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Key Economic Data 
  2003 2002 2001 Ranking(2003)
Millions of US $ 7,124 6,090 5,600 102
GNI per capita
 US $ 810 710 650 146
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Area (


Principal ethnic
Azeri 90%
Russian 2.5%
Armenian 2%
Dagestani 3.2%
other 2.3


Azeri Manat

Ilham Aliyev

Ilham Aliyev

Update No: 297- (29/09/05)


The democratic wave
The US is changing course in its foreign policy in the former Soviet sphere. The most dramatic switch has come in Central Saia, where a rupture has occurred with Uzbekistan after the terrible events of mid-May in the Ferghana Valley.
But the Caucasus is also in the frame. The US is redefining its relationship to Georgia in the aftermath of the Rose Revolution. But so is it as well to Azerbaijan. 

The following is contributed by the Caucasus expert, Richard Gregorian


A working visit to Washington in mid-September by Azerbaijani Foreign Minister, Elmar Mammadyarov came at a very significant time for both countries and could represent something of a turning point in bilateral relations.
Following a sweeping re-evaluation of U.S. policy, those relations have been subject to a dynamic, yet subtle shift in recent months, driven by a set of external developments ranging from the impact of the so-called coloured revolutions in several former Soviet states to a new emphasis on democratization as the strategic priority of the second Bush administration.
The shift in U.S.-Azerbaijani relations has also been dictated by internal considerations, further exacerbated by Azerbaijan's looming parliamentary elections set for 6 November.
Set against the wave of democratic change in Georgia, Ukraine, and most recently, in Kyrgyzstan, Azerbaijan faces new pressure to ensure a free and fair election. And it is this need to meet heightened democratic standards that is the new determinant in the U.S. approach to Azerbaijan.
The necessity for improved electoral credentials in Azerbaijan has been repeatedly stressed in recent months by the Council of Europe, the Organization for Security and Cooperation in Europe (OSCE), and was reiterated during last month's visits to Baku by former U.S. Secretary of State Madeline Albright and current Deputy Secretary of State Paula Dobriansky. But Washington's insistence on democratization in Azerbaijan is not merely an end in itself, but stems from a broader American recognition of democratization as essential to domestic stability and regional security. It also reflects a new tool in the global war on terror, although it remains to be seen if this "muscular Wilsonian" approach will yield better results.
For Azerbaijan, this priority for democratic elections has sharply raised the threshold for the regime of President Ilham Aliyev. But preparations for the election have fallen far short of the shared expectations of the international community and the Azerbaijani opposition. Specifically, Azerbaijan's electoral reforms remain incomplete, with shortfalls in both the composition of electoral commissions and the planned monitoring of the ballot. American disappointment with election preparations to date was also a central message in Mammadyarov's talks with his American hosts.
This is also a lesson for others, however. For neighbouring Armenia, which will be facing its own elections within the next two years, and even for Georgia, whose Rose Revolution was rewarded by an American presidential visit and by U.S. help in pressuring Russia to withdraw its troops from the country, but which has since created a Central Election Commission wholly dominated by supporters of the ruling party, there are significantly higher standards and greater expectations.

Military cooperation - what next
In addition, Mammadyarov's visit was largely overshadowed by speculation about an imminent agreement for a new U.S. military base in the country. This speculation has been largely fuelled by the recent demand by Uzbekistan's President Islam Karimov to close the U.S. and coalition air base at Karshi-Khanabad within six months.
The loss of the use of the base in Uzbekistan is viewed by some experts as an immediate setback to the U.S. military's operational capabilities in nearby Afghanistan and, as the thinking holds, necessitates the opening of a new air base in Azerbaijan. While this view is correct in recognizing the importance of the South Caucasus air corridor as a "lifeline" between coalition forces in Afghanistan and bases in Europe, it is flawed by a superficial understanding of the nature of the U.S. military mission and presence in Azerbaijan, as well as by the practical limitation of aircraft needing to refuel en route from Azerbaijan to Afghanistan.
Despite reports predicting a "new" U.S. military engagement in Azerbaijan, in reality there has been a significant American military mission there for at least three years, comprised of two components. The first component was the creation of the "Caspian Guard," an initiative involving both Azerbaijan and Kazakstan focusing on maritime and border security in the Caspian Sea. The Caspian Guard initiative incorporates defensive mission areas, including the surveillance of Caspian airspace, borders, and shipping. It encourages greater coordination and cooperation in counter-proliferation efforts by Azerbaijan and Kazakstan. This effort was further bolstered by a $20 million program launched in July 2004 and implemented by the U.S. Defence Threat Reduction Agency to train the Azerbaijan Maritime Border Guard. Additional training and combined exercises were also provided by U.S. Navy SEALS to Azerbaijan's 41st Special Warfare Naval Unit in June 2004.
The second component was the establishment of several "Cooperative Security Locations," tactical facilities with pre-positioned stock that provide contingency access but, unlike a traditional base, have little or no permanent U.S. military presence. These locations are designed to increase the mobility of U.S. military forces and, most importantly, facilitate counter-proliferation missions along Azerbaijan's southern border with Iran and northern borders with Georgia and Daghestan.
In line with the U.S. military need to project military power rapidly, the U.S. presence in Azerbaijan may be further expanded from the existing Cooperative Security Locations to Forward Operating Sites, host-country "warm sites" endowed with a limited military presence and capable of hosting rotational forces. These forward operating sites can also serve as centres for bilateral and regional training.
Thus, while the utility of a permanent, traditional military base in Azerbaijan is seriously limited; the expansion of the forward stationing of forces is likely. (Azerbaijani presidential aide Novruz Mamedov's recent statement to Interfax that Azerbaijan will not host "U.S. military bases" may draw a fine semantic line between "bases" in the traditional sense and forward operating sites.) Yet even the military relationship is in the final analysis contingent on Azerbaijan's ability to meet the new, more stringent U.S. standards of democracy and free elections. 

