By Mina Muradova (04/15/2015 issue of the CACI Analyst)
While it is too early to anticipate whether the April framework agreement between Iran and the six world powers will lead to a permanent deal, Baku expects business ties between the neighbors to grow after international sanctions on Iran are lifted.
On April 3, Azerbaijan’s Foreign Ministry expressed its belief that “this political framework will provide an opportunity in furthering the peace, security and stability in the region and beyond.”
Fikret Sadykhov, a political analyst, believes the Lausanne agreements with Iran will be beneficial for Baku, which was always against a military settlement of the conflict. “Over recent years, Azerbaijan has been affected by the military rhetoric of both the West and Iran as well as blamed for becoming a so-called platform for military attacks against Iran, all this had a negative impact on bilateral relations between Baku and Tehran,” said Sadykhov.
Rasim Musabekov, a member of parliament, told Vestnik Kavkaza that agreements will have a long-term effect not only on bilateral relations between Baku and Tehran, but also in the region. “If anti-Iranian sanctions are lifted, there are several projects that can be implemented between Iran and Azerbaijan. Trade turnover and economic contacts with Iran will develop in a better way. The project of constructing the North-South Railway will be fulfilled intensively. So, there are prospects for improvement in the trade and economic sphere.”
According to Ilham Shaban, head of the Center for Oil Studies, in 2010 trade turnover between the countries was about US$ 600 million, while in 2014 it was only US$ 220 million, as a result of sanctions.
Baku and Ankara have already expressed their interest in developing economic ties between the three countries, especially in transporting Iranian oil and gas through their territories. The Iranian, Turkish and Azerbaijani Foreign Ministers will soon hold a trilateral meeting in Tehran.
Rovnag Abdullayev President of Azerbaijan’s State oil company SOCAR, claimed that Tehran was interested in the Trans-Anatolian Gas Pipeline (TANAP) project, which will carry gas from Azerbaijan to Europe via Turkey. He noted that Iran closely monitors the TANAP project. Speaking to the Azeri press, Abdullayev said Iran wants to purchase a share of TANAP, and that SOCAR, which is the principal stakeholder in the project, intends to sell shares if they receive a “proper” offer. Underlining that Iran’s need for this project will increase, Abdullayev said Tehran will produce more natural gas and it has no other alternatives to TANAP to carry it to Europe.
“It will be possible for Iran to take a stake in the TANAP project as long as certain commercial conditions are fulfilled,” Turkish Energy Minister Taner Yıldız said on April 9. He added that other countries also want a stake in the project, following a signing ceremony in Ankara between Turkish and Georgian authorities on energy.
According to plans, TANAP will connect to the Trans-Adriatic Pipeline (TAP) to bring the gas into Europe. The cost of building TANAP is estimated to between US$ 10 and 11 billion. SOCAR owns 58 percent of the project, Turkey’s Botas 30 percent, and BP owns the remaining 12 percent. EU officials also support the idea of Iran joining to the project, which has the potential to diversify energy supplies and decreasing Europe’s dependence on Russian gas.
“TAP is open to new shareholders, which can add strategic value to the project,” Lisa Givert, TAP's communication head, told reporters in Baku, commenting on the possible interest from Iran. The pipeline aims to start transportation of gas from Azerbaijan’s Shah Deniz II field in the Caspian Sea, one of the world’s largest gas fields, in 2018-2019. The 870 kilometer (545 mile) pipeline will connect to TANAP near the Turkish-Greek border at Kipoi, and cross Greece, Albania and the Adriatic Sea before reaching southern Italy. “For any additional volumes that come on stream, TAP will comply with the EU regulation and relevant sanctions,” Givert said. Azerbaijan aims to transport 16 billion cubic meters (bcm) of gas a year from its Shah Deniz II field in the Caspian Sea to Turkey and on to Europe.
