Regnum, Russia
March 10 2006

Will Russian investors replace Turks and Dutchmen in Azerbaijan?
Azeri press digest

Politics. Government

Armenia’s non-constructive position in the Karabakh peace process is
pushing Azerbaijan into policy revision, Azeri President Ilham Aliyev
says Mar 1, while opening a village of refugees and displaced people
in Agdam region. He regrets that the long-term peace talks with
Armenia have given no fruits, to date. There are certain hopes but
they all are blasted by Armenia’s non-constructive position. Aliyev
notes that he has always been and will be an advocate of cease-fire.
Azerbaijan’s position is that the Karabakh conflict must be resolved
by peace, and there is a special format for that: the OSCE Minsk
Group co-chairs are now consulting, and there are certain
opportunities for finalizing the key principles. But Armenia is again
non-constructive and disinterested in having the principles
finalized. `And so, Azerbaijan should think over what to do,’ says
Aliyev. (AzerTag)

Speaking of the possibility of new war between Azerbaijan and
Armenia, well-known Azeri political expert Zardusht Alizade says to
Echo daily that `the talks have been in stalemate for 14 years
already.’ `I am sure that the Azeri army is absolutely unprepared for
war. We can’t start a war given the present corrupt defeatist
generals. The potential of the peace process is absolutely intact,
and there is a vast reserve of unused peace opportunities. The
parties’ inaction means their reluctance to solve the problem and to
get worthy peace for both Armenians and Azeris. In fact, both Aliyev
and Kocharyan believe that the conflict must be dragged on and the
people regularly scared. Ilham Aliyev’s statement that Azerbaijan’s
12-year Karabakh talks are already a concession and that the country
must review its position does not mean that Azerbaijan will shortly
resume war,’ Azeri political expert Rasim Musabekov says to Echo.
`But this means that Azerbaijan will not talk in the format, tone and
framework insisted on by Armenia – which, in fact, means ceding not
only Karabakh but also Kalbajar and Lachin. Aliyev makes it clear
that one should not expect such a capitulation from Azerbaijan. But
this also means that Azerbaijan will not bear unlimited occupation of
its territories. To me, this means an unfolding arms race and
toughening propaganda. As regards the meeting of the co-chairs, they
will hardly find a way to thrust an unfavorable solution on
Azerbaijan – they better use the capacities they have. And the US,
Russia and Europe do have the capacities to bring Kocharyan round and
to force him to renounce his exorbitant demands. If they actually
want to use the levers, they will find a way out of the present
diplomatic deadlock, if not – they will face the prospect of a real
arms race. And if Azerbaijan will spend its own money, Armenia will
have to use the money it gets from the Americans, Russians and
Europeans.’

Political expert Eldar Ismaylov is sure that there will be no
military conflict. `The peace process must actually be in a stalemate
– for the sides appear to have no single ground in common and, I am
afraid, can no longer continue the talks. Today, they are showing the
same approaches they showed 10-15 years ago. I don’t like the way the
talks are going. This all is very much like a continued drag on.’
(Echo)

Mar 4 the Puls-R sociological service presented the results of its
monitoring `Azerbaijan in 2005.’ It is the third consecutive
monitoring by the service. The director of the project, political
expert Rasim Muzabekov says that despite prevailing optimism, Azeris
are getting increasingly critical of the present situation in their
country. Their key concerns are the Karabakh conflict, unemployment
and poverty. Most people don’t share the optimism of foreign
diplomats that there may be a breakthrough in the Karabakh peace
process in 2006. Despite improved assessment of unemployment and
poverty, they show growing discontent with corruption, tyranny, poor
education and health care. The president and the army are the only
authorities people have steadily trusted in the last three years.
They also trust media and, partly, religious institutions. More
people are beginning to advocate drastic government reforms. Many
(27.7%) are still for integrating with the EU, while NATO
sympathizers have grown scarce – from 12.4% in 2004 to 7% in 2005.
The biggest friend is Turkey, and also Russia and Iran, instead of
the US in 2004. But the selfsame Iran and Russia are also the 2nd and
the 3rd biggest enemies. The top enemy is steadily Armenia. It is
noteworthy that the number of those advocating Islamic values has
over redoubled – from 6.2% to 14.5%. (Echo)

Head of OSCE Office in Baku Maurizio Pavesi states the necessity of
electoral reforms in Azerbaijan. In a Mar 1 seminar `Towards
Transparency in Politics: a Review of Electoral System and Funding of
Political Parties in Azerbaijan’ Pavesi says: `The OSCE/ODIHR final
report on the November 2005 parliamentary elections showed that the
electoral system in Azerbaijan needs some changes in order to match
European standards.’ Pavesi says that his office has got nothing from
its post-electoral meetings with the Azeri government and opposition
and will not continue them. He says that from now on his office will
help the local authorities in technical problems only, but the
initiative should come from political parties themselves. (Zerkalo)