The election is coming
As campaigning for the 6 November parliamentary elections gets under way, the Azerbaijani authorities are directing their efforts toward ensuring that the ruling Yeni Azerbaycan Party, together with ostensibly independent but loyal candidates, retains control of the new parliament. While such efforts are not unexpected in light of previous tainted elections, the Azerbaijani government's blatant disregard for the international community's insistence on electoral fairness and transparency is surprising. Moreover, this apparent disdain for world public opinion is at odds with -- and signals a retreat from -- initial moves apparently aimed at reversing the country's record of election "illegalities."
In mid-May, President Ilham Aliyev issued a decree warning election officials and local councils against any voting irregularities. The decree also tasked local election officials with compiling accurate and updated voter lists, set forth procedures for uniform exits polls, and made provision for all candidates to have equal access to state run media.
Just a few weeks later, however, in late June, the parliament adopted numerous minor amendments to the election law that failed to include a number of the most significant recommendations of the Council of Europe's Venice Commission. Those changes, which opposition parties, too, deemed indispensable to ensuring a fair and democratic election, ranged from greater opposition representation on electoral commissions to the use of indelible ink to mark voters' fingers in a bid to prevent multiple voting.

The crackdown begins
The passage of half-hearted electoral reforms was soon eclipsed by much more disturbing events, however. Starting in early August, the country's already embattled political opposition was targeted in a new campaign of intimidation and innuendo. Ruslan Bashirli, chairman of the opposition youth movement Yeni Fikir (New Thinking), was arrested, charged with conspiring to overthrow the government and, for good measure, accused of accepting money from an unlikely combination of Armenian intelligence officers and American nongovernmental organizations. The case also implicated Azerbaijan Popular Front Party (AHCP) Chairman Ali Kerimli by charging that Bashirli was acting on Kerimli's behalf.
Perhaps fearful of the Ukrainian example of the potential power of a youth movement, the Azerbaijani authorities arrested Yeni Fikir deputy head Said Nuri and another of the organization's leaders in September on similar treason charges. Those arrests were followed by a raid on the offices of the AHCP during which police "seized" three grenades and an undisclosed amount of explosives in a room used by the Yeni Fikir movement. Then, on 15 September, a special team of security officers from the Azerbaijani Border Service and National Security Ministry arrested Serhiy Yevtushenko - an activist of the opposition Ukrainian youth movement Pora -- at the Baku airport and interrogated and later expelled him. Yevtushenko had been invited to Baku by the opposition Azadlyg bloc, of which the AHCP is a member, to attend a conference on democratization.
In a more imaginative move, some recent Azerbaijani media reports also "reported" that opposition Musavat party Chairman Isa Gambar recently met with an Armenian intelligence operative to discuss plans to disrupt the election. The most amusing aspect of that report was the contention that Gambar was able to meet freely with the Armenian during a visit to Turkey, not a country known for permitting Armenian intelligence such freedom of action.

Bold tactics
Such actions on the part of the Azerbaijani government so close to the election raise several questions as to Baku's motives for such outright disregard for international opinion and, even more confusing, why the Aliyev administration assumes that it has far less to lose by adopting such confrontational tactics. Such actions also give grounds for serious concern over the actual conduct of the voting and the possibility of a repeat of the postelection violence that erupted in Baku after the flawed presidential ballot of October 2003.
One factor driving the Azerbaijani government's disregard for international reaction to its tactics over the past six weeks may be its inferences from Western -- specifically the U.S. -- response to two other developments.
The first test case for Azerbaijan was what Baku perceived to be the lukewarm Western reaction to the May unrest in Uzbekistan. Not only did Uzbek President Islam Karimov's bloody response to the violent events in the southeastern town of Andijon, his government's dubious definition of the events as an uprising by Islamic extremists, and the repressive handling of the victims and witnesses not result in international sanctions, most importantly, the Uzbek case was a direct and blatant challenge to U.S. credibility.
The second key development was Washington's praise for Egypt's presidential election earlier this month. That praise may have been construed in Baku as signaling that the United States would be content with even the most modest progress toward greater democracy.
Moreover, for a presidential republic like Azerbaijan, which remains as much a one-family state as a one-party state, the test for its November parliamentary election will be limited to the conduct, and not the outcome, of the poll. (By contrast, the role of the parliament in Azerbaijan is almost cosmetic.) Thus, assuming that the Azerbaijani authorities are acting in line with a carefully crafted strategy, they may be assuming they have wide latitude to ensure a victory for the pro-government majority, albeit allowing for greater opposition representation than before, perhaps in line with the prognosis by Parliamentary Assembly of the Council of Europe rapporteur Andreas Gross, who calculated that the opposition is capable of winning at least 25 of the 125 seats. If the Egyptian case is any indication, such an outcome -- which would be a marked improvement over previous Azerbaijani elections -- might induce Washington to overlook violations in the pre-election campaign and deliver an overall favourable assessment.