Economic analyst Ilham Shaban believes the decision to transit Iranian gas through TANAP will be political rather than commercial. “TANAP might be used only for some small volume of Iranian gas as the pipeline is not designed for transit of huge resources. If we share capacity with Iran, then what happens to export of gas from fields like Absheron, Umid-Babak and the deep-water section of Azeri-Chirag-Guneshli (ACG) to the European market in the future? Are we going to build another export pipeline? … I think the issue of transit of Iranian gas through Turkey will be discussed only within the political context.”
Iran’s gas resources are impressive. According to BP’s review, the country has the world’s largest proven gas reserves at 33.8 trillion cubic meters (tcm). Russia's reserves are marginally lower at 31.3 tcm. Shaban believes that Iran will need to use alternative routes to transport its gas to Europe. “The Nabucco-West pipeline with a capacity of transporting 20 billion cubic meters of gas could be such an opportunity,” the analyst said.
However, Tehran has already signaled through Deputy Oil Minister Ali Majedi that it is ready to supply gas to Europe through Nabucco. Majedi stated that Iran was prepared to sign on as a supplier and added that “two visiting European delegations” had discussed potential routes to bring Iranian gas to Europe.
Iranian President Hassan Rouhani brought up the offer in a meeting with his Austrian counterpart Heinz Fischer in September on the sidelines of the UN General Assembly. Rouhani told Fischer that “the Islamic Republic can be a reliable supplier of energy for Europe” and mentioned the Nabucco pipeline.
By Nurzhan Zhambekov (04/01/2015 issue of the CACI Analyst)
Azerbaijan and Kazakhstan face a tough year as oil prices plummet. A dramatic shift has occurred in the international oil market in recent months as oil supply has gone up, particularly with the U.S. oil production increase, and demand has weakened with the economic slowdown in China and the EU. Saudi Arabia, the world’s second largest oil producer, did not reduce its oil production despite the oil price decline, indicating that it would like to maintain its international oil market share. The precipitous decline in oil prices has resulted in a sharp fall in export revenues for Azerbaijan and Kazakhstan, the third and second largest oil producers respectively in the former-Soviet Union after Russia. This dramatic price drop has put the two countries’ currencies under severe pressure.
By Mina Muradova (03/18/2015 issue of the CACI Analyst)
The mediators in peace talks over a settlement of the Nagorno-Karabakh conflict have welcomed Armenia’s decision to participate in the first-ever European Games that will be hosted by Azerbaijan this summer. At the same time, shootings along the frontline and the military rhetoric of official Baku and Yerevan continue.
Starting on June 12, Baku will host a major multi-sport event for 17 days, which will bring together over 6,000 athletes from 50 countries of the European continent.
On March 11, the Executive Committee of Armenia’s National Olympic Committee (NOCA) officially announced its final decision. The country expects to compete in sambo, shooting, judo, wrestling, boxing, and taekwondo.
Fierce tensions have existed between Azerbaijan and Armenia ever since the two countries received independence in 1991 over ownership of Nagorno-Karabakh, a landlocked region in the South Caucasus, located within Azerbaijan’s internationally recognized borders. Although the two sides signed a cease-fire agreement in 1994, the latest clashes along the frontline and military rhetoric are intensifying on both sides. Monitors say the 2014 death toll of about 60 people was the worst for 20 years, while the nature of the confrontation on the front line is becoming more dangerous due to attacks not only by snipers, but also by helicopters and artillery.
Armenia’s and Azerbaijan’s Presidents Serzh Sargsyan and Ilham Aliyev met on three occasions last fall made no progress toward a lasting peace settlement. According to OSCE Chairman in office, Serbian FM Ivica Dačić “… acts of violence increased after these meetings, and the political process weakened.” While politicians are looking for diplomatic solutions, the sports community looks to make its own contribution in establishing trust between sides.
