Jim Nichol, ‘Azerbaijan: Recent developments and US interests’, CRS Report for Congress, Congressional Research Service, 4 September 2009. For Azerbaijan’s perceptions of Section 907, see author’s interviews at the Azerbaijan Foreign Ministry (MFA); also, interview with Hafiz Pashayev, Azerbaijani ambassador to the USA; Interview with Trade Minister Husein Bagirov, Azerbaijan International, vol. 8 (4), Winter 2000; and interview with Agshin Mehdiyev, head of the MFA Department for Europe, USA and Canada, all in Azerbaijan International, vol. 8 (4), winter 2000. Ekho, 2 February 2001, p. 1. EurasiaNet.org, online www.eurasianet.org/resources/regional/silkroad. html. Interview with Guluzade, then foreign relations adviser to Aliyev, AzerTadj Press, 25 March 1999. Zerkalo, 2 February 2002, p. 4. For secondary sources, see Henri J. Barkey, ‘The endless pursuit: Improving US-Turkish relations’, The United States and Turkey: Allies in Need (New York: The Century Foundation Press, 2003): p. 235. US Department of State, Congressional Budget Justification for Foreign Operations, FY2009, 12 May 2009. US Department of State, Country Reports on Terrorism 2008, 30 April 2009. Robin Wright and Ann Scott Tyson, ‘USA evicted from air base in Uzbekistan’, The Washington Post, 30 July 2005.

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300

POWER GAMES

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103. Deirdre Tynan, ‘US gets Uzbek air base’, EurasiaNet, 12 May 2009, online http://www.isn.ethz.ch/isn/Current-Affairs/Security-Watch/Detail/?ots59=4888 caa0-b3db-1461–98b9-e20e7b9c13d4&lng=en&id=100079. 104. For proposals to use Manas for Collective Security Treaty Organisation contingents, see statements by the Russian envoy to NATO, Dmitrii Rogozin, quoted in Deirdre Tynan, ‘Kyrgyz parliament mulls US air base closing bill’, EurasiaNet, 5 February 2009, online http://www.isn.ethz. ch/isn/Current-Affairs/Security-Watch/Detail/?ots591=4888caa0-b3db1461–98b9-e20e7b9c13d4&lng=en&id=96150. 105. ‘Kyrgyzstan extends US lease on Manas air base’, BBC News, 16 April 2010, online http://news.bbc.co.uk/1/hi/8624723.stm. 106. For Aliyev’s understanding of the geostrategic importance of Azerbaijan, see Ekho, 18 September 2002, p. 1. Also, see Ilham Aliyev, speech delivered to the Asia Society in Los Angeles, excerpt reprinted in ‘Anticipating a bright future’, Azerbaijan International, vol. 6 (1), spring 1998. 107. ‘Presidential determination on Azerbaijan’, 25 January 2002, No.2002–6, Office of the Press Secretary, online http://georgewbush-whitehouse. archives.gov/news/releases/2002/01/20020128–20.html; see also memoranda for the secretary of state, presidential determination on the extension of waiver on Section 907 of the Freedom Support Act, 13 January 2005, No. 2005–18, Office of the Press Secretary, online http://georgewbush-whitehouse.archives.gov/news/releases/2005/01/20050113–10.html. 108. Eizenstat, US Undersecretary of State, testimony before the Senate Foreign Relations Committee, 22 July 1997. 109. See, for instance, Aliyev’s speech, in Interfax, 14 February 1997; for secondary sources, see Bradford R. McGuinn and Mohiaddin Mesbahi, ‘America’s drive to the Caspian’, in Hooshang Amirahmadi (ed), The Caspian Region at a Crossroad: Challenges of a New Frontier of Energy and Development (London: Macmillan, 2000), pp. 187–211. 110. The first three states were Ukraine, Moldova and Georgia. Diplomatiia Mira, pp. 111–2. 111. Diplomatiia Mira, p. 112. 112. Aliyev, speech at the signing of the Partnership for Peace framework document in NATO headquarters, Brussels, 4 May 1994, Musteqillik Yollarinda, vol. 1, pp. 338–48. 113. Hasanov, speech at the inaugural meeting of the Euro-Atlantic Partnership Council, Sintra, Portugal, 30 May 1997, online http://www.nato.int/docu/ speech/1997/s970530u.htm. 114. Ibid. 115. Interview with Guluzade, 22 April 2004.