The US gives high attention to the protection of Azerbaijan’s sea
borders and systematically aids the country’s navy, US Ambassador to
Azerbaijan Reno Harnish says Mar 1. He says that the bigger part of
the aid is given to sea border guards, with the navy getting mostly
technical assistance: `we are presently helping them to repair
several worn-out ships.’ Harnish notes that the US will further
continue to help Azerbaijan to protect its sea borders. (Azeri Press)

Opposition

The Azeri opposition continues disintegrating as its key forces are
brawling harder – Musavat party, who has decided to work in the
parliament, and Democratic Party, whose leader is Rasul Guliyev, ex
parliamentary speaker and US resident since 1996.

In an interview to Azeri-Press Guliyev says that after the
parliamentary elections, he no longer regards Musavat as an
opposition party. Asked what he thinks about Musavat’s decision to
work in the parliament, Guliev says: `This is a painful stab in the
back for democracy hopes in Azerbaijan. I regret that the party whose
70%-80% are true democrats and intellectuals has failed to prevent an
incompetent decision by 2-3 ambitious and adventurous leaders. How
then can it fight the regime?’ They let people down during the
presidential race 2003 – they crushed their hopes and have not even
begged their pardon for being unable to protect their votes for Isa
Gambar (Musavat party leader – REGNUM). Now too, like in Apr 1920,
they prefer defeat. Then too Musavat sought cooperation with the
Bolsheviks, but the Bolsheviks refused. The same is now: Musavat
wants to cooperate with the authorities, but the authorities will
also refuse… Musavat is not longer an opposition to me. They are just
4-5 MPs that think they are a party. Once again I express my regret
that the party’s worthy members have allowed such a situation.”

Azerbaijan-Armenia. Karabakh problem

In a talk with Azeri journalists US Ambassador to Azerbaijan Reno
Harnish says that the resolution of the Karabakh conflict is not far
off. He hopes that the US will help the conflicting parties to solve
the problem. He quotes OSCE MG US co-chair Steven Mann as calling
2006 the year of the conflict’s resolution. Neither Armenia nor
Azerbaijan have elections this year, and their politicians will have
enough time to solve complex problems. Harnish notes that if the
conflict is not resolved in 2006, there are other scenarios – one of
them being war. But war will be a real tragedy for the Caucasus. And
so, Harnish urges all politicians, foreign ministers and presidents
to use the chance to find a way out. (Azeri Press)

The statement that Nagorno Karabakh may join Armenia is only adding
to the tensions in the region and is giving it nothing good, US
Ambassador to Azerbaijan Reno Harnish says Mar 3 in comment on the
last statement by Armenian President Robert Kocharyan. He says that
the US wants the negotiating process to continue and encourages the
presidents and the FMs to continue their peace dialogue. (Echo)

`Lately, a number of European countries have shown unawareness and,
sometimes, even bias concerning some issues,’ says the head of the
department of foreign relations of the Azeri president’s executive
staff Novruz Mamedov, commenting on the European Parliament’s
decision to acknowledge the fact of destruction of Armenian
cemeteries in Julfa region of Nakhchivan AR. He says that the
European MPs should have studied the region better. He notes that
almost totally destroyed are over 1,000 Azeri historical and cultural
monuments registered by UNESCO and located in the territories
`occupied’ by Armenians. Mamedov is displeased with Europe’s
partiality on some issues – from the Mohammed cartoons to the Julfa
cemeteries. He notes that the West’s wrong position in the world
processes may lead it to a tragedy. One should show one’s position
through fair decisions only. (New Time)

Iran

Aljazeera.Net gives an article by former UN inspector in Iraq Scott
Ritter. Ritter urges the world not to believe the Bush administration
when it speaks of `diplomacy’ and a desire for a `peaceful’
resolution to the Iranian question.

In his article `The US War with Iran has Already Begun’ Ritter says
that there are several actions ongoing against Iran.

To the north, in neighboring Azerbaijan, the US military is preparing
a base of operations for a massive military presence that will
foretell a major land-based campaign designed to capture Tehran.

Secretary of Defense Donald Rumsfeld’s interest in Azerbaijan may
have escaped the blinkered Western media, but Russia and the Caucasus
nations understand only too well that the die has been cast regarding
Azerbaijan’s role in the upcoming war with Iran.

The ethnic links between the Azeri of northern Iran and Azerbaijan
were long exploited by the Soviet Union during the Cold War, and this
vehicle for internal manipulation has been seized upon by CIA
paramilitary operatives and US Special Operations units who are
training with Azerbaijan forces to form special units capable of
operating inside Iran for the purpose of intelligence gathering,
direct action, and mobilizing indigenous opposition to the Mullahs in
Tehran.