Armenia will participate in in the inaugural European Games next year, claimed Patrick Hickey, President of the European Olympic Committees (EOC) last November, when Armenia’s Olympic Committee took part in 43rd EOC General Assembly in Baku. It has taken much mediation to find a solution to allow Armenian participation in the Baku 2015 European Games.
Following a visit of Hickey with the International Olympic Committee President Thomas Bach to Armenia last year, a solution have been found and the problems between the two countries will not lead to a boycott. The recent confirmation is a major coup for the EOC and the organizers less than three months before the European Games.
“We are very pleased to confirm our participation in the first European Games,” NOCA President Gagik Tsarukyan said in a statement. “We know that Armenian athletes will have the best possible facilities and support available to them at Baku 2015, helping them reach their peak performance this summer. I can say now that this was the best decision for the future of sport in our country … My Executive Board took this decision based on sporting reasons alone; it is important to keep sport independent from politics, he noted.
The U.S. Co-chair of the OSCE Minsk Group James Warlick posted on Twitter: “Good news that Armenian athletes will compete in the European games in Baku. Hope Azerbaijan will welcome the decision.” The decision was also welcomed by France.
However, the decision of Armenia’s NOC has been hotly contested between the Olympic Committee chiefs and some leaders of the country’s sports federations, who have opposed the idea of participating in the games to be held in Azerbaijan from June 12-28. “There’s no need for our athletes to go to Baku,” Levon Julfalakyan, the head coach of Armenia’s Greek-Roman wrestling team said. “They will never get a fair deal for their performances in Azerbaijan.” His statement was backed by Armenia’s gymnastics head Albert Azaryan. “Regardless of our athletes’ performance they will never be given a chance to win in Baku by any means,” he said. “Armenia has a difficult relationship with Azerbaijan and the trip to Baku could become a pretty risky affair.”
Meanwhile, the organizers of the European Games have already given security guarantees for the members of Armenia’s delegation during the event. “We invite all 50 countries to take part in first European Games. We guarantee that all necessary conditions will be created. Azerbaijan will ensure security at a high level for all participants of Baku 2015,” stated Azad Rahimov, Azerbaijan’s Minister of Youth and Sport.
Azerbaijan’s military authorities also intend to take additional precautions during the events. “Azerbaijan will give a harsh response to any provocation of Armenia before and during the first European games, Vagif Dergyahly, a spokesperson of the Azerbaijani Defense Ministry told Trend on Thursday. He did not rule out that Armenia, on the eve of Baku 2015, will try to “aggravate the situation on the frontline.”
KAZAKHSTAN AND THE EEU, by Dmitry Shlapentokh
U.S. NEW SILK ROAD INITIATIVE NEEDS URGENT RENEWAL, by Richard Weitz
IS “TURKISH STREAM” A SERIOUS THREAT TO THE TRANS-CASPIAN PIPELINE?, by Juraj Beskid, Tomáš Baranec
CASA-1,000 – HIGH VOLTAGE IN CENTRAL ASIA, by Franz J. Marty
KYRGYZSTAN’S RESIGNED PROSECUTOR-GENERAL GIVES WORRYING PRESS CONFERENCE, by Arslan Sabyrbekov
MOSCOW PLEDGES TO COUNTERACT GEORGIA’S INTEGRATION WITH NATO, by Eka Janashia
ARMENIA TOUGHENS ITS STANCE AGAINST TURKEY, by Erik Davtyan
FOREIGN MINISTERS OF TURKEY, AZERBAIJAN AND TURKMENISTAN DISCUSS ENERGY AND TRANSPORTATION IN ASHGABAT, by Tavus Rejepova
By Tavus Rejepova (03/04/2015 issue of the CACI Analyst)
Azerbaijan's, Turkey's, and Turkmenistan's Ministers of Foreign Affairs Elmar Mammadyarov, Mevlut Cavusoglu and Rashid Meredov gathered in Ashgabat on January 29 to discuss regional energy and transportation issues.