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Azerbaijan and Georgia to cooperate on securing pipeline 

Azerbaijan's National Security Minister, Eldar Makhmudov, and Georgian Intelligence Department chief, Batu Kutelia, discussed prospects for cooperation in security on August 30, Interfax News Agency reported. 
The two exchanged opinions on possible measures to secure the Baku-Tbilisi-Ceyhan pipeline and other major facilities in the region, said a security ministry statement distributed following the Georgian delegation's visit to Baku. Makhmudov and Kutelia noted that cooperation in this sphere needs to be developed. Makhmudov also noted at the meeting that due to the presence of uncontrolled zones that are used for transiting drugs and weapons, illegal migration and other crimes, both Azerbaijan and Georgia have similar security problems. 

SOCAR, Rafi Oil sign Surakhany PSA 

Azeri state oil company SOCAR and Rafi Oil of the United Arab Emirates have signed a production-sharing agreement (PSA) to develop the Surakhany oil field, Interfax News Agency reported.
SOCAR chief Natik Aliyev said SOCAR would have 25 per cent and Rafi Oil 75 per cent of the project, however Azerbaijan's share in the profits will increase to 90 per cent from 40 per cent as costs are repaid.
"The contract states that oil production at the field should rise 50 per cent in two years. Rafi Oil will finance SOCAR's stake in the project until it doubles the current rate of extraction. Rafi Oil must also pay a bonus of one million Euro and present SOCAR with a working programme on the field's development within 90 days," Aliyev said. He said the field, which first went into production in 1904, had 6.822m tonnes of oil left in it.
"We forecast that lower levels hold more still. If residual reserves at the upper levels average at 13,400 tonnes per well, then the lower reserves should be 177,000 tonnes. Large-scale geological work will be needed to tap them," Aliyev said. Tufail Ahmad, the general manager of Rafi Oil, said the company would invest 400m Euro in the field. "This includes 100m Euro during the initial stage to renovate existing infrastructure and the remainder on increasing production, implementing new technologies and other areas," Ahmed said. He also said that Azerbaijan would earn 921 million Euro from the contract if oil prices averaged 49 Euro a barrel.
Rafi Oil intends to incease oil production at the field from 95,100 tonnes in 2004 to 257,000 tonnes in 2014. More than 2,500 wells have been drilled at Surakhany, which has produced 151 million tonnes of oil and 15.7bn cubic metres of gas in its time. The field produced 58,400 tonnes of oil and 10.5m cubic metres of gas in the first half of 2005. The PSA with Rafi Oil is Azerbaijan's 26th oil hydrocarbons contract to date.

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Italy, Azerbaijan expand ties in communications sector 

Azerbaijani Minister of Communications and Information Technologies, Ali Abbasov, recently met with the ambassador of Italy to Azerbaijan, Margherita Costa, Interfax News Agency reported.
According to the press-service of the ministry, Abbasov stressed the successful development of cooperation between Azerbaijan and Italy in many spheres and also spoke about the existing relations in the communications and information technologies sector. He congratulated Costa on her conferment of the "Glory" order for her contribution to development of the Azerbaijan-Italy relations. Abbasov informed the ambassador of his upcoming visit to Italy and noted that the ministry of communications and information technologies are believed to be about to sign an agreement "Network Security Cooperation." Costa expressed gratitude to Abbasov for the warm welcome and stated that she is proud to receive this order. She expressed her regret over completion of her diplomatic activity in Azerbaijan and stressed that she will be supporting the development of Azerbaijan-Italy relations.

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Azerbaijan, Turkey, Georgia to discuss railway project 

Azerbaijan, Turkey and Georgia are expected to discuss the Gars-Tbilisi-Baku regional railway project in Ankara soon. The meeting of the three countries' transport ministers, previously scheduled in Ankara for August 24, was later postponed till early September, reported Interfax News Agency.
Deputy Minister for Transport, Musa Panahov, will represent Azerbaijan, as minister Ziya Mammadov, is currently on vacation, the State Railway Office (SRO) said. Prior to the minister's meeting, the joint taskforce will meet to discuss technical issues of the project, allocation of funds by the project partners, drawing funds from other interested parties, as well as establishment of a joint venture on operation and construction of the new railway line in the future. The work of the taskforce comprising Azeri, Turkish and Georgian experts is coordinated by the three countries' deputy transport ministers. The documents to be discussed by the taskforce will be submitted for signing at the ministers' meeting. Some details relating to the project were agreed upon in the previous meetings of the taskforce.

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