THAW SHIFTS ALLIANCES IN SOUTH CAUCASUS
By Isabel Gorst in Moscow

FT
April 25 2009 01:46

A rapprochement between Turkey and Armenia this week provided further
evidence of a shift in the balance of power in the South Caucasus
that is propelling gas-rich Azerbaijan closer to Russia, analysts said.

The process that began when Georgia went to war with Russia last
summer over its breakaway territories of South Ossetia and Abkhazia,
could jeopardise European plans to reduce dependence on Russian gas
by importing extra Caspian supplies.

Ilham Aliev, the president of Azerbaijan, has intensified pressure
on Turkey, suggesting during a visit to Moscow this month for talks
about gas and the disputed region of Nagorno-Karabakh, that a Turkish
betrayal could hit bilateral gas trade.

Disagreements between Turkey and Azerbaijan over gas prices and transit
terms have undermined European plans to build the Nabucco pipeline
to carry extra Caspian gas across the South Caucasus to Europe.

Mr Aliev said Azerbaijan could export some gas through the planned
Nabucco pipeline to Europe, but warned it was "difficult to say when
this project will move from a dead end and who will do it".

Azerbaijan opened gas talks with Russia last year after the war in
Georgia exposed the vulnerability of pipelines crossing the South
Caucasus that have allowed Turkey to emerge as a crucial energy hub
in the area.

Mr Medvede v said the "chances were very high" that Russia would soon
clinch a gas import deal with Azerbaijan.

Edward Chow, a senior fellow at the Washington-based Center for
Strategic and International Studies, said: "It makes sense [for
Azerbaijan] to appease Russia by sending some gas that way,". It
was unlikely that Azerbaijan would compromise its independence by
exporting all its gas to Russia, he added.

Mr Aliev said the settlement of the Nagorno-Karabakh conflict could
end Armenia’s exclusion from oil and gas export projects in the
South Caucasus.

European diplomats said Russian efforts to broker a settlement of
the Nagorno- Karabakh conflict could help restore its international
image in the aftermath of the war in Georgia. But analysts said
Russia was exploiting separatist tensions to strengthen its grip on
the South Caucasus.

From: Emil Lazarian | Ararat NewsPress