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NOTES

301

116. See, for instance, statement by the Azerbaijani ambassador to Russia, Ramiz Rizayev, ‘Azerbaijan does not need to join any military blocs’, Interfax, 16 August 2004. 117. Ekho, 23 January 1999, p. 1. 118. Zerkalo, 23 January 1999, p. 1. 119. Interview with Guluzade, Yeni Musavat, 23 April 2000, p. 8. 120. Interview with Guluzade, 22 April 2004. 121. Ibid. 122. Steve Bowman, ‘Conventional Armed Forces in Europe (CFE): Flank Agreement and Treaty’, Foreign Affairs and National Defence Division, Congressional Research Service, Library of Congress, January 1997, online http://www.globalsecurity.org/wmd/library/report/crs/cfe_jan_ 97.htm. 123. Richard A. Falkenrath, ‘The CFE flank dispute: Waiting in the wings’, International Security, vol. 19 (4), spring 1995, pp. 118–44: 122. 124. Interview with Jayhun Mollazade, 6 January 2004. 125. Russia and the CFE Treaty: The Limits of Coercion, Centre for Defence Information, 1 December 2000. 126. Interview with Guluzade, Panorama, The Institute of Peace and War Reporting, 24 May 1997. 127. Interview with Tofig Zulfugarov, former minister of foreign affairs, in Ekho, 7 February 2001. 128. ‘Statement on behalf of the Russian Federation’, Annex 5, Final Act of the Conference of the State Parties to the Treaty on Conventional Armed Forces in Europe, CFE DOC/2/99, 19 November 1999, online http://www.osce.org/ documents/doclib/1999/11/13761_en.pdf. 129. A document was adopted by the Senate Foreign Relations Committee on the non-stationing of troops and military equipment on the territory of independent states as another gesture of US support for its decision (Guluzade, Sredi Vragov i Druzei, pp. 44–8). 130. Interview with Guluzade, Panorama, The Institute of Peace and War Reporting, 24 May 1997. 131. Speech at the inaugural meeting of the Euro-Atlantic Partnership Council, Sintra, Portugal, 30 May 1997, online http://www.nato.int/docu/ speech/1997/s970530u.htm; see also author’s interview with Hasanov, 12 February 2004. 132. Andrew Monaghan, ‘Russia emergent: A political idea without a strategy?’ unpublished manuscript; for a related excellent discussion, see Monaghan, ‘An enemy at the gates’ or ‘from victory to victory’ Russian foreign policy’, International Affairs, July 2008, vol. 84 (4), pp. 717–33.

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133. Ekho, 24 February 2008. 134. RFE/RL, 15 August 2010. 135. Alexander Jackson, ‘Russia tightens its grip in the South Caucasus’, Caucasian Review of International Affairs, Caucasus Update 78, 23 August 2010. 136. Statement by Eldar Sabiroglu, quoted in ‘Azerbaijan examines new RussiaArmenian military pact’, RFE/RL, 25 August 2010. 137. For the analysis of diplomacy in the Georgian-Russian war, see Ronald Asmus, A little war that shook the world: Georgia, Russia and the Future of the West (Palgrave MacMillan, 2010), pp. 189–234. 138. Vedomosti, 10 July 2010. 139. Shahin Abbasov, ‘Azerbaijan: Analysts expect purchase of Russia’s S-300 missile systems’, EurasiaNet.org, 16 August 2010, online http://www.eurasianet.org/node/61749.

