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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
Ranking is given out of 208 nations - (data from the World Bank)

Books on Azerbaijan


Update No: 323 - (26/11/07)

The Azeris are in a difficult situation. They are on worsening terms with the Armenians, still holding down 20% of their territory quite apart from the disputed territory of Nagorno-Karabakh. Many of them are hankering for a new war with Yerevan.

The Azeris feel that they have time on their side. Their oil revenues are mounting by the month, with soaring world oil prices. The hard-line President Kocharian of Armenia, a veteran leader of the previous war as president of the enclave, Nagorno-Karabakh, in contention between the two sides, is due to depart next year.

It is possible, however, that the ruthless Kocharian will opt for war beforehand to let the Russians get him out of a hole (See Armenia). 

The geopolitical quandary
But there is trouble brewing elsewhere too. Azerbaijan is in a quandary. It is glad to have very good relations with the US, the key to it joining NATO soon. 

But Washington has put it in a fix by requesting use of its airfield facilities to oversee, and perhaps bomb, Iran. This could turn Azerbaijan into a pariah among its neighbours and be just the occasion for Kocharian to exploit. There have been armed clashes of late between the Armenian and Azeri armed forces along the disputed border zones. If Baku rashly goes along with the final fling of a doomed US administration over Iran, it could rue the day. It would be advisable for international diplomats and observers to warn it of its peril here. 

Iran is a very special neighbour indeed, home to 13 million Azeris in its northern province, Azerbaijan, which is more than there are in Azerbaijan itself. If a war did break out they would be threatened. 

President Ilham Aliyev was in Tehran for a conference of the Caspian Sea littoral states in mid-October. Putin was there too and said that it was quite unacceptable for one Caspian Sea state to allow a foreign state to use its territory to attack another. Everyone knew what he meant.

Not that he wants Iran to acquire nuclear weaponry. The Russians are back-pedaling on giving Iran civilian nuclear technology at Bushehr, citing payment lags. 

The Caspian Sea summit, held October 16 in Tehran, achieved no substantive progress on the central issue of the territorial division of the seabed. Yet, somehow participants seemed very pleased with the outcome. 

The results of the summit 
Summit meetings can greatly help to defuse international tensions, in this case on two fronts, the Armenian and Iranian ones with Azerbaijan. Baku is to host the 2008 Caspian Sea summit. It will hardly want to be at war with two of its neighbours, one of then attending the conference, then. 
The primary result of the summit, which brought together the leaders of Azerbaijan, Iran, Kazakhstan, Russia and Turkmenistan, was a declaration of intent that offered something for everyone, while providing no clear timetable for the realization of goals envisioned in the document. 

The declaration affirmed the notion that outside powers should have no role in deciding how the sea's resources are utilized. It also emphasized that a legal framework for the sea's division would be reached through "consensus." 

"The sides hereby announce that only Caspian Sea littoral countries are allowed to use the resources of the sea," read an excerpt of the declaration published by the Tehran Times. 

From the viewpoint of Iran, and perhaps Russia, the most significant passage in the declaration concerned regional security. "The sides agree that they will never launch a military attack against any of the littoral states," the declaration stated. "The sides reiterate that they will not let any country use their soil for a military attack against other littoral states." This wording would seem to rule out completely the possibility that the United States could gain access to Azerbaijani military facilities to support a potential attack against Iran. 

The rough outlines of a breakthrough in Caspian negotiations could be seen taking shape at the Tehran gathering. On the territorial division question, Iran appears to be the chief stumbling bloc, given Tehran's insistence on an equal 20 percent share of the sea. Under a formula supported by Azerbaijan, Kazakhstan and Russia, Iran would end up with a roughly 13 percent share. 

However, Iran might be willing to modify its position, if it can receive security assurances from its Caspian neighbours - something that could help Tehran withstand US and European Union pressure connected to the country's nuclear programme. 

"There might be a quid pro quo somewhere down the line which entails a softening of the Iranian position on division, in exchange for some security guarantees on its northern flank," said Michael Denison, an expert on Caspian affairs at the University of Leeds in England. 

The leaders of Caspian littoral states agreed to meet in 2008 in Baku. Nazarbayev voiced hope that a comprehensive territorial pact could be ready for signing by the time that summit convenes, but many experts believe such a scenario, despite the mutual expression of intent in Tehran, remains highly unlikely. 

