Putin’s Baku visit highlights complex Russia-Azerbaijan ties - World Politics Review
On Aug. 13, Vladimir Putin made his first visit to Baku in seven years, marking only his third trip to Azerbaijan as president of Russia—a gap reflecting the complex and sometimes strained relationship between Moscow and Baku. The two have grown apart due to Russia’s closer ties with Armenia as well as Azerbaijan’s westward-oriented energy focus.
Azerbaijan’s leaders have been trying to leverage their country’s pivotal location, energy resources and other assets to help manage their volatile neighborhood. Meanwhile, they are pursuing their own regional objectives, which focus on recovering territories occupied by Armenia, averting a war with Iran while countering Iranian subversion, minimizing foreign leverage over Azerbaijan’s domestic policies and establishing Baku, the national capital and a major port city, as a center for regional commerce. A key element of this effort is Azerbaijan’s pursuit of a balanced foreign policy toward other countries.
The Azerbaijani government has sought to maintain good relations with Russia even while developing ties with Western governments. Russia is Azerbaijan’s second-largest trading partner, after Italy, with Russian-Azerbaijani trade amounting to $3.4 billion last year. The corresponding figure for January-May of this year showed 50 percent growth over the same period in 2012. According to Putin, more than 70 Russian regions have close business ties with Azerbaijan, and more than 500 Russian companies operate in automobiles, energy, finance, health care and other important sectors of the Azerbaijani economy. Since 2009, Azerbaijan has been a major natural gas exporter to Russia through an agreement between the State Oil Company of Azerbaijan Republic (SOCAR) and Gazprom, Russia’s leading energy conglomerate.
In his opening statement on the Baku trip, Putin singled out humanitarian ties as “the most important aspect” of Azerbaijani-Russian relations. He praised the Azerbaijani government for promoting Russian language instruction in schools and welcoming Russian universities to set up campuses in Azerbaijan. The two countries will continue these efforts through a new two-year Program for Humanitarian Cooperation that will run through 2015.
Social ties between the two countries run deep. Many Azerbaijanis live in Russia and vice versa. Russia’s Azerbaijanis have played a very active role in developing Russia’s economy as well as supporting economic ties between Russia and Azerbaijan. According to Putin, more than 1 million Azerbaijani citizens work in Russia, while another million ethnic Azerbaijanis have Russian citizenship. The owner of Lukoil is an ethnic Azerbaijani, for instance, and another ethnic Azerbaijani who holds Russian citizenship, Rustam Ibrahimbegov, is contemplating running in Azerbaijan’s upcoming presidential election. Several hundred thousand ethnic Russians work in Azerbaijan.
Nonetheless, Russian-Azerbaijani economic relations would be even larger if bilateral energy ties had developed the way Russia planned. Western companies have a considerably larger role in Azerbaijan’s energy sector than their Russian counterparts. The only Russian energy company that now has large presence on the ground is privately held Lukoil, which owns a network of gas stations in Azerbaijan and is developing the Shah Deniz Caspian Sea gas field. For a while it appeared that Russia’s state gas monopoly, Gazprom, had secured almost all of Azerbaijan’s gas exports, but the deal was only partially implemented. In 2012, Azerbaijan delivered 1.55 billion cubic meters of natural gas to Russia, half the desired amount. Meanwhile, Azerbaijan recently committed to send most of its 1 trillion cubic meters in gas reserves through a new pipeline to Europe from 2019.
Russia's state-owned Rosneft oil company and SOCAR signed a cooperation agreement during Putin’s visit, but concrete oil and gas deals were lacking other than an agreement for joint use of certain terminals and pipelines. In May, Russia ceased importing oil through the Baku-Novorossiysk pipeline due to Azerbaijan’s steady reductions in oil deliveries, reflecting the country’s declining overall oil production. Russia's state-run oil pipeline operator, Transneft, was losing money because the pipeline was operating at less than half its planned capacity. Rosneft has yet to acquire its desired stake in the Apsheron gas field in the Caspian Sea.
Russia recently confirmed a large arms deal with Azerbaijan, whose military has many Russian and Soviet weapons systems. Nevertheless, the two countries recently declined to renew Russia’s lease of Azerbaijan’s early warning radar station at Gabala. Meanwhile, the Russian military has reinforced its main Armenian base in Gyumri, which is under a decades-long lease, and continues via the Collective Security Treaty Organization to sell weapons at discounted prices to Armenia, Azerbaijan’s main adversary.
Azerbaijan’s location at the crossroads of Iran, Russia, the Middle East and Europe has constrained Baku’s ability to pursue an independent foreign policy. Azerbaijan and the rest of the Caucasus region were an object of rivalry between the Persian, Ottoman and Russian empires for centuries. This competition has continued even after the demise of these empires as well as the rise and fall of the Soviet Union.
Despite Azerbaijan’s impressive economic performance and religious tolerance, the country is still relatively weak in comparison with its neighbors, primarily due to its relatively small size—33,000 square miles and 9 million inhabitants. Today, the interests of Iran, Russia, Europe and the United States in the South Caucasus and Caspian region can still clash, confronting the Azerbaijani government with the need to accommodate the parties as best they can while still advancing its own interests.
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