Around Caspian oil

[Alik Bahshi]

Alik Bahshi



AROUND CASPIAN OIL​

This article was published in Israel in the newspaper “Наша страна” (24.09.98) under the impression of Heydar Aliyev’s historic visit to England and may be interesting as a page from the recent past. By the way, in the article I foresaw the importance of Azerbaijan for Israel as a strategic and economic partner in the Middle East region, which happened later. The article highlights the indisputable role of Heydar Aliyev as a smart strategist who knows how to conduct a balanced policy that laid the foundation for successful economic achievements and the future victory of Azerbaijan over Armenia.

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The Caspian Sea shelf in the Baku region is predicted to be one of the richest oil fields, which is predicted to play the role of the second Kuwait. In this regard, Baku may involuntarily become the center of emerging political storms and intrigues. It just so happens that where there is oil, a clash of political interests is inevitable. During World War II, the capture of Baku was part of Germany's strategic plans, which solved the problem of constant fuel shortages for it and put the Soviet Union on the brink of military disaster. England had concentrated military forces in the Middle East in advance to protect Baku in the event of a breakthrough by German troops in the Caucasus. With the collapse of the last empire, Baku oil became the property of Azerbaijan for the first time, but economic benefits are possible only with a successful solution to the political and economic problems that arose.

Over the course of almost a century of oil production, it seemed that the depths of the Baku oil fields were depleted, and their further exploitation was futile, and Moscow, apparently, did not particularly regret the loss of Azerbaijan as an oil-producing country. But soon it turned out to be exactly the opposite. Geological exploration confirmed the presence of colossal oil reserves near the sea shelf adjacent to Baku. Emissaries of the largest oil companies rushed to Baku. Quite unexpectedly, Azerbaijan turned out to be an oil competitor for Russia. Here we must also take into account the favourable geographical location of Azerbaijan, close to the Asia Minor coast of the Mediterranean Sea and the Persian Gulf. The construction of an oil pipeline through the territory of Georgia to the Turkish port of Ceyhan will make Caspian oil easily accessible to all Mediterranean countries. By the way, it is a stone's throw from Ceyhan to Haifa, which is much closer than overseas Mexico, which supplies oil to Israel. In addition, in the future, it is planned to build oil and gas pipelines along the bottom of the Caspian Sea from Krasnovodsk to Baku. Thus, Baku will supply Turkey not only with Caspian oil, but also with oil and gas produced in the former Soviet Central Asian republics, and all this without any participation of Russia, which naturally causes extreme disappointment in Moscow. Kremlin politicians are using all channels of pressure on Azerbaijan so that Caspian oil is transported exclusively through the North Caucasus to Novorossiysk via the existing oil pipeline. But, firstly, its capacity is insufficient, secondly, the political situation in the North Caucasus is far from stable and although the Russians are laying an oil pipeline bypassing Chechnya, the growth of anti-Russian sentiments in Dagestan could nullify all their efforts. And thirdly, for economic and political reasons, it is more advantageous for Azerbaijan for the main flow of oil to go to Turkey, because in this case both the extraction and sale of oil will take place in the countries of the Turkic world, which will be an important factor in their consolidation in the matter of the revival of the Great Turan. Of course, the last argument looks very hypothetical, but Russia is seriously concerned about its Turkic-speaking underbelly. The main trump card that Moscow has in terms of putting pressure on Baku is the Karabakh conflict. But here Russian politicians find themselves in a dilemma. On the one hand, Armenia is traditionally an important geopolitical ally for Russia in the Caucasus, and through Armenia, Russia can once again reignite the flames of the Karabakh war, which would be welcomed by the war party led by Robert Kocharyan that came to power in Armenia. On the other hand, a military alliance with Armenia does not bring any economic dividends, which could be obtained even if Moscow had an equal attitude towards Armenia and Azerbaijan.



Oil is the only and very important trump card that Azerbaijan has, which, if played successfully and carefully, promises great economic and political benefits. Precisely carefully, without irritating Moscow and without giving cause for open discontent. It should be noted that the President of Azerbaijan Heydar Aliyev has so far succeeded in such a political game. Meeting Russia's wishes, Azerbaijan agreed to supply oil to Novorossiysk. There is also an insignificant share of participation of the Russian company Luk Oil in the development of oil fields. However, this is where Russia's involvement in Caspian oil ends. While lengthy negotiations on the status of the Caspian Sea are underway, a lot of work is being done to sign oil contracts with Western companies without the participation of Russia, which, in addition to political ambitions, does not have real financial capabilities to participate in these projects. At present, negotiations are underway with competing European and Japanese companies on the construction of the Baku-Ceyhan oil pipeline, the commissioning of which will eliminate the expediency of the Baku-Novorossiysk line.

At the end of July 1998, Azerbaijani President Heydar Aliyev visited Great Britain, where he was received by all the top officials and even by Queen Elizabeth II herself. The pomp of the reception corresponded to the importance of the three contracts concluded there. It should be noted that President Aliyev was no different from the English high society in his ease and refinement of behaviour, and his speech at the ceremonial reception at the mayor of London was simply brilliant and caused a sea of ovations. A comparison with Russian President B. Yeltsin involuntarily suggests itself, with his rude speech, completely devoid of oratory and with his ingratiatingly familiar manner of communication abroad, a manner that can only be called bearish. Aliyev's successful visit to London apparently caused great jealousy in Moscow, if immediately after its completion, the Chairman of the State Duma Committee on International Affairs Vladimir Lukin arrived in Baku, presumably with the aim of sounding out whether there were any changes in Azerbaijan's position regarding the status of the Caspian Sea and what possible actions Russia should take to finally move the negotiations from a dead point.