Chapter 8 Postscript and conclusions: What future for Azerbaijani gas and strategic manoeuvring? 1. Ronald W Ferrier and James H Bamberg, The History of the British Petroleum Company: the Developing Years, 1901–1932, Volume 1 (London: Cambridge University Press, 2000), p. 182. 2. This figure increased to 33 per cent in 2007. 3. This estimate was widely quoted in Russian and Western media. See, for instance, ‘Russia resumes Turkmenistan gas imports’, RT, 22 December 2009; ‘Gazprom agrees to resume Turkmen exports’, St Petersburg Times, 25 December 2009. 4. ‘Turkmenistan, Russia agree to resume gas supplies in 2010, ending impasse’, IHS Global Insight, 23 December 2009, online http://www.ihsglobalinsight. com/SDA/SDADetail18049.htm. 5. See, for instance, a statement by SOCAR President Rovnag Abdullayev, quoted in Shahin Abbasov, ‘Azerbaijan: Gazprom deal means no change for Baku’s energy policy’, EurasiaNet.org, 31 March 2009, online http://www. eurasianet.org/departments/insightb/articles/eav040109.shtml. 6. Interview with Rovnag Abdullayev, ANS, 30 March 2009. 7. Rudolf ten Hoedt, interview with Elshad Nasirov, ‘We do not want to depend on only one pipeline’, in European Energy Review, 15 November 2010. 8. ‘Phase II at Shah Deniz delayed’, UPI, 18 September 2009. 9. ‘Shah Deniz second phase delayed to 2017’, LexisNexis, 19 April 2010. 10. Nona Mikhelidze, ‘The Turkish-Armenian rapprochement at the deadlock’, Istituto Affari Internazionali, Documenti IAI 10, 5 March 2010, updated 5 April 2010.

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NOTES

303

11. Statement of the Ministry of Foreign Affairs of the Republic of Azerbaijan, 12 October 2009, online http://mfa.gov.az/eng/index.php?option=com_content &task=view&id=580. 12. Quoted in Kenan Guluzade, ‘Turkey’s Caucasus allies ponder Armenia deal’, Institute for War and Peace Reporting, CRS 15, 22 October 2009, online http://iwpr.net/report-news/turkey%E2%80%99s-caucasus-allies-ponderarmenia-deal. 13. Brian Whitmore, ‘Azerbaijan could scuttle Nabucco over Turkey-Armenia deal’, Radio Free. Europe/Radio Liberty, 19 October 2009, online http:// www.rferl.org/content/Azerbaijan_Could_Scuttle_Nabucco_Over_Turkey Armenia_Deal/1855784.html. 14. Today.Az, 15 October 2009, online http://www.today.az/news/business/56552.html. 15. This pipeline had been idle since 2007 – the last year Azerbaijan imported Russian gas. 16. ‘Gazprom and SOCAR sign addendum to Azerbaijani gas purchase and sale contract’, Gazprom Press Release, 3 September 2010, online http://gazprom. com/press/news/2010/september/article102799/. 17. Haroutiun Khachatryan, ‘Armenia suspends ratification of protocols with Turkey’, Central Asia-Caucasus Institute Analyst, 28 April 2010, online http:// www.cacianalyst.org/?q=node/5320. 18. ‘Azerbaijan. Turkey agree on gas price, supply and transit terms’, IHS Global Insight, 8 June 2010, online http://www.ihsglobalinsight.com/SDA/ SDADetail18794.htm. 19. Interview with Elshad Nasirov. 20. Shahin Abbasov, ‘Turkish-Azerbaijani deal throws open a “window to Europe” for Baku’, Eurasia.Net, 14 May 2010. 21. This has been reported by the Turkish media, although it is not clear whether Azerbaijani exports will be purchased at a discount to Russian gas supplied to Turkey via the Western onshore route through Ukraine or the considerably more expensive Blue Stream under the Black Sea. Given the political ties between Ankara and Baku, the discount was probably offered compared to the cheaper Russian source of imported gas. 22. Quoted in Kostis Geropoulos, ‘Azerbaijan energy minister: If you build it, gas will come’, New Europe, 4 July 2010. 23. FSU Energy, 20 August 2010. 24. FSU Energy, 17 September 2010. 25. According to Abbasov, this was put in writing, but it was also agreed that gas would be sold jointly by the partners; EurasiaNet.org, 14 May 2010. 26. CNG ships typically carry half as much gas as LNG ships. They are also more expensive, but because the capital cost of liquefaction and re-gasification is

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304

27.

28. 29. 30. 31.

32. 33. 34.

35. 36.

