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Books on Azerbaijan
REPUBLICAN REFERENCE
Area (sq.km)
86,600
Population
7,868,385
Principal ethnic
groups
Azeri 90%
Russian 2.5%
Armenian 2%
Dagestani 3.2%
other 2.3
Capital
Baku
Currency
Azeri Manat
President
Ilham Aliyev
President
Ilham Aliyev
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Update No: 305 - (30/05/06)
Westward Ho
Azerbaijan has offered to help Europe meet its long-term energy needs and reduce
its dependence on Russia by putting itself forward as a potential source of
natural gas.
llham Aliyev, president of the energy-rich Caspian nation, has made it plain
that Azerbaijan is ready to focus on mainland Europe as a potential future
market when planning new gas projects. He is departing here from the policy of
his father, Haydar Aliyev.
His father was always viewed in Azerbaijan and the wider world as a stooge of
Moscow, which by and large he was, a member of the Politburo in Soviet days as
president of the country. He invariably carried out its bidding.
He continued doing so after independence in 1991, remaining a loyal satrap.
Hence why he was evicted and replaced by Islamic rulers for a while.
But Moscow arranged a coup that saw him put back in place later in the decade.
He died in 2004, bequeathing his son the succession.
The idea was that Ilham was to continue the same Russophile policy. But he is
not so much a chip of the old block as a splinter of it. He, an inveterate
gambler, sees Azerbaijan's future towards the West. Sons do not always pursue
the path of their fathers.
Welcome to Washington
Aliyev, whose party's sweeping victory in last November's parliamentary
elections was widely denounced by Western observers as fraudulent, was,
nevertheless, warmly welcomed in Washington in late April. "We talked about
the need for the world to see a modern Muslim country that is able to provide
for its citizens, that understands that democracy is the wave of the
future," Bush said at a brief photo-opportunity. "And I appreciate
your leadership, Mr. President."
The occasion was cut off before reporters could ask any questions about
precisely what Aliyev's "understanding" of democracy might be, let
alone Azerbaijan's placement as one of the world's most corrupt nations,
according to the latest rankings by Transparency International.
What Aliyev has going for him, of course, is the fact that his nation territory
sits atop billions of barrels of hydrocarbons at a time when global supply is
stretched very thin; the United States is more dependent than ever on external
supplies; and presidential public approval ratings appear increasingly tied to
the price of gasoline and home heating oil. Azerbaijan has 31bn barrels of oil
reserves at a conservative estimate.
"At the heart of Bush's democracy doctrine was the principle that the
United States would abandon its Cold War-era practice of propping up dictators -
especially in the Muslim world - in exchange for easy access to their energy
resources and military cooperation," according to press sources.
But "the race for energy and an increasingly bare-knuckled contest with
Moscow for influence over its producers have caused the downgrading of the
democracy strategy," he wrote, noting that Azerbaijan's proximity to Iran
and the existence of a fairly significant Azeri minority in Iran might also help
explain Washington's willingness to ignore Aliyev's autocratic peccadilloes.
Baku undaunted by Iran's pipeline strike threat
Iran, indeed, recently issued a statement that it might target US regional
energy projects, clearly meaning Azeri projects. This does not frighten
Azerbaijan, Minister of Industry and Energy, Natig Aliyev, another of the
extensive Aliyev clan, has said. He added that any attack on the
Baku-Tbilisi-Ceyhan (BTC) main export oil pipeline would be ineffective.
"The pipeline is 1,730-km long. In the event of an attack, a small section
of the pipe may be damaged and can be repaired," Aliyev said.
Foreign Minister Elmar Mammadyarov too has said there is nothing to worry about.
"I don't believe things will reach a point when military forces and
missiles will have to be used. I am sure the whole world is against a new war.
Everything will be done to resolve the crisis diplomatically," he said.
The minister said the pipeline was not only Azerbaijan's. The US, Japan and
other countries have participating shares in the pipeline project and any attack
on the facility will also affect the countries involved.