Cavusoglu, leading a big delegation, arrived in Ashgabat on January 28 to meet with President Berdimuhammedov and discuss the next day's trilateral meeting as well as Berdimuhammedov's expected visit to Turkey on March 3. Cavusoglu also met separately with his counterpart Meredov to discuss energy security, transportation and expansion of the current state of commercial ties. Turkey is Turkmenistan's main trade partner and Turkey represents the highest presence of foreign companies in Turkmenistan, at over 600 companies.
Mammadyarov met with President Berdimuhammedov on January 29 before the trilateral ministerial meeting and discussed enhancing commercial ties between the two countries. Referring to his last visit to Ashgabat five years ago, Mammadyarov expressed satisfaction with the current level of relations between Azerbaijan and Turkmenistan.
During the trilateral meeting between the ministers of foreign affairs, the sides discussed cooperation in the areas of trade, energy, transportation and education. In particular, the ministers stressed the Afghanistan-Turkmenistan-Azerbaijan-Georgia-Turkey transportation link project aimed at increasing trade and reducing cargo transit expenses among these countries, as an important objective. Representatives of these five countries met in Ashgabat in November 2014 over the draft agreement of this transport corridor.
Following the talks, the sides also decided to create a trilateral format for the oil and gas company representatives of the three countries. The ministers of Turkey and Azerbaijan reportedly invited Turkmenistan to join the Trans-Anatolian gas pipeline (TANAP) project, which envisages delivering gas from Azerbaijan's Shah Deniz field to Europe via Georgia and Turkey.
President Berdimuhammedov has stated earlier stated that the trans-Caspian pipeline, intended to bring Turkmen gas to Europe via TANAP, only requires the consent of two countries (Turkmenistan and Azerbaijan) whose seabed sectors these pipelines would cross. But Russia's Minister of Foreign Affairs Sergey Lavrov has stated that "the project of the trans-Caspian gas pipeline falls into the category of projects that affect the interests of countries that do not participate in it" expressing concern over the project. Maros Sefcovic, the European Commission's Vice President in charge of Energy Union, stressed the importance of addressing the technological and legal issues of transporting Turkmen gas to Azerbaijan in his address to reporters on February 12. Speaking at Turkmenistan's Oil & Gas Conference in Ashgabat in November 2014, Rovnaq Abdullayev, the CEO of Azerbaijan's energy company SOCAR, expressed readiness to provide Azerbaijan's developed infrastructure, diversified oil and gas pipeline network, warehouses and terminals, fleet of ships and other assets needed for implementing projects in the oil and gas industry to its neighbors in the region, primarily to Turkmenistan.
During the trilateral meeting in Ashgabat, Mammadyarov also met with Cavusoglu to discuss regional cooperation, highlighting President Ilham Aliyev's visit to Turkey on January 14-15, 2015.
The first trilateral meeting between the foreign ministers of Turkey, Azerbaijan and Turkmenistan took place in Baku on May 26, 2014, when the "Baku Statement" was released, expressing the three countries' determination to develop trilateral relations in various fields, particularly in energy, trade, transportation, culture, tourism, education and environmental protection through joint projects and cooperation initiatives.
As a result of the Ashgabat meeting, the foreign ministers signed a joint declaration and adopted a trilateral framework cooperation program for 2015-17. The foreign ministers also agreed to organize a trilateral meeting between the presidents of Azerbaijan, Turkey and Turkmenistan in Ashgabat, planned for October of 2015, which is expected to expand the trilateral partnership in energy, transportation and communication sectors to new levels. The next trilateral meeting between foreign ministers is slated to be held in Turkey.
The Central Asia-Caucasus Analyst is a biweekly publication of the Central Asia-Caucasus Institute & Silk Road Studies Program, a Joint Transatlantic Research and Policy Center affiliated with the American Foreign Policy Council, Washington DC., and the Institute for Security and Development Policy, Stockholm. For 15 years, the Analyst has brought cutting edge analysis of the region geared toward a practitioner audience.