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avoided, CNG can be economic for smaller volumes of gas and over shorter distances. Analysis by the Norwegian DNV foundation in 2005 indicated that CNG could be economic for shipping distances of 500–2,500 nautical miles. (Oxford Analytica Daily Brief, 7 July 2010.) Sources at TAP privately complained that the EU prioritised Nabucco over their project (as well as ITGI), despite the fact that all three had been selected as Trans-European Energy Networks (TEN-E) projects. In mid-November 2010, Statoil, which is a partner in the Shah Deniz consortium and owns a 42.5 per cent stake in TAP, suggested in November 2010 that TAP and ITGI were better options than Nabucco, as they only needed Shah Deniz gas (and no second suppliers). Alluding to the political component in the process of selecting pipelines, Statoil Vice-President Olav Skalmeraas stated in November 2010: ‘Producers and sellers need to find a solution. Politicians do not build pipeline; commercial companies build pipelines. It is critical for us to have all agreements in place before we take a multi-billion dollar investment decision.’ (From a speech at a conference in Ashgabat, FSU Energy, 26 November 2010). Today.Az, 17 September 2010, online http://www.today.az/news/ business/73643.html. Interview with Nasirov. Ibid. Azer Khudiyev, first secretary of the Central Asia Department of the Azerbaijani MFA and director of the Analytic Department at the Baku Centre for Synergistic Research, ‘Taking geopolitical risks into account in the formation of Azerbaijan’s foreign policy’, ADA Biweekly (a publication of the Azerbaijani Diplomatic Academy), vol. 2 (24), 15 December 2009, online http://ada.edu.az/bwprint. php?item_id=20091215015824988&sec_id=293. For the analysis of war diplomacy, see Asmus, pp. 191–200. Quoted in Jim Nichol, ‘Azerbaijan: Recent developments and US interests’, CRS Report for Congress, 4 September 2009. Thomas Goltz, ‘Bad blood in Baku: The angry ally Obama can’t afford to lose’, Foreign Policy, 11 June 2010, online http://www.foreignpolicy.com/ articles/2010/06/11/bad_blood_in_baku. Andrew Monaghan, ‘Russia emergent: A political idea without a strategy?’ unpublished manuscript. For background, see Steve LeVine, ‘Obama nominates Bryza as ambassador to Azerbaijan’, Foreign Policy, 27 May 2010, online http://oilandglory. foreignpolicy.com/posts/2010/05/27/obama_nominates_bryza_as_ambassador_to_azerbaijan; and Abbasov, ‘Bryza clears big confirmation hurdle’

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NOTES

305

EurasiaNet.org, 22 September 2010, online http://www.eurasianet.org/ node/61995. 37. ‘Nominee for US envoy to Azerbaijan takes two steps forward, one step back’, RFE/RL News, 22 September 2010, online http://www.rferl.org/content/Controversial_Nominee_For_US_Ambassador_To_Azerbaijan_Wins_ Key_Senate_Approval/2164517.html. 38. Ibid. 39. US presidents can circumvent the requirement of getting Senate approval of nominations if Congress is in recess. These are known as recess appointments.

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INDEX

A Adams, Terry 136, 143, 173, 180, 210, 214 Adversarialism 51 Afghanistan 89, 115, 206, 226, 252, 255 Amoco 180, 215, 220 Azerbaijan International Oil Consortium (AIOC) 104, 112, 118, 120–7, 135, 136, 142–9, 173, 178–81, 190–92, 205, 210, 216–9 Alignment 22–4, 27, 78, 82, 87, 172, 205, 212, 215 Alliance-building 18, 22, 24, 33, 172, 200 Alma Ata Declaration 85, 125 Armenian-Turkish protocols 244 Astara-Gasan Kuli line 128, 131 Azeri-Chirag-Guneshli (ACG) 118–20, 136, 137, 140–51, 173, 176–80, 189–93, 207, 217, 223, 232 Azeri Light 146, 148, 188, 190

