Publication: Monitor Volume: 8 Issue: 22

Azerbaijani President Haidar Aliev’s January 24-27 visit to Moscow seems to have opened a new stage in bilateral relations, promising stable and businesslike cooperation. Russian President Vladimir Putin in turn aims for a more balanced Russian position between allied Armenia and the latter’s rival Azerbaijan. This development has been facilitated by Azerbaijan’s steadily developing relations with its principal partners, the United States and Turkey.

The aftermath of September 11 has increased Azerbaijan’s value as a supporter of U.S. policies in this region and a logistical way station between Western Europe and Central Asia. The White House recently won congressional support for suspending decade-old restrictions on U.S. government assistance to Azerbaijan. The move opens the way for wide ranging assistance programs including military and security assistance. Some of that the United States apparently intends to offer evenhandedly to Armenia also. This in turn would reduce the scope for Russian wedge-driving tactics in the region.

Also in recent months, the U.S.-supported Baku-Tbilisi-Ceyhan (Turkey) oil pipeline project has at last acquired what seems an irreversible momentum. During the last few weeks, with the preparations in full swing for Aliev’s Moscow visit, Azerbaijan finalized with Turkey and Georgia a far-reaching agreement on regional security, due for signing shortly. All this enables Azerbaijan to face Moscow with a considerable sense of self-confidence.

The Moscow meeting signaled a shared desire for accommodation on long-unresolved issues.

–Caspian Delimitation. In a joint statement, the two presidents agreed to proceed to delimiting the Caspian on a bilateral basis into national sectors, along a median line to be defined in subsequent negotiations. This consensus rewards Azerbaijan’s insistence on sectoral division, but also satisfies Russia in that it would divide the seabed only, leaving the water body and water surface largely under shared jurisdiction.

This agreement on principle follows those reached separately, on a bilateral basis, by Russia and Azerbaijan with Kazakhstan. The median line principle favors Azerbaijan in the dispute that Iran had provoked last year by claiming a large part of Azerbaijan’s sector. Meanwhile, a joint working group of all five Caspian countries persists in an unpromising effort to draft a lowest-common-denominator document, in preparation for a five-country summit some time this year in Ashgabat. The working group held, almost certainly by prearrangement, a session in Moscow during Aliev’s visit there.

–Oil Export. Given the recent momentum on Baku-Tbilisi-Ceyhan, Russia’s two largest oil companies–Lukoil and Yukos–seem poised to climb on the bandwagon. The two have begun negotiations toward acquiring stakes of 7.5 percent and 12.5 percent, respectively, in the Baku-Ceyhan Sponsor Group, which in turn seems on the verge of turning itself into the Pipeline Consortium. Lukoil’s and Yukos’s stakes would be sold to them by Azerbaijan’s State Oil Company, which holds a 40 percent interest, most of which is to be apportioned to foreign companies willing to join the project. The two Russian companies await a green light from their government. The latter apparently continues hedging its bets. The Western oil companies and governments involved favor giving Moscow a stake in the project and thus in its success.

An Azerbaijani-Russian bilateral agreement on oil transport ended its five-year term in December 2001. Under that agreement, Azerbaijan’s State Oil Company was supposed to export 5 million tons of crude oil annually through the Baku-Novorossiisk (Russia) pipeline. The amounts annually pumped fell very much short of that figure because of excessive transit fees on Russian territory and serious security risks in Russia’s North Caucasus. Moscow would have liked to renew the agreement for another five year term, but Azerbaijan declined. The sides have now agreed that Azerbaijani use of that pipeline will continue on an ad-hoc basis, with an informal understanding that 2.5 million tons would be pumped in 2002.

–Karabakh. Putin used the occasion of Aliev’s visit to call for a “peace without victors and vanquished” between Armenia and Azerbaijan. Putin’s formula can only evoke concern in Yerevan and Stepanakert. The Armenian side often uses the argument that it won the war in justification of its position on territorial and related issues. The Putin-Aliev joint communique included a condemnation of “aggressive separatism” which “threatens international stability.” As the Russian side well knew in accepting this phrase, “aggressive separatism” is one of Azerbaijan’s standard coded references to Karabakh and to Armenia’s military support for the latter. Moreover, the communique urged settling the conflict in accordance with “generally accepted international legal standards”–again, an oft-used Azerbaijani formula, obliquely referring to the territorial integrity of states and the inviolability of internationally recognized borders.

—Gabala Radar. The Moscow meeting settled by agreement the status of the last remaining Russian military installation in Azerbaijan: the Gabala missile attack early warning radar. Located in northwestern Azerbaijan and operational since 1985, the radar tracks ballistic and cruise missile launches as well as aviation flights in an area that stretches across the Mediterranean, the Middle East, and the Indian subcontinent and Indian Ocean, reaching into the southern hemisphere. Under the agreement signed in Moscow, the radar’s immovable assets are the property of Azerbaijan, while the movable assets are Russia’s property. Russia will pay Azerbaijan US$7 million annually in rent, US$1.5 million annually for electricity and other services, and US$31 million in arrears for rent and services from 1997-2001. The agreement places a cap of 1,500 on the number of personnel that Russia may station at the radar. As part of the quota Russia will hire several hundred local Azerbaijani citizens, to be selected at the discretion of the Russian side.

Russia will share certain, unspecified types of information with Azerbaijan. This stipulation probably refers to the monitoring of Iranian flights over the Caspian Sea, into airspace that Azerbaijan regards as its own. Russia guarantees that the radar will in no way harm Azerbaijan’s national interests and security, while Azerbaijan guarantees the confidentiality of any information about the radar and its operation. Azerbaijan’s military will provide air defense for Gabala. Russia will fund, equip and train that particular unit of Azerbaijan’s air defense forces. Aliev made clear that no discussion took place on Russian-Azerbaijani cooperation in air defense, other than that at Gabala. The agreement is valid for ten years and can be renewed by mutual consent for another three. (Turan, ANS, Interfax, Western news agencies, January 25-29).

The Monitor is a publication of the Jamestown Foundation. It is researched and written under the direction of senior analysts Jonas Bernstein, Vladimir Socor, Stephen Foye, and analysts Ilya Malyakin, Oleg Varfolomeyev and Ilias Bogatyrev. If you have any questions regarding the content of the Monitor, please contact the foundation. If you would like information on subscribing to the Monitor, or have any comments, suggestions or questions, please contact us by e-mail at, by fax at 301-562-8021, or by postal mail at The Jamestown Foundation, 4516 43rd Street NW, Washington DC 20016. Unauthorized reproduction or redistribution of the Monitor is strictly prohibited by law. Copyright (c) 1983-2002 The Jamestown Foundation Site Maintenance by Johnny Flash Productions