But this is only one use the US has planned for Azerbaijan. American
military aircraft, operating from forward bases in Azerbaijan, will
have a much shorter distance to fly when striking targets in and
around Tehran.

A much shorter route to Tehran now exists – the coastal highway
running along the Caspian Sea from Azerbaijan to Tehran.

US military planners have already begun war games calling for the
deployment of multi-divisional forces into Azerbaijan.

Logistical planning is well advanced concerning the basing of US air
and ground power in Azerbaijan.

Commenting on the article to Echo, well-known Azeri political expert
Zardusht Alizade says: `I think that however bad at rule, the Azeri
leaders are still quite good at self-preservation. Those people will
never allow to use themselves in a game against Iran, because this
bodes big and simply unpredictable consequences.’

Business-scandal

The Azeri authorities have given start to expelling Turkish Barmek,
an LTD enjoying monopoly in electricity supply in Baku and some
regions. `If Barmek fails to clear its faults by our deadline, we may
stop our contract with them,’ Azeri Economic Development Minister
Haydar Babayev says Mar 2. He says that Barmek is defaulting on its
investment commitments: `Any foreign company operating in Azerbaijan
should respect the law and the contract.’ Azeri President Ilham
Aliyev has also criticized Barmek in a recent conference. (525th
Daily)

Mar 2 Barmek President Huseyn Arabul gave a press-conference to
express his attitude towards Aliyev’s criticism. In a conference
chaired by Aliyev President of AzerEnergy Etibar Pirverdiyev said
that Barmek was defaulting on its contractual commitments, was
under-investing in its network and so on. Aliyev instructed relevant
bodies to inquire into Barmek’s activities. Arabul says that he has
received many presidential instructions and has no objections. Arabul
says that the conference misinformed Aliyev of the Barmek’s
activities. Arabul is ready to regularly report to Aliyev on his
company’s activities. He has tried to meet with Aliyev, but failed as
he was very busy. At the same time, Arabul notes that, if need be, he
will leave Azerbaijan.

Mar 3 the Azeri Public Prosecutor’s Office brought a criminal action
against Barmek President Huseyn Arabul. The action followed an
inspection of the company’s activities by the anti-corruption
department, experts from the ministries of finances, taxes, economic
development, industry and energy and the audit chamber. Oct 13 2001
the Azeri Economic Development Ministry agreed with Turkish Barmek
Holding A.S. to give it the right to manage Bakuelectricshebeke for
25 years. The ministry undertook the obligations of the Azeri side.
Barmek pledged to invest a total of $51 mln in 5 years, but has spent
almost nothing, so far.

The company is also accused of non-compliance with several points of
its 25-year contract. It has under-invested, embezzled state
property, got involved in financial machinations. The Public
Prosecutor’s Office reports complicity by the former economic
development minister, now political detainee Farhad Aliyev and Barmek
Azerbaijan President Huseyn Arabul. Particularly, Aliyev is reported
to pay big ministerial money to some British company for something it
did not do. (AzerTag)

Meanwhile, Echo reports that the contract with Barmek will shortly be
annulled, and one of the most probable substitutes is RAO UES Russia.
Some sources say that this was discussed during recent visits by
Russians to Baku. One source is Arabul himself, who says that RAO UES
is showing interest in the Baku electric networks – something RAO
does not even try to hide in its interview to Echo.

Quite recently AzerEnergy President Etibar Pirverdiyev said that
Barmek was failing to meet its contractual obligations and President
Aliyev ordered an inspection in the company. As a result, the
contract may be annulled and the Azeri side will have to pay off all
Barmek’s investments in the country. Barmek may stop its activities
in Azerbaijan and leave vacant the grids in Baku, Sumqayit and some
other northern regions. The general rumor is that Barmek will be
replaced by a big energy company by some top official, while experts
say that coming instead will be some foreign – probably Russian –
company.

Echo reports President of the Association of Engineers and Energy
Experts of Azerbaijan Rasul Suleymanov to say that, in fact, it was
German Siemens who first won the right to manage the electric
networks in Baku, Sumqayit and other northern regions. `But for some
objective reasons, that company refused and gave its rights to the
second company in the tender – Barmek. But neither Bayva nor Barmek
have managed to ensure normal payment collection rate.’

It should be noted that almost all Farhad Aliyev-time contracts are
being criticized and annulled. Curtailing activities is Dutch Fondel
Metal, who has a 25-year contract to manage Azerbaijan’s aluminum
complex. The Dutch may be replaced by Russians – RUSAL – even though
the new economic development minister Haydar Babayev is sure that the
situation with Fondel has nothing to do with RUSAL’s wish to start up
in Azerbaijan, says Echo.