B Bagirov, Sabit 49, 50, 207 Baku Declaration 108

index.indd 306

Baku-Tbilisi-Ceyhan (BTC) pipeline 144, 147–69, 180, 184–99, 205, 221–3, 229, 239, 243, 251, 254 Baku-Tbilisi-Erzurum (BTE) pipeline 193, 195, 229, 239, 240, 242 Baku-Tbilisi-Kars railway (BTK) 142 Baku-Novorossiysk pipeline 28, 137, 140, 142, 143–51, 182, 184, 194 Baku-Supsa pipeline 28, 147, 148, 149, 150, 180, 190, 219 Bandwagoning 11, 18, 22, 24, 26, 30–4, 40–2, 68, 70–84, 97, 102, 105, 127, 213, 236, 255 BP 6, 13, 135, 141, 147, 149, 181, 188, 190, 197–8, 207, 212, 215 BOTAS 222 Bosphorus (see also Turkish Straits) 147, 182, 183 Bryza, Matthew 253 Buffer zone 22 Bureaucracy (bureaucrats/bureaucratic) 33, 34, 38, 43–8, 54, 57, 61–2, 66, 68, 71, 103, 161 Bush, George 160–1, 200, 226

10/11/2011 2:23:53 PM

INDEX

C Caucasus 1, 7, 42, 78, 80, 89, 97, 115, 147–9, 159, 185, 201, 205, 219, 225, 229–30, 235, 237, 251, 255 Caspian Flotilla 83, 87, 93, 100 Caspian Sea 5, 6, 12, 13, 49, 95, 99, 100, 101, 112–4, 117–39, 151, 177, 192, 196, 198 Central Asia 8, 9, 46, 78, 115, 135, 154, 159, 161–3, 166, 199, 200–6, 226, 241 Ceyhan 144, 146, 150, 160, 177, 179, 181–4, 188, 221 Chechnya 114, 141, 143–5, 178, 186, 230 Chernomyrdin, Viktor 122, 123, 140–2 Chirag (field, platform, Chirag-1) 118, 126, 137, 143, 148, 173, 189, 190 Çiller, Tansu 162–3, 176, 180, 181, 184, 186 Clinton, Bill 65, 147, 163, 215, 218–24, 228, 231 Compressed Natural Gas (CNG) 248 Cognitive (style, complexity, attributes) 12, 32, 35–7, 52–4, 61, 96 Cold War 22–3, 26, 72, 108–9, 132–3, 238, 250 Commonwealth of Independent states (CIS) 7, 73, 85 Condominium 126 Continental shelf 129, 131, 132 Conventional Forces in Europe (CFE) 81, 103, 206, 230–5

D Daryal (-type) radar 108, 111 Dagestan 114, 145, 168–9, 242, 245 Duma (also Russian State Duma) 35, 36, 80, 102, 106

index.indd 307

307

E Energy policy 14, 61, 73, 82, 112, 143, 195, 205, 239 Euphoria 153–6, 198 Exclusive Economic Zone (EEZ) 128, 129

F Fradkov, Mikhail

29

G Gabala Radar Station (GRS) 91, 98, 108–9, 111 Gazprom 28, 122, 124, 149, 194, 240–242, 245, 247 Georgia 28, 66, 73, 77, 107, 140, 141–51, 169, 170, 178–91, 199, 205–6, 229, 230, 250–1 Grachev, Pavel 89, 91, 99, 101, 176 Great Game (as well as New Great Game) 3, 8–10 Great Power 9, 10, 16, 18–35, 40, 41, 185, 203, 215, 220–1, 230, 238, 250–4, 255 Goltz, Thomas 115, 252 Gonensay, Emre 180, 181 Gorbachev, Mikhail 83–4, 91, 96, 105, 159 Gukasyan, Arkadii 81 Guluzade, Vafa 46, 49, 50, 78–81, 39, 169, 207–8, 212, 229, 230 Gyumri military base 114, 116, 235, 253

H Hajizade, Hikmet 54, 91 Hasanov, Hasan 141, 211, 228, 233, 235 Host Government Agreements (HGA) 188, 222

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308

POWER GAMES

I Interconnector Turkey-Greece-Italy (ITGI) 194, 195, 239, 248, 249 Inter-Continental Ballistic Missiles (ICBMs) 108, 110 International maritime law/practice 128, 131, 135 International Maritime Organisation (IMO) 182 International Security Assistance Force (ISAF) 226 International organisations 1, 18, 20, 164, 176, 211 Iran-Libya Sanctions Act (ILSA) 217, 218