Serious obstacles remain. Perhaps the most visible difference of opinion at the Tehran meeting concerned the construction of a trans-Caspian pipeline, a project strongly backed by the United States. Nazarbayev argued that such a pipeline should only require the approval of states directly involved in order to move forward. Putin, however, not for the first time, invoked newly re-awakened environmental concerns, in arguing that any major pipeline project concerning the Caspian must obtain the consent of all littoral states. Given that any trans-Caspian pipeline would break Russia's existing stranglehold over regional energy export routes, and the vagueness of the so-called environmental concerns, Moscow may not be expected to approve of the construction of a new route. That in effect would mean that a pipeline would not be built (despite the fact that Russia itself has constructed a pipeline under the Black Sea to Turkey, and currently is constructing a pipeline under the Baltic to Germany where it can only be assumed it has less environmental worries). 

A key to whether or not a Caspian treaty can be signed soon is connected to efforts by Azerbaijan and Turkmenistan to compromise on sectors of the sea claimed by both countries. Azerbaijan, Kazakhstan and Russia have already resolved their disputes regarding their respective Caspian sectors. If Azerbaijan and Turkmenistan can settle their differences, Iran would come under increasing pressure to revise its stance. 

Some experts say things have already reached a point where Iran is having trouble resisting the pressure of its neighbours. "The de facto situation is going to become the de jure situation," predicted Ustina Markus of the Kazakhstan Institute of Management, Economics and Strategic Research in Almaty. "There are too many vested interests there [in the Caspian Basin] now." 

Other observers believe that no matter what happens between Azerbaijan and Turkmenistan, a Caspian accord is unlikely to be signed in 2008. "It [an Azerbaijani-Turkmen pact] could bring the five [Caspian] countries closer to a convention on [the sea's] legal status," said Maria Disenova, an analyst at the Institute for Economic Strategies-Central Asia. ""But I am not positive that it will be signed during the next summit." 

Beyond the question of the sea's territorial division, Putin used the summit to try to extend Russia's influence over regional economic affairs. Putin advocated development of new transport routes, including a North-South rail corridor and new water routes between the Caspian and the Black Sea, including a possible second Volga-Don canal. 

Last June, Nazarbayev said Astana was prepared to seek investors for a new canal to connect the Caspian with the Black Sea. The so-called "Eurasia" canal could cost upwards of $6 billion. Though the concept would seem to have Putin's backing, some regional officials, including Vladimir Chub, governor of the Rostov Region, are on record as saying a second canal is not needed. 

Meanwhile at the summit, Iran, Kazakhstan and Turkmenistan pledged to take steps to connect their railway networks. Subsequently, Putin told Turkmen President Gurbanguly Berdymukhamedov that the planned trilateral railway link would be connected to Russia's railway system. 

In Tehran, Putin also held bilateral talks with Iranian President Mahmoud Ahmadinejad, focusing on energy and nuclear cooperation. Putin reportedly pledged to finish Bushehr nuclear reactor project, but refrained from any time-specific commitments. Some experts also believe Putin pressed his Iranian counterpart for Tehran's participation in a Russia-led natural gas cartel. 

The formation of such a cartel has reportedly been a long-held goal of the Russian president. "Now suppose Russia, Kazakhstan, Azerbaijan, Turkmenistan and Iran agree to coordinate their natural gas activities," said a commentary published October 16 by the Gazeta daily. "If this happens, then Venezuela and Algeria (both large natural gas exporters) will readily join - they will just have no choice other than to join."

Sergei Prikhodko, a foreign policy aide to Russian President Vladimir Putin, hailed the declaration as a "very serious and useful document." Meanwhile, Kazakhstan's president, Nursultan Nazarbayev, characterized the document as a building block for a comprehensive agreement. "One can assert realistically that we, for the first time, have got things moving," the Interfax-Kazakhstan news agency quoted Nazarbayev as saying during a news conference in Tehran. 

Baku backs Ankara versus PKK
In another contentious situation the Turks are hoping for Azeri help in another conflict. Reports are being circulated that Azerbaijan will support Turkey's anti-terrorist (Kurds) operation. According to an informed source in Turkey, Baku and Ankara are now considering the participation in military operations of a special mountain-infantry regiment located on their joint frontiers in Naxichevan. This regiment has high combat readiness and is said to be able to carry out military operations in very difficult circumstances. 

This would be an important incentive for the two fraternal countries' current and future relations. Azerbaijani servicemen are already participating in military operations in areas where it is difficult to conduct them - like Kosovo and Afghanistan. Support for Turkey, a close ally, in a sense the 'patron' of Azerbaijan, balancing Russia's support for Armenia, would not come as a surprise. 
That kind of support for Turkey from Baku may have a positive influence on the further rapprochement between the two countries and also on opportunities to get reciprocal military support from Turkey, especially in the resolution of the Nagorno-Karabakh conflict.

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