With more than a year to go before the expiration of Russia’s lease for Azerbaijan’s Gabala radar station, Baku and Moscow are already haggling about a renewal, EurasiaNet.org has learned. Amid Russia’s ongoing tussle with Washington over a European anti-missile defense system, Azerbaijan is expected to try and squeeze Moscow for more cash in order to extend the lease.

Built in 1985, the station, located in a mountainous part of northern Azerbaijan, can monitor missile launches throughout the Middle East, Iran and Southeast Asia. Russia holds a 10-year lease on Gabala. That lease is due to expire on December 24, 2012.

Baku appears to be setting new parameters for renewal negotiations, including an unspecified increase in the $10 million annual lease fee that Russia currently pays for use of the radar station.

Beyond a lease payment, Azerbaijani officials are pushing for an increase in the price of electricity supplied to the station, the pro-government Azerbaijani news agency APA reported in June. Russia pays the same price for electricity as do businesses in the Gabala area -- nine gapik (about 12 cents) per kilowatt, according to the Tariffs Council. Baku reportedly wants Russia to pay a higher tariff (about 18 cents per kilowatt) for Azerbaijan, in effect, “exporting” electricity to the Russian-leased station.

In addition, Baku is said to be seeking to increase the number of Azerbaijani civilians working at the station: currently a few dozen Azerbaijani nationals work at the facility, according to military analyst Jasur Sumarinli. Officials also want Azerbaijani businesses to gain a greater share of catering and other services provided to Russian military families stationed at Gabala. Compensation is additionally being sought for what Azerbaijan describes as the financial losses incurred by the government’s inability to promote tourism in the mountainous region.

An official in Azerbaijan’s presidential administration who spoke on condition of anonymity confirmed to EurasiaNet.org that the Azerbaijani and Russian foreign ministries have started consultations about the lease’s renewal, but did not elaborate on the terms under discussion.

In June, the Russian ambassador to Baku, Vladimir Dorokhin, said that it is too early to comment on whether or not Moscow and Baku will renew the lease, and under what terms. “So far, we do not face any problems and when there will be necessity for other statements on the issue, we will make them,” Dorokhin told a June 8 news conference in Baku.

In comments to reporters, though, Deputy Foreign Minister Araz Azimov has justified the reported terms proposed by Azerbaijan by citing the “increased importance of the station.”

Gabala’s importance for Russia has increased as Moscow’s tug-of-war with the North Atlantic Treaty Organization over setting up anti-missile defense systems in Europe has intensified.

The two sides agreed to cooperate in 2010, but NATO has now rejected categorically Russia’s proposal that the Atlantic Alliance and Moscow divide up geographic responsibility for Europe’s anti-missile defense, Russia’s state-run RIA Novosti news agency reported on July 15, citing a member of the Russian delegation to the talks.

“[I]t is not clear what the two sides have left to discuss,” the agency’s report said.

Vladimir Putin, currently Russian prime minister who was at the time the president, proposed in 2007 that Gabala form part of a joint US-Russia anti-missile defense shield for Europe. But, after several rounds of talks, the US rejected the idea.

Moscow now maintains that a jointly run Gabala would not be “an addition” to US plans for an anti-missile defense system in Europe, but a “reasonable alternative,” APA reported.

Some analysts in Baku, citing recent comments made by a senior US diplomat, believe that the United States is interested in using Gabala in some capacity. After talks with Azerbaijani government officials on June 24 in Baku, US Assistant Secretary of State for Political-Military Affairs Andrew Shapiro told reporters that talks with Baku about using the station could still take place. “We are holding negotiations with Russia on the similar theme,” APA quoted Shapiro as saying. “In the present stage, we are holding discussions on missile defense; in the future, we may hold discussions on Gabala radar.”

Given such perceptions of outside interest, Azerbaijan could prove a hard bargainer on the Gabala lease renewal, suggested political analyst Elkhan Shahinoglu, head of the Baku-based Atlas research center. “The bargaining will apparently continue until the last moment, and can even go beyond the end of the station’s lease in 2012,” Shahinoglu predicted.

Given the prospect of tough negotiations ahead, Azerbaijani media reported that the topic of anti-missile defense systems featured prominently during Russian Foreign Minister Sergei Lavrov’s July 13 talks with US Secretary of State Hillary Rodham Clinton in Washington. In her post-meeting comments, Clinton noted that the topic had been addressed, but did not indicate to what extent.