It wasn't exactly a surprise last week when Russia and Azerbaijan announced they had failed to agree on terms to extend the lease of the Gabala radar station which the Russian military operates in Azerbaijan. Azerbaijan had little incentive to let Russia keep using the radar, and so demanded a huge increase in the rent from $7 million a year to a reported $300 million. Russia, meanwhile, doesn't have much leverage over Azerbaijan, and anyway is in the process of setting up a next-generation radar system on its own territory, in Armavir in the North Caucasus. That system is apparently set to become operational in the first quarter of 2013.
Still, Russia clearly wanted the station to remain, though it's not clear on what terms. The post-mortems of the failure of negotiations, interestingly, differ markedly depending on which country they come from. In Azerbaijan, the public consensus seems to be that there will be no serious ramifications. From APA:
“Russia's refusal to use Gabala radar station will not negatively affect relations between the two countries, said Deputy Chairman and Executive Secretary of the ruling New Azerbaijani Party (YAP) Ali Ahmadov....
“The decision on refusing exploitation of Gabala radar station has been passed at the negotiations between the states. If this decision was made on the basis of mutual agreement, it can not cause the tension in the relations between the two countries.”
"Along with the fact that the station's equipment is old, Russia has established an alternative with a more effective [radar] in Armavir. The new station is able to replace the Azerbaijani facility completely and adequately provide security of Russia at a higher technological level," Ismail Agakishiyev said.
Meanwhile, from Russia, most of the commentary addressed the fact that Gabala wasn't really needed any more. But in terms of Russia-Azerbaijan ties, the consensus seems to be that it will sour relations a bit. Here's Komsomolskaya Pravda, quoting Igor Korotchenko, the editor of the Moscow military magazine National Defense:
"This was a blatantly unfriendly act towards Russia on part of Azerbaijan," Korotchenko believes. "Therefore, Baku did not have any economic grounds to raise the annual rental payment 40 times. It is obvious that the country wanted to oust Russia from Gabala, but use purely economic factors for this, setting the price, which Russia was not ready to pay in advance. Baku understood perfectly the importance of this radar station for the security of our country, because the radar station shielded the southern missile direction. Thus, they made us withdraw from there," he underlined.
(There was a bit of schadenfreude from Armenia on this point, as well.)
There also seemed to be a fair amount of conspiracy theorizing from Russia, that somehow the U.S. was behind Russia's ouster from Gabala, and that it was related to a looming attack on Iran. Of all the Russian military activities the U.S. is concerned about in the ex-Soviet states, the Gabala radar is very far down on the list.
Probably all of these commentaries (other than those relating to the U.S. or Israel) are right: this won't be fatal for Russia-Azerbaijan relations, but of course it's not good for them, either. It represents a continuation of the trend of Baku gently trying to remove itself, as uncontroversially as possible, from Moscow's orbit. But there are larger factors (Karabakh, arms sales, oil and gas pipelines, to name a few) that are bigger factors.