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Key Economic Data 
 
  2003 2002 2001 Ranking(2003)
GDP
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)

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Update No: 322 - (25/10/07)

The Iran quandary
Azerbaijan is in a quandary. It is glad to have very good relations with the US. 

But Washington has put it in a fix by requesting use of its airfield facilities to overlook (and perhaps bomb), Iran. Iran is a very special neighbour indeed, home to 13 million Azeris in its northern province, also named Azerbaijan, which is more than there are in the republic of 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 have long been back peddling 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, participants seemed very pleased with the outcome. 

The results of the summit 
The primary result of the summit, which brought together the leaders of Azerbaijan, Iran, Kazakhstan, Russia and Turkmenistan, (three of them amongst the richest Individuals in the world, one of them amongst the most powerful and one, the host, whose statements have put him amongst the most dangerous of the world's leaders), 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 block, 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 neighbors - 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, invoked 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, Moscow would not be expected to approve of the construction of a new route. 

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 planed 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 the 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 is reportedly been a long-held goal of the Russian president's. "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.
The Turkish government has asked the parliament to sanction its military operations against the PKK [Kurdistan Workers' Party] terrorist organization over the frontier in northern Iraq. The Turkish parliament has supported this proposition. Meanwhile, reports are being circulated that Azerbaijan will also support Turkey's anti-terrorist 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 in Naxchevan, the Azeri enclave on the Turkish frontier. This military regiment has high combat readiness and is able to carry out military operations in very difficult terrain. 

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 of Azerbaijan, should not come as a surprise. 

That kind of direct support for Turkey from Baku may have a positive influence on the further rapprochement between the two fraternal countries, and on opportunities to get reciprocal military support from Turkey, especially in the resolution of the Karabakh conflict.

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