For an overall view of the whole problem, see as follows:-
Azerbaijan on the west's new frontier of energy security
By Vladimir Socor
Monday, May 1 2006
Azerbaijani President Ilham Aliyev's April 24-28 visit to Washington spotlighted
the urgency of opening direct Western access to eastern Caspian oil and gas
reserves. US policy seems, however tentatively, to move in that direction; the
European Union is only beginning to consider the issue; and both are moving too
slowly to win.
With the imminent completion of the Baku-Tbilisi-Ceyhan oil pipeline and the
parallel line for gas, Azerbaijan's role in the world of energy and geopolitics
is set for a qualitative change: From regional projects to projects of global
significance, and from a primary role as energy producer to a primary role as
energy transit country. This change turns the Western-oriented Azerbaijan into a
major factor in Euro-Atlantic energy security. In this regard, Azerbaijan's
location has already become a more valuable asset than the country's own
reserves; and the value of its location is set to increase from this point on,
amid a rapidly intensifying contest over direct access to energy reserves.
Prior to reaching this qualitative threshold, Azerbaijan had already crossed
another threshold: No longer simply a consumer of security, it became also a
provider of security within the region and farther afield, by deploying troops
with US and NATO forces in the Balkans, Afghanistan, and Iraq; providing crucial
transit passage to American and allied forces operating in Afghanistan and
Central Asia; and successfully containing the radical Islamist challenges to
modernization of the country and the region.
Its potential for energy transit can further enhance Azerbaijan's role as a
security provider: Functionally, by adding a decisive dimension of energy
security; and geographically, by turning Azerbaijan, alongside Georgia, into a
key factor of energy security for a Europe that now faces an over dependence on
politically risky Russian supplies. Europe's energy security is a prerequisite
to transatlantic political solidarity and NATO cohesion.
The eastern Caspian basin is key to that security through supply
diversification. Azerbaijan and Georgia provide the only existing westward
transit option for oil and gas from Kazakstan and Turkmenistan. The Azerbaijani
government has taken the lead by upholding the right of Caspian countries to
make sovereign decisions about laying pipelines in their respective seabed
sectors, despite Russian and Iranian opposition.
Similarly, Azerbaijan is currently spearheading initiatives on trans-Caspian
cooperation in oil and gas transportation westward. This role, however, cannot
for long substitute -- and certainly can not effectively substitute -- for the
leadership that the United States had earlier exercised in this regard, and from
which it seems to have stepped back.
Aliyev's Washington visit could have provided the opportunity for a
reaffirmation of US leadership in that regard. A joint political statement at
the presidential level, announcing US support for trans-Caspian energy projects,
could have been the vehicle for such reaffirmation. This opportunity was passed
up, however. The US side considered issuing such a statement but decided against
it at the last moment. This decision seems to reflect a lack of clarity in US
policy on Caspian energy issues generally. It apparently also reflects an
underestimation of the risks that Azerbaijan must face from Russia and Iran as a
result of Baku's energy transit initiatives that answer to Western interests.
Back in 1997, then-Presidents Bill Clinton and Heydar Aliyev signed a joint
political statement in Washington, and in 1999 Clinton signed a common
declaration with the presidents of Turkey, Georgia, Azerbaijan, Turkmenistan,
and Kazakstan on Caspian energy development and transit. Those and similar
political documents signaled US commitment at the international level to friend
and potential foe alike as well as domestically to the US government agencies,
lending institutions, and private energy companies. Thus, the
Baku-Tbilisi-Ceyhan and Baku-Tbilisi-Erzurum projects were set on track at that
time.
Those two pipelines in the western Caspian basin form parts of the planned
East-West Energy Corridor, which the United States led in promoting during
1995-2001. That corridor's larger components, however, are the unfulfilled
trans-Caspian projects from the eastern shore. Paradoxically, the US commitment
to trans-Caspian pipelines petered out in the wake of 9/11, instead of
redoubling. Those projects' importance is ever-greater in today's global energy
context of growing scarcity and insecurity than it was in the benign pre-9/11
environment and before the Kremlin had turned monopolization of transit and
markets into strategic policy tools.