It seems worth covering the meeting in more detail, because the Russian side did not provide the necessary information, while at the meeting President Aliyev openly expressed his opinion on the reasons preventing the rapprochement of the positions of Moscow and Baku. It is interesting to note that the meeting took place in the presence of the press and was broadcast in full on Azerbaijani television. This fact suggests that Aliyev feels confident in his rightness and hopes that Azerbaijan's position will find understanding and international support.

At the meeting, Lukin noted that Azerbaijan and Russia are moving in the same direction, but there are moments that separate them, there are "some feelings that sometimes we bump elbows." Lukin's claims were that the negotiations on the status of the Caspian Sea are being held up by the Azerbaijani side, despite the fact that Russia has changed its initial position towards progress, but compromises must be made on both sides. Azerbaijan should balance its position in the negotiations. In response to Aliyev's remark about the imperial ambitions of some members of the State Duma, Lukin said that history is irreversible and one should not pay attention to the Duma shouters, especially since they are a minority there. Touching upon the Karabakh problem, Lukin believes that Russia is trying to do everything to resolve the conflict, noting, however, that it can be reproached for not acting energetically enough to resolve it, but that patience is also necessary. Lukin expressed the position of the State Duma, which believes that Russia should take a balanced position in relation to the CIS countries, while acknowledging that there are forces in his country that think that "an Armenian bird in the hand is worth two in the bush."



To be continued

 

[Alik Bahshi]

Continuation:

In his response, President Heydar Aliyev explained the nature of the disagreements between Azerbaijan and Russia. In his opinion, they stem from Moscow's different attitudes toward the Caucasian republics, both during the Soviet era and today. Armenia has always been closer to Russia than Azerbaijan, and this would not have mattered much if not for the Karabakh conflict, in which Azerbaijan is the aggrieved party. As a mediator and co-chair of the OSCE Minsk Group for the settlement of the conflict, Russia also has special relations with Armenia, which were secured last year by an agreement on friendship, cooperation and mutual military assistance. Azerbaijan also does not welcome Russia's actions with the illegal supply of weapons to Armenia worth $ 1 billion. A criminal case was opened on this fact, which is stuck in the corridors of the Russian prosecutor's office. Feelings of discontent are caused by the recent statement by Defense Minister Igor Sergeyev that Russia will supply Armenia with S-300 missiles. The statement by Russian President Boris Yeltsin after the resignation of President Ter-Petrosyan that “Armenia is in the field of our strategic interests, it is a country close to us because it is Christian” was also perceived negatively. Aliyev emphasizes to Lukin that Azerbaijan does not understand such unbalanced actions of Moscow within the CIS.
Touching upon the issue of the status of the Caspian Sea, President Aliyev expressed confidence in further progress on this issue, and he does not see any major problems here. The President emphasized that only Azerbaijan is currently developing mineral resources in the Caspian Sea, while Russian companies are also participating in the signed contracts. During recent negotiations in Baku with the Russian delegation, a number of documents on shipping, fishing and ecology were prepared.
The head of Azerbaijan considered it necessary to assure the Russian parliamentarian that Russia can be calm about its compatriots. Azerbaijan broadcasts three leading TV channels from Moscow. Aliyev said that he himself watches the news program every day. In Azerbaijan, there are educational institutions with instruction in Russian. Incidentally, this is not the case in Armenia, where instruction in Russian has been legally eliminated, education must be conducted only in Armenian, and it is an ally of Russia, while in Azerbaijan, on the contrary, the number of students studying in Russian is increasing, and at the expense of Azerbaijanis.
Summing up, President Aliyev said that all this testifies to the good attitude of Azerbaijan towards Russia, which is trying to eliminate all factors that hinder friendly relations with Russia. “Russia and Azerbaijan will always have relations and we will not escape them. But Russia should treat countries depending not on religion or any other factors, but on their importance for strategic relations with it.”
Vladimir Lukin had no choice but to answer: “It is felt that you have a strong desire for our relations to be balanced.” Thus, the President of Azerbaijan has thrown the ball “into the court” of the Kremlin politicians, on whose decision the further course of negotiations on the status of the Caspian Sea and the possibility for Russia to get a piece of the pie from the sale of Caspian oil will depend.

Time is on Baku’s side. While there is a ceasefire with Armenia and negotiations with Moscow are dragging on, Azerbaijan is making every effort to speed up the construction of an oil pipeline to Turkey, attracting investments from large companies whose property is guarded by America, Europe and Japan, which will force Armenia to be more cautious in the event of a resumption of hostilities. With the growth of Azerbaijan’s role as an exporter of Caspian oil, as well as a country through which oil and gas from Central Asia will be pumped, its international authority, economic and political weight will increase and the opportunity will appear to peacefully return the territories occupied by Armenia. It seems that Heydar Aliyev is guided by his policy with such an outcome in mind.

Baku is currently an open city for all those interested in investing capital. The city is literally flooded with representatives of American, European, Turkish, Japanese and South Korean firms, who are conducting economic reconnaissance with the aim of subsequently extracting profit. By the way, the South Koreans are proposing to build a car factory. It is a pity that Israel does not show interest in the economic field of Azerbaijan until the niche is filled by competitors. This Muslim country, located at the junction of Europe and Asia, is important for Israel as a potential political partner.

24.09.1998