J Javadov, Rovshan 104

K Kaliningrad 232 Kalyuzhny, Viktor 127, 134, 145 Karshi-Khanabad 115, 226 Kashagan 191, 192, 193 Kazakhstan 114, 119, 127, 129, 138–9, 147, 150, 159, 168, 185, 190–6, 216, 230 Kazimirov, Vladimir 52, 57, 91, 105 Kazakhstan Caspian Transportation System (KCTS) 192, 193 Khojaly (tragedy, massacre) 85–8 Korpeje-Kurt Kui pipeline 124 Kozyrev, Andrei 73, 92, 93, 101, 105–6, 121 Kyapaz (see also Serdar) 117, 118, 119

L League of Nations 19 Lezghin 7, 168–9

index.indd 308

IN THE

C AUCASUS

Littoral states 13, 93, 99–100, 119, 123, 125, 127, 128, 131–9, 196, 214 Liquefied Natural Gas (LNG) 240, 248 Lukoil 117, 119, 120, 122, 125, 135–38, 150, 215

M Main Export Pipeline (MEP) 118, 144, 146, 179, 182, 187 Mediterranean Sea 78, 146, 147, 159, 179, 191 Medvedev, Dmitrii 66, 115, 234–6, 241, 245 Milli Mejlis 45, 49, 77 Ministry of Foreign Affairs (MFA) 43–7, 78, 112, 127, 158, 161, 166, 173, 182, 214, 220, 244, 250 Ministry of Foreign Affairs (Russian, MID) 118, 213–4 Ministry of Internal Affairs (MVD) 89, 91, 104 Minsk Group 163, 176 Moratorium 126, 233 Mutalibov, Ayaz 46, 54, 58, 63–4, 75, 82–6, 104

N Nabucco pipeline 10, 13, 155, 156, 172, 178, 190, 194, 195, 197, 229, 238, 239, 240–3, 248, 249, 254 Nagorno-Karabakh (enclave, conflict) 52, 55, 62, 79, 80–98, 101, 105, 155, 157, 163, 174, 178, 179, 186, 203–8, 224, 231, 245 Nakhchivan (also Nakhchivan Autonomous Republic) 56, 59, 64, 77, 95, 175, 211 National sectors 119, 120, 127, 134, 137, 140

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INDEX NATO 159, 165, 180, 200, 201, 205, 206, 221, 225–37, 250–53 Near abroad 90, 92, 93, 101, 107, 121, 140, 170, 212 Neo-realism (also neo-realist thinking) 3, 31, 32, 40 Neutrality 19, 21, 22, 131 Neutralism 18, 22, 25–6 Niyazov, Saparmurat 74, 117, 119 Nobel brothers 5, 6 Northern route 140, 143, 149 Novorossiysk 28, 118, 137, 140, 143–7, 150, 151, 177, 191, 194, 219

O Obama, Barack 115, 252, 253 Offshore 1, 5–7, 13, 99, 112, 117–47, 151, 177, 189, 191, 197–8, 213, 214, 239 O’Leary, Hazel 181, 215 Oil Boom 5, 6, 198

P Pan-Turkism (pan-Turkist ideals, ideas, etc) 63, 154, 156, 159, 161, 162–70 Pastukhov, Boris 134, 138, 146 Politburo 4, 56, 58, 76, 96, 105, 183, 211 Primakov, Yevgenii 52, 76, 88, 136–7 Putin, Vladimir 66–7, 103, 105–14, 139, 170

309

S Saakashvili, Mikheil 73 Sangachal terminal 188 Shafrannik, Yurii 120, 121, 140 Shah Deniz 135, 189, 190, 194–9, 207, 212, 219, 239, 240–7 Shaposhnikov, Yevgenii 85, 88, 89, 174 Sea of Okhotsk 132 Security Council 15, 51, 90, 106, 122, 163, 208, 217 Self-reliance 18, 21 Serdar (see also Kyapaz) 117 SOCAR 34, 49, 117–8, 142, 147, 150, 191, 198, 207, 209–10, 214–16, 222, 224, 242–7 Soviet Union 1–8, 36, 43, 45–6, 55, 66, 72–4, 80, 84, 89, 92, 101, 106, 108, 113, 121–7, 130–8, 153–9, 166, 168, 170, 176, 196, 200, 201, 228, 230, 231, 235–9, 255 Strategy 21–8, 41, 52, 73–85, 94, 120, 130, 142, 171, 197, 199, 205, 207, 212, 217, 219, 225, 229, 237, 247, 252, 255 Strategic manoeuvring 57, 70, 73, 84, 94–6, 107, 115, 117, 120, 121, 120, 136, 147, 152, 156, 171, 195, 196, 199, 206, 211, 215, 217, 221, 237, 238, 249, 251, 254–5 Soviet-Persian/Soviet-Iranian Treaties 125, 127, 128, 130, 131, 133, 138 Supsa 140, 145, 148, 149, 180