To help reactivate those projects, the United States needs to begin by issuing
the indispensable political signal to Caspian countries, energy companies, and
investment capital markets. It also should reinstate the abolished position of
Caspian energy policy coordinator, which proved its value in streamlining
regional, European, and US efforts at the government and private-sector level to
complete the Energy Corridor's western components. On a parallel track,
Washington needs to show no less political commitment to Azerbaijan's security
than it does to neighbouring Georgia's. The two countries' security is
indivisible, as they function in tandem in providing the unique transit
linchpin.
Aliyev's visit helped refocus Washington's attention on those necessary steps to
reinstate the trans-Caspian projects high on the list of US energy policy
priorities.
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ECONOMY
EBRD, Azerbaijan discuss economy
Azerbaijani President, Ilham Aliyev, and a delegation led by European Bank for
Reconstruction and Development President, Jean Lemierre, discussed the former
Soviet republic's economy at a meeting in Baku on April 10th, the Azerbaijani
president's office said, Interfax News Agency reported.
The intensive character of Azerbaijan's economic development, as well as key
energy projects were highlighted, the office told Interfax. Aliyev and Lemierre
said cooperation between Azerbaijan and the EBRD was increasing and called for
its further growth.
EBRD officials also held meetings with Minister of Economic Development, Heydar
Babayev, and the Azerbaijani governor at the EBRD and chairman of the National
Bank of Azerbaijan, Elman Rustamov. During Lemierre's visit to Azerbaijan, a two
million Euro credit line was signed with a local financial institution,
Azerigazbank OJSC, for on-lending to micro, small- and medium-sized Azerbaijani
enterprises. The agreement was signed at Caspian B Room at the Hyatt Regency
Hotel on April 11th. The very same day, the EBRD delegation also visited the
city of Guba, to familiarise itself with development of small and medium-size
businesses outside of the country's capital.
The EBRD said it remains committed to working with Azerbaijan in its transition
to a market economy. The Bank's latest strategy for the country focuses
primarily on the development of the non-oil sector and regional economic
diversification, enhancement of the competitiveness of the banking sector and
using that sector as an intermediary to provide support to micro, small and
medium-sized enterprises, the rehabilitation of public infrastructure - roads,
rail, power, telecommunications and the continuing development of the natural
resources sector, with due regard to the environment, transparent management and
effective utilisation of revenues.
Azerbaijan has already made progress in this area, being the first EBRD country
of operation to sign up to the Extractive Industry Transparency Initiative (EITI),
a programme to promote transparency in energy usage and mining.
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MINERALS & METALS
Azerbaijan Aluminium to double output by 2008
Azerbaijan aluminium plans to increase aluminium production at its Sumgait
smelter to 60,000 tonnes by 2008, company production director Jamil Safarov
said. "Production amounted to 29,000 tonnes in 2005, this year we are
forecasting 30,000 tonnes in 2006, and by 2008 we intend to double this
figure," he said. Safarov said the company has drafted a plan of action to
expand production. "We plan to restore the operation of two pot houses,
which will enable us to double production. This will create 480 new jobs,"
he said, Interfax News Agency reported.
Work on restoring the pothouses has already begun. "This work will require
a year. Investment will initially be provided by the government, but investors
might be attracted in future," he said, without specifying the cost of the
project. Safarov also said the company's Ganja alumina refinery is expected to
produce 450,000 tonnes this year. "We get 5,000 tonnes of alumina every
month, and the rest is exported," he said. Azerbaijan Aluminium comprises
the Ganja alumina refinery, Sumgait smelter and Zaglik alunite quarry.
Azerbaijan put these enterprises into Fondel Metal Participations BV's
trusteeship for 25 years in 2001. The Dutch company pledged to invest one
billion Euro but has so far invested just 50 million Euro. It had planned to
build a 100,000-tpy smelter at a cost of 250 million Euro - 300 million Euro.
But at the beginning of 2006 the government cancelled the trusteeship contract
with Fondel Metal. Azerbaijan's government intends to invest more than 50
million Euro in Azerbaijan Aluminium this year, Kariam Hasanov, chairman of the
State Property Committee told a press conference on April 14th. "The state
intends to ensure that the company develops and its investment in the aluminium
industry this year alone will exceed the 48 million Euro invested by Fondel
Metal over a period of three years," Hasanov said.
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