Eurasianet Organization
Aug 10 2004

IRAN-AZERBAIJAN RELATIONS: ON A BETTER FOOTING AFTER KHATAMI’S BAKU
VISIT
Shahin Abbasov: 8/10/04

A recent visit by Iranian President Mohammad Khatami to Azerbaijan
seems to have put bilateral relations on a better footing. However,
the Iranian leader’s trip did not succeed in resolving the
fundamental issue separating the two nations: the territorial
division of the Caspian Sea.

Khatami held talks in Baku with his Azerbaijani counterpart, Ilham
Aliyev, and other top officials during his August 5-7 visit. It was
the Iranian chief executive’s first trip to neighboring Azerbaijan
since his election in 1997 – evidence of the chill that has marked
bilateral ties since the break-up of the Soviet Union in 1991.
Besides the Caspian question, the issue of ethnic Azeris in Iran has
been a significant source of tension. Geopolitics has also come into
play: Azerbaijan has been wary about Iran’s strong economic and
political ties with Armenia, while Tehran has been suspicious of
Baku’s close relationship with the United States.

Upon his arrival in Baku, Khatami spoke of “great opportunities and
tremendous potential for the development of bilateral relations.”
Aliyev expressed similar sentiments, and accepted an invitation to
make a state visit to Iran at a time to be determined. The most
significant development to arise from Khatami’s visit was an Iranian
commitment to allow Azerbaijan to open consular offices in Tabriz, a
hub for ethnic Azeris living in northern Iran.

There are an estimated 30-35 million Azeris in Iran, most of them in
northern areas of the country. The pending opening of an Azerbaijani
consulate in Tabriz has generated hope in Baku that the Iranian
government is adopting a more tolerant stance towards ethnic Azeris
in Iran.

In addition, Khatami reiterated Iran’s commitment to Azerbaijan’s
territorial integrity, effectively signaling that Tehran supported
Baku’s negotiating position in the stalled Nagorno-Karabakh peace
talks. [For additional information see the Eurasia Insight archive].
In a follow-up development, Iran’s Export Development Bank extended a
$75 million loan to improve the power grid in the Azerbaijani exclave
of Nakhichevan, which straddles the Iranian frontier, the Bilik
Dunyasi news agency reported.

Azerbaijan, in turn, has expressed support for Iran’s participation
in a transit system connecting Europe and Asia, known as TRACECA.
Baku additionally endorsed the creation of a tripartite railway and
road network, involving Azerbaijan, Iran and Russia. Such projects
could potentially be of enormous economic benefit for Iran by opening
new export routes.

As widely anticipated, Khatami’s visit was unable to produce a
breakthrough on the Caspian Sea question. Iran and Azerbaijan have
long been unable to agree on a formula to divide the sea. The
bickering at some points has even threatened to turn violent. [For
background see the Eurasia Insight archive]. The lack of a deal has
hampered the development of the region’s ample natural resources.
[For background see the Eurasia Insight archive].

During his Baku visit, Khatami tried to stir hope that a near-term
breakthrough was possible. Yet no participants in the stalemated
Caspian Sea talks have given any indication of making a significant
concession. Iran believes the five Caspian littoral states should
receive equal 20 percent shares of the sea. Azerbaijan, along with
Kazakhstan and Russia, favor a formula that would leave Iran with
roughly a 13 percent share. Turkmenistan’s stance in the process has
proven hard to pin down.

Despite the lack of progress on the Caspian issue, state-controlled
media in Azerbaijan generally trumpeted Khatami’s visit as a success.
“There is great potential to develop Azerbaijani-Iranian relations in
all fields,” said a headline in the August 7 edition of the official
Khalq Gazeti.

Some observers say that bolstering bilateral ties marks a pragmatic
step for both sides. Azerbaijan of late has expressed frustration
with Western institutions, in particular the OSCE Minsk Group, over
the lack of progress on a Karabakh settlement. [For background see
the Eurasia Insight archive]. Closer Azerbaijani-Iranian ties, or at
least the appearance of such, could be a way to get Minsk Group
members, especially the United States, to push harder for a Karabakh
settlement, some Azerbaijani officials believe. The Bush
administration has been keen to promote Iran’s diplomatic isolation.
[For background see the Eurasia Insight archive]. “Rapprochement with
Iran would allow Azerbaijan to create great potential for political
maneuvering vis a vis the West,” said a commentary published by the
Zaman newspaper.

Other Azerbaijani experts, meanwhile, feel that Iran desperately
needs friendlier relations with Baku. “Khatami realizes very well
that from a geopolitical point of view, Iran is currently in a
situation with no prospects,” said a commentary published by the
Zerkalo daily. [See related story] “Iran is sliding into a dangerous
area of geopolitical isolation.”

Editor’s Note: Shahin Abbasov is a freelance contributor to
EurasiaNet. He also serves as the deputy editor-in-chief of the Echo
newspaper in Baku.