T R Realism 31, 33, 173 Rasizade, Artur 23, 28, 223 Rosneft 117, 119

index.indd 309

Tactic 4, 8, 29, 50, 57, 70, 95, 120, 174, 212, 215, 221–5, 234, 242, 252, 254 Tajikistan 226

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310

POWER GAMES

Talysh 7, 168, 169 Tengiz 179, 190, 191, 193 Ter-Petrosyan, Levon 56, 105 TPAO (Turkish Petroleum Corporation) 184, 215, 216 Trans-Caspian pipeline 139, 177, 192, 205 Transneft 28, 144, 145, 148 Tsarist (Russian) Empire 2, 72, 79, 165 Turkish Model 156, 160–1, 166, 171, 173, 199, 200–3 Turkish Straits (see also Bosphorus) 180, 184 Turkmenistan 74, 117–9, 127, 129, 136, 137–9, 147, 150–1, 168, 194, 196, 205, 216, 241

U Ukraine 36, 46, 83, 97, 114, 159, 229–30, 239, 240, 248 UN Convention on the Law of the Sea (UNCLOS) 128, 129

index.indd 310

IN THE

C AUCASUS

V Vietnam 21, 56 Volga-Don Canal 2, 123, 129, 135, 141, 143 Voronezh-M 114

W Walt, Stephen 30, 31, 32, 38 Warsaw Pact 23, 102 White Stream 195, 248 Western Europe 13, 69, 70, 110, 238 World War I 22 World War II 5, 21, 79

Y Yeltsin, Boris 57, 66, 75, 84, 89, 90, 91–6, 103, 105–9, 117, 119, 121–2, 167, 170, 176, 215 Yeskene-Kuryk pipeline 192, 193

Z Zinin, Boris

93

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The Central Azeri platform in the Caspian Sea. Operated by BP.

The Chirag platform in the Caspian Sea. Chirag is part of Azerbaijan’s ACG field, located offshore, 120km east of Baku. The field is operated by BP. Photo courtesy of SOCAR http://www.socar.az/uploads/Chirag-platformasi.jpg

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The Sangachal terminal. The terminal covers an area of 500 square km and is one of the largest in the world. Operated by BP. Photo courtesy of SOCAR http://www.socar.az/uploads/santer11.jpg

West Azeri platform in the Caspian. Located 100 km off the coast. Operated by BP Photo courtesy of SOCAR http://www.socar.az/uploads/Qarbi-Azeri-platformasi.jpg

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The world’s first oil tanker, Zoroaster. Photo displayed in the Nobel Museum in Baku, Villa Petrolea, July 2009.

Fountains in Baku with the twelfth century defensive walls of the Inner City (Icheri Sheher) in the background. Courtesy of Narmina and Leyla Mehdiyeva

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Depleted oil fields of Bibi-Heybat, the place of the nineteenth century Oil Boom

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Depleted oil fields of Bibi-Heybat, the place of the nineteenth century Oil Boom

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Depleted oil fields of Bibi-Heybat, the place of the nineteenth century Oil Boom

Maiden Tower (Qiz Qalasi) in Baku, twelfth century, built over the original structures dating back to the seventh to sixth centuries B.C., UNESCO world heritage site. Courtesy of Narmina and Leyla Mehdiyeva

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A view of the architecture of modern Baku. Courtesy of Narmina and Leyla Mehdiyeva

SOCAR building in Baku, night view. Courtesy of SOCAR http://www.socar.az/uploads/bina.jpg

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