AZERBAIJAN AND RUSSIA AT LOGGERHEADS
By Kenan Guluzade in Baku

Institute for War and Peace Reporting, UK
Jan 11 2007

Neither side willing to back down in energy dispute.

The year 2007 has begun in Azerbaijan with relations with Russia
hitting a low point. Baku has stopped receiving gas from Russia and
halted transport of its oil through Russia via the northern pipeline
to the Black Sea. Experts see this is a sign of a new and significant
shift in Azerbaijani foreign policy away from Moscow.

The relations between the two neighbours took a turn for the worse at
the end of 2006, despite this being officially the "Year of Russia"
in Azerbaijan. The Russian gas giant Gazprom declared it would
increase the price of gas for Azerbaijan from 110 to 235 US dollars
per 1,000 cubic metres and reduce supplies by two thirds. Meantime,
the gas prices for Armenia, Azerbaijan’s rival and enemy, were to
remain unchanged.

Azerbaijan responded by declaring it would stop pumping oil to the
Russian Black Sea port of Novorossiisk as from January 8 and use mazut
(low-quality fuel oil) to compensate for the shortage of natural gas.

Azerbaijani president Ilham Aliev lashed out at Russia in an interview
to the Moscow radio station Ekho Moskvy, saying, "I decided to find
a way for Azerbaijan to get out of the situation with minimal losses
but also with dignity. I can’t allow Azerbaijan to become a country
subject to commercial blackmail. Azerbaijan is no longer a state that
can be forced to do things. Gazprom may claim 500 dollars or a thousand
for its gas, as it is its right. And it is our right to refuse it."

Analysts in Baku say the standoff between the countries, which had
seen an improvement in relations in recent years, has geopolitical
causes, as well as economic ones. "Russia is demanding solidarity
from Azerbaijan for its policies against Georgia, while it offers
nothing serious on the Karabakh issue [with Armenia]," said political
scientist Ilgar Mamedov. "Azerbaijan’s refusal to accept this regional
policy has annoyed Moscow. That is why cold winds are blowing in
this relationship."

"This is a continuation of a big geopolitical confrontation between
Russia and the West, above all, the USA," said Caucasus expert Arif
Yunus. "Having secured large quantities of oil dollars, Moscow has
adopted a more aggressive policy in the South Caucasus. Russian
politicians began feeling certain they could recover what they lost
in the Nineties of the last century."

Yunus said that Moscow had miscalculated by trying to rely on
Azerbaijan for support in its campaign against Georgia and being
rebuffed.

Azerbaijan was due to start shipping gas to Georgia on January 11,
under an agreement struck in December whereby Georgia will receive
one million cubic metres of gas, costing 120 dollars per 1,000
cubic meters, over a three-month period – around half the price
of what Russia was offering. Georgia also hopes to receive some of
Turkey’s share of the gas from the new Baku-Tbilisi-Erzerum pipeline
in February.

Yunus said the row could affect adversely Azerbaijani labour migrants
in Russia, especially those trading in Russian markets. Up to two
million Azerbaijanis live in Russia and their remittances are a major
source of income for many families in Azerbaijan. Yunus believes that
if the dispute escalates many of these migrants could be deported
from Russia.

Some experts see this quarrel as a turning point in Azerbaijan’s
foreign policy. Rauf Mirkadyrov, political commentator for Zerkalo
newspaper, wrote, "Pro-western political forces can blow their
trumpets. It seems we are witnessing a new drastic historical shift
in Azerbaijan’s foreign policy."

"Azerbaijan had to determine its foreign policy priorities," said
Arastun Orujlu, director of the East West research centre. "The
current events show that Azerbaijan has made its choice and is now
leaning to the West."

Orujlu said that Russia was trying to use gas as a political weapon
but it had no impact against an energy producer such as Azerbaijan.

He predicted that Russia would try to put renewed pressure on
Azerbaijan, perhaps using its influence in Armenia to do so.

Azerbaijan’s response to the Russian measures has been tough. Besides
halting the transport of oil via the Baku-Novorossiisk pipeline and
supplying gas to Georgia, the government announced it would stop
broadcasting Russian television channels from July this year. As if
this was not enough, President Aliev described the Commonwealth of
Independent States as a "useless" organisation for Azerbaijan.

Yunus argued, however, that the Russian-Azerbaijani quarrel would
not be as intense as that between Russia and Georgia, saying the two
sides still had many common interests.

"A certain way of thinking will play a role: it’s better to be with
Russia than with the democratic West, which consistently hints at
problems with elections," said Yunus. "Also, we cannot forget about
the large Azerbaijani diaspora in Russia. And the main thing is that
the leaders of our country do not have a clear strategy on developing
either our foreign or domestic policy."

"Everything depends on the internal political situation in Russia,"
concluded political analyst Ilgar Mamedov. "Putin will adhere to
his policy of pressure so long as it does not threaten his interests
in the 2008 election. But it’s not beneficial for him to spoil his
relations with Azerbaijan to the same extent as he has ‘achieved’ in
his relations with Georgia, because in that case the actual result of
his eight years’ rule will be two South Caucasus republics completely
turning away from Russia."

Kenan Guluzade is deputy editor of Zerkalo newspaper in Baku.