ILKHAM ALIYEV CHANGES ROUTES
Dmitry Butrin

RusData Dialine – Russian Press Digest
November 9, 2006 Thursday

Azeri President to hold talks with Vladimir Putin

Today Russian President Vladimir Putin will suggest to Azerbaijani
President Ilkham Aliyev, who is visiting Moscow after a trip to
Brussels to meet with European Commission President Jose Manuel
Barroso, that he decide whether Azerbaijan intends to continue with its
"strategic partnership" with Russia. If Azerbaijan responds positively,
Moscow will request Baku’s cooperation in Russia’s struggle with
Georgia and will offer Russian arms and investment by UES Russia and
RusAl in return.

President Aliyev’s visit to Europe unnerved the Kremlin chiefly
because of Azerbaijan’s projected defense spending for 2007: the
country will spend $1 billion on the military next year, up from $600
million currently. Russia fears that this could be a preliminary step
towards membership in NATO. If Azerbaijan joins neighboring Georgia
in a NATO bid, the ex-Soviet Caucasus could end up hosting NATO and
American military bases as the West seeks to control Iran.

In an effort to forestall the possibility of NATO bases near its
southern border, Russia is attempting to lure Azerbaijan back to its
own camp with promises of increased sales of cut-rate Russian-made
weapons. Russia has been curtailing its arms trade with Azerbaijan,
fearing to fan the flames of Azerbaijan’s long-standing feud with
neighboring Armenia.

Russia is also focusing on Azerbaijan in an attempt to create a
unified front within the CIS against the Kremlin’s latest enemy,
Georgia. Moscow is seeking to impose an energy blockade on Georgia
in the winter of 2006-2007, while Azerbaijan last winter stepped
in with emergency supplies of electrical energy and gas when Russia
interrupted deliveries to Georgia. In 2007, Gazprom is threatening
to raise the price of gas for Georgia from $110 to $230 per thousand
cubic meters. According to unofficial sources, the same proposal
has been made for Azerbaijan as well, angering President Aliyev. The
country currently pays $95-100 per thousand cubic meters for the 1.5
billion cubic meters of gas that it imports from Russia annually.

Other proposals from the Kremlin are more palatable: according to
Kommersant’s sources, Vladimir Putin will offer President Aliyev
investment by the company RusAl to the tune of a $1 billion aluminum
plant in Azerbaijan. Mr. Putin will also mention interest on the
part of the Russian company UES Energy in investing in Azerbaijan’s
energy sector.