Publication: Eurasia Daily Monitor Volume: 3 Issue: 112

While attending the annual Caspian Oil and Gas show in Baku, the capital of Azerbaijan, on June 8, Israeli Minister of National Infrastructure Benjamin Ben-Eliezer said that his country was interested in exporting Azerbaijani oil. “We and the Azerbaijani side are interested in transporting Azerbaijani oil from Ceyhan [the Turkish port in the Mediterranean] through the ‘Ashkelon-Elot’ pipeline towards the Red Sea and from there to such large markets as India and China,” he said. “This pipeline is the shortest and cheapest way from the Mediterranean to the Red Sea” ( News, June 8).

Oil can be transported from Ceyhan to the Israeli coast both by tankers and by a 400-kilometer long seabed pipeline. This idea was also raised in May when Josef Shagal, a member of the Knesset, visited ( News, June 7). China and India have been showing much interest in Caspian oil lately, due to the rising energy demands in their respective markets.

At the moment, Israel consumes 270,000 barrels of oil per day. Of this, two million tons are supplied by Azerbaijan. The BTC pipeline, completed last month, will export more than 1 million barrels of Azerbaijani oil per day. It took three years and more than $4 billion to build the pipeline, which bypasses both Russia and Iran, traditional energy competitors in the region.

Ben-Eliezer’s announcement comes on the heels of Kazakhstan’s decision to join the BTC pipeline. Kazakh President Nursultan Nazarbayev told journalists in Astana that his government has completed negotiations with Baku, and a new agreement on transporting 25 million tons of Kazakh oil through BTC would be signed in the coming weeks (ANS TV, June 9). This, in turn, would give a major boost to BTC, which was once portrayed as a commercially unprofitable project.

In addition to BTC, Ben-Eliezer also offered to extend the Baku-Tbilisi-Erzurum gas pipeline to Ceyhan and to buy Azerbaijani gas. “Our government is interested in buying as much gas as Azerbaijan can offer. I have discussed this issue with the Turkish Prime Minister and we will continue the negotiations on this” (Turan, June 8). The Baku-Tbilisi-Erzurum gas pipeline is expected to be completed at the end of 2006 and will export Azerbaijani gas from the Shah Deniz field. Lately EU and U.S. officials have been pushing for construction of a Trans-Caspian gas pipeline from Turkmenistan to Baku, which would allow Turkmen gas to be exported to the European markets. Russia and Iran fiercely object to this proposal.

Israel, meanwhile, is interested in more than just Azerbaijani oil and gas. Bilateral relations are experiencing another boom period, with trade turnover reaching $205.8 million in 2005 and $104.5 million in just the first quarter of 2006, which is several times higher than the first quarter of 2005 ( News, June 8). Receiving Ben-Eliezer, Heydar Babayev, Azerbaijan’s minister of economic development, noted that there is a big potential for the expansion of trade between the two countries and that a new agreement on the protection and encouragement of investments between Azerbaijan and Israel is under preparation. “Azerbaijan is interested in developing the non-oil sector of the economy and that is why the offer from the Israeli side to develop cooperation between the businessmen of the two countries is very useful for us,” Babayev said ( News, June 8).

As bilateral Azerbaijani-Israeli relations flourish, they have been the subject of discussions with several high-ranking Israeli delegations this year. Most prominently, in February a delegation of the leaders of 50 Jewish-American organizations visited Baku and met with President Ilham Aliyev. It was reported after the meeting that the Azerbaijani president has promised to open a trade bureau in Israel. Azerbaijan still prefers not to open an embassy in Tel Aviv, due to its close proximity to Iran and other Muslim states, but the two countries have had diplomatic relations since 1993. “We believe that Azerbaijan is extremely important to us from strategic, geopolitical, and moral points of view,” said Malcolm Henline, the executive vice-chairman of the Confederation of Jewish leaders (Central Jewish Resource

Azerbaijan has always prided itself on its excellent relations with Israel and the Jewish minority in the country. There are estimated 8,000 Jews living in Muslim Azerbaijan, and no major incidents of anti-Semitism have been recorded. In fact, recently the Jewish community of Azerbaijan built the largest synagogue in the country with the blessing of President Aliyev. Gennadiy Zelmanovich, the head of the Jewish community of Azerbaijan commented, “Jews in Azerbaijan have never had major problems. Even in Soviet times we were free from those limitations that existed for Jews in other Soviet republics” (Central Jewish Resource

The visible increase in the already warm relations between Baku and Tel Aviv is likely to bring economic and political dividends to both countries. But Azerbaijani politicians still prefer to walk a safe line on this issue.