EurasiaNet Business & Economics - Azerbaijan: Russian Arms Scandal Feeds Baku's Support for Nabucco

BUSINESS & ECONOMICS

AZERBAIJAN: RUSSIAN ARMS SCANDAL FEEDS BAKU’S SUPPORT FOR NABUCCO
Shahin Abbasov 2/04/09

Angered by recent allegations about Russian arms transfers to Armenia, Azerbaijan is increasingly positioning itself to take on Russia as a direct competitor for European gas markets, Azerbaijani analysts believe.

The tip-off came with Azerbaijani President Ilham Aliyev’s expressions of support for the Nabucco pipeline project at two recent meetings. While Baku has never shied away from the project, it has always balanced its statements with a nod toward Russia’s pipeline counter-offers. At the World Economic Forum, held in Davos, Switzerland, Aliyev underlined a seller’s logic: Azerbaijan has more gas than it can use -- 2-3 trillion cubic meters in reserves -- and is looking for new customers.

"These markets already exist -- Western and Central European countries -- and, therefore, Azerbaijan needs Nabucco to deliver its gas to consumers," Azerbaijani news agencies reported him as saying during an energy session held January 30.

While Aliyev underlined Nabucco’s shortcomings -- lack of clarity about financing, transit tariffs, construction plans and a project deadline -- a recent landmark gas deal between Azerbaijan and Bulgaria has underlined Baku’s commitment to pushing into markets formerly seen as within Russia’s sphere of influence. [For background see the Eurasia Insight archive]. Under the terms of a January 27 deal, signed at the Nabucco summit in Budapest, Azerbaijan will supply 1 billion cubic meters of gas per year to Bulgaria. The European Union member is currently totally dependent on gas from Russian energy giant Gazprom.

Azerbaijan’s supplies could start as early as the end of 2009, and will travel via the Baku-Tbilisi-Erzurum and Turkey-Greece pipelines. Bulgaria needs only to build a short branch line to join the system.

One Baku-based expert believes that a recent scandal over Russia’s alleged transfer of military hardware to Armenia has affected Aliyev’s position on both Nabucco and competition with Gazprom. While steadfastly denied by Moscow, the reports have prompted a widespread feeling that Azerbaijan has been duped by Moscow. [For background see the Eurasia Insight archive].

"I think we are witnessing a conceptual move in Azerbaijan’s foreign policy now," said Elhan Shahingolu of the Atlas Research Center. "For more than ten years, both Aliyevs [Ilham Aliyev and his father, the late president Heidar Aliyev] have tried to keep a strategic partnership with Moscow, and hope for Russia’s neutrality in the Karabakh conflict. However, it looks like Baku does not have such illusions anymore."

A former presidential aide agrees. After the 2008 war between Georgia and Russia, Baku showed itself ready to accept Moscow as an honest broker for the Karabakh conflict with Armenia, noted Vafa Guluzade. [For background see the Eurasia Insight archive].

"Many officials and pro-government analysts voiced pro-Moscow statements then," Guluzade said. After reports about Russia’s alleged arms transfer to Armenia, however, "[n]ow they have understood that Armenia was and will remain Russia’s only ally in the region," he said. [On January 30, the Azerbaijani parliament voted to send a delegation to Moscow to discuss the alleged arms transfer].

In Azerbaijan, public criticism of Russia has recently increased. At a February 3 news conference, pro-government parliamentarian Baba Taghiyev termed Russia an "insincere mediator" who is "not interested in the resolution of regional conflicts."

Although Azerbaijani officials are keen to show the Kremlin that they can’t be taken advantage of, Baku may find that the Nabucco project is not an effective tool that can be used to readjust any pro-Armenian bias in Moscow, said one energy expert.

"Azerbaijan . . . is not able to do much for Nabucco now because there is no pipeline, no tariffs and more questions than answers [concerning the project]," said Ilham Shaban. The project has a rough completion date of 2014, the same year that large-volume gas production at Shah Deniz is supposed to start.

Shaban believes that Baku will not push to speed up the pipeline project, but, instead, will concentrate on selling the gas it already has. Aliyev himself suggested this in Budapest, telling Hungarian television on January 27 that "it is too early to talk about Azerbaijan’s commitments" to Nabucco while financing and transit "issues are not solved." [For background see the Eurasia Insight archive].

More resolute support from the European Union was also on the Azerbaijani leader’s wish list. With an apparent eye to the recent Russia-Ukraine gas dispute, Aliyev noted at the summit that Nabucco touches on "an issue of energy security that leads to general security and securing independence" from Gazprom.

Commented Zohrab Ismayilov, chairman of the Public Association for Assistance for a Free Economy: "We are witnessing a toughening of the geopolitical fight for gas."

Editor's Note: Shahin Abbasov is a freelance correspondent based in Baku. He is also a board member of the Open Society Institute-Azerbaijan.

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