Azerbaijan's President Heidar Aliev, fresh off disappointing talks on a Nagorno-Karabakh settlement, is scheduled to travel March 12 to Turkey, where more unsettling news may be awaiting him.

When he steps off the plane in Ankara for a four-day visit, the faces greeting him will not have changed much since his last trip in January 2000, but he may find himself in a totally transformed country. At the end of February, Turkey saw a disastrous collapse in its currency, and with it any hope, in the short term, of taming inflation and beating off a recession. Aliev will be anxious to know how this impacts Azerbaijan's prospects of selling the Turks more oil and gas, and whether Turkey's economic troubles make the Baku-Ceyhan pipeline project even more of a pipe dream than many suspect it already is. Under current plans, Baku-Ceyhan is scheduled to be ready in 2004. But the pipeline concept already has experienced numerous setbacks and delays.

Azerbaijani concerns are shared by other Caspian states, namely Kazakhstan and Turkmenistan, who also look to Turkey as a significant market for their production and as a gateway to the West. Watching over their shoulder will be Moscow, keen to see a Trans-Caspian solution buried in favour of the Blue Stream project for piping Russian gas to Turkey from under the Black Sea.

Cengiz Israfil, a former top Turkish bureaucrat and adviser to the Azeri President in the early '90s, is sanguine about the long-term prospects. "Turkey's energy requirements aren't going to go away," says Israfil, although he concedes that forecasts for demand may need to be adjusted if the economic downturn is severe enough.

Turkey imported 13 billion cubic meters (bcm) of gas in 1999, 70 percent of it from Russia. The latest independent forecasts are that demand will rise to 42-48 bcm in 2010, and 90-95 bcm in 2020.

So if Turkey is going to need more oil and gas, why are the Azerbaijanis rattled? President Aliev appeared perplexed recently at what he perceived as a cooling on the part of Ankara towards Baku-Ceyhan, just when Kazakhstan was showing signs of coming on board. In talks with US officials March 2, Kazakhstani President Nursultan Nazarbayev said that the country would ship oil from its Kashagan field, which is expected to begin pumping in 2005 via the Baku-Ceyhan route.

Aliev clearly believes the Turks have been dragging their feet over a deal to buy 5 billion cubic meters of natural gas from Azerbaijan. "Turkey doesn't need Blue Stream," Aliev said in an interview March 8 with the Istanbul daily Sabah.

Sharik Tara, chairman of Enka, one of Turkey's largest industrial conglomerates and a partner in the Russian project, begs to differ. "Blue Stream is a fabulous opportunity for Turkey," said Tara on a recent visit to Moscow. "Without it, Turkish industry will suffer a severe energy shortage." Opponents of the scheme counter that Moscow's insistence on excluding rival sources will only increase Turkey's dependence on Russian gas.

And here lies the nub of the problem. "The rivalry between the Azeri and the Russian pipeline projects is mirrored within Turkey itself," says one seasoned political analyst bluntly. "Powerful forces are pulling in opposite directions." The $3.2-billion Blue Stream project has the backing of the smallest of the three-party coalition government's partners, the Motherland Party, which also controls the Energy Ministry. The other junior partner, the Nationalist Action Party (MHP), has traditionally been a strong advocate of closer ties with the Turkic republics. And the perceived need to maintain a diversity of supplies coincides with the security concerns of Turkey's powerful military.

For Aliev, the uncertainty over Baku-Ceyhan and oil exports comes on the heels of disappointment over stalled talks on a political settlement to the Nagorno-Karabakh war. Aliev described the latest round of peace talks, held in Paris on March 4-5, as "fruitless," blaming Armenian intransigence for the break down of negotiations. The Azerbaijani president has pressed in recent months to produce a Karabakh settlement, and to solidify the Baku-Ceyhan project. Resolution of those two issues would greatly enhance Azerbaijan's political and economic security, according to Azerbaijani experts, thus making it easier for Aliev to transfer power to his son, Ilham.

Ironically, the delay in an oil import decision is not so much a question of the financial crisis impacting Turkey's energy policy, as the other way around. It was, after all, President Sezer's remarks that the government appeared less than committed to rooting out corruption, particularly in the Energy Ministry, that caused the Prime Minister, Bulent Ecevit to take umbrage, triggering the market meltdown that led to the latest crisis.

Oezdem Sanberk, head of the influential social and economic policy think tank, TESEV, says the financial crisis will have a minimal impact on Turkey's trade relations with its partners in the Caspian basin. "What would shake up the chessboard is if the corruption investigations were to destabilise the coalition, but that threat seems to have receded again, if only because of a perception that there is no alternative to this government," Sanberk says.

Cengiz Israfil believes the cathartic effects of the current crisis will ultimately benefit Turkey's Caspian partners. "We were never a very good role model," he says, wistfully remembering the one day a week he used to spend advising the Azeri government, for a salary of $5 a month. "Now Turkey has no alternative but to make radical structural changes, speeding up privatisation and reforming the banking sector. Once that has been achieved, we will fulfil our destiny as a role model for the whole region."