Luba Azarch

Azerbaijani President Ilham Aliyev is about to visit Germany. What is the current level of bilateral relations?

As one of the trailblazers in economic reforms in the post-Soviet area and with its considerable hydrocarbon resources, Azerbaijan is considered one of the top spots for German investment in the CIS.  In the political realm, too, Baku is seen as a vital geostrategic partner, notably on Caspian energy issues.

Azerbaijan is an active participant in the Eastern Partnership Program. What does Azerbaijan mean to the EU?

Azerbaijan is a source of risks as well as opportunities for the EU.

The risks are due to the "frozen conflict" over Nagorno-Karabakh and the unpredictability of President Aliyev’s geopolitical orientation and his autocratic rule. It is not clear how the Nagorno-Karabakh question will be dealt with once oil production has peaked in 2012.  However, the EU is well aware that Azerbaijan has been arming itself during the time of economic growth.

The opportunities are due to its oil and gas resources (the EU is the world’s largest importer of oil and gas) and due to its pivotal role in building an East-West energy corridor that connects the EU with Caspian resources.

Much is said about the prospects for energy cooperation between Azerbaijan and the EU. What is your opinion?

The development of a gas corridor between Central Asia and Europe is still at the very beginning and appears politically risky, especially if the political insecurities of the South Caucasus – the "frozen conflict", the post-war instability in Georgia as well as the general unpredictability of Russia in respect of the post-Soviet space – are taken into consideration. Indeed, the conflict between Russia and Georgia has accentuated the risks facing this transport route and the project to connect the Central Asian energy market with Europe in general. Moreover, it has dampened the Caspian producers’ preparedness to take risks.

What do you think of the prospects for the Nabucco project to build a pipeline to pump gas from the Caspian region to Europe? It seems that the project still has many obstacles. And what about the prospects for Azerbaijan's participation in this project?

I think the future of Nabucco – if it is to include gas from the Caspian region – is problematic, less so, if it considers importing gas from Iraq. This is due to the lack of internal consensus on financial support for the €7.9 billion pipeline and on the general political approach towards the Central Asian energy suppliers. Indeed, citing doubts as to its viability and necessity, some European countries, notably Germany, France, Italy and Greece, are still somewhat reluctant to allocate EU funds for Nabucco, thus slowing down the project’s progress to some extent.

Also, the role of Turkey and other European countries is not without ambiguity. As for the former, Turkey's energy consumption is continuously increasing and raises questions about Ankara’s readiness to function solely as a transit country for Central Asian gas. What is more, Turkey is aware of its geopolitical significance and knows how to use it – notably in its accession talks with the European Union, which may additionally raise the economic as well as political costs of Nabucco. As for the transit countries, three members of the Nabucco consortium (Austria's OMV, the Hungarian-Slovak MOL and Bulgargaz) have also pledged to participate in the South Stream pipeline, Gazprom's rival project. The possibility of a conflict of interest and even the termination of collaboration on Nabucco on the part of these three cannot, therefore, be ruled out.

Finally, to be viable Nabucco needs far more gas than Azerbaijan can deliver, i.e. it needs a trans-Caspian pipeline to connect Turkmen gas with the South Caspian Pipeline and then Nabucco. This requires huge investments in the Turkmen energy infrastructure as well as agreement on the part of Russia and Iran to the subsea pipeline. Both issues are difficult.

Why is the EU so passive on the settlement of the Karabakh conflict between Azerbaijan and Armenia? Don't you think that economic interests in Azerbaijan should make the EU more interested in the settlement of the conflict?

The EU’s capability to resolve the post-Soviet region’s frozen conflicts is not high. This is due to the inherent intergovernmental character of the Common Foreign and Security Policy and the European Security and Defence Policy and to the role of regional actors in the conflict such as Turkey and Russia. It is not clear to me what Baku would expect from Brussels as both parties to the conflict (and potentially some regional powers, too) may have an economic and political interest in maintaining the conflict and thus in its underlying informal structures. Azerbaijan should focus on its possibilities to resolve the conflict and then ask for concrete help from the EU.

Aliyah Fridman
News.Az