BACKGROUND:From the very start of his presidency, Putin sought to compensate the strong priority in Russia’s foreign policy granted to Armenia, a trusted military ally, with a new emphasis on building ties with Azerbaijan. Paying his first visit to Baku in January 2001, he sought to establish a personal rapport with President Heydar Aliyev, while never bothering to develop any ‘special chemistry’ with Kocharyan. Accentuating their common background in the KGB, Putin skillfully played on the age difference, assuring the ‘grand master’ of Azerbaijan’s politics that Moscow would have no objections whatsoever against his cherished plan for the transfer of power to his son Ilham. This message was reiterated at every following meeting and Russia held true to its word when Ilham Aliyev won the controversial presidential elections in October 2003. In a peculiar way, that firmly orchestrated succession coincided with the beginning of the turbulent period of ‘colored revolutions’ in the former Soviet space marked with the emotional but bloodless storming of the parliament in Tbilisi in November 2003 and the resignation of Georgia’s president Eduard Shevardnadze. Russia stood resolutely against this wave of public discontent and experienced a series of setbacks from Abkhazia to Kyrgyzstan, in which the most devastating defeat was the victory of the ‘orange revolution’ in Ukraine in November-December 2004. Moscow’s counter-revolutionary stance further hardened after the forceful suppression of the revolt in Andijan, Uzbekistan in May 2005, which the Kremlin supported wholeheartedly seeing it as the turning point of the revolutionary tide. Putin has been trying to impress upon Ilham Aliyev that his place is not in the company of ‘extremists’ like the Georgian President Mikhail Saakashvily but in the network of ‘responsible leaders’ like Aleksandr Lukashenko, the President of Belarus, who know how to deter revolutionary excesses. The example might be not that attractive, since Lukashenko is treated with well-deserved contempt on the European arena, but Western criticism of the tightly managed parliamentary elections in Azerbaijan in November 2005 gave Aliyev new food for thought. Moscow expressed its full satisfaction with these elections and Putin can now argue that the West would invariably turn every following elections into a new ‘democracy test’ while a stronger control might become necessary for securing Aliyev’s hold on power. Before going to Baku, Putin had sent there his trusted lieutenant, Defense Minister Sergei Ivanov, with a preparatory mission. Ivanov explained that the size of the rent for the Russian early warning station at Gabala was not a big issue but the deployment of two U.S. radar stations in Azerbaijan and the plans for expanding the Caspian Guard operation, as outlined by U.S. Secretary of Defense Donald Rumsfeld during the visit to Baku in April 2005, certainly were seen by Moscow as disturbing developments. Heading to Armenia afterwards, Ivanov emphasized that no solution for Nagorno-Karabakh could possibly be found without Russia’s consent and hands-on involvement.

IMPLICATIONS:Unlike in most of Putin’s other foreign visits, energy issues were not on the top of the agenda of his talks in Baku. Nevertheless, Russia’s proactive policy towards Azerbaijan is driven primarily by energy interests. Early on in his presidency, Putin lifted all political objections against the construction of the Baku-Tbilisi-Ceyhan (BTC) oil pipeline, but this ‘strategic’ project remained a major irritant for Russia. Now that the construction is completed and, despite endless delays, the first tanker will be filled with oil before summer, Putin can only confirm that it is fine with him. He can perhaps hint, from experience, to Aliyev that as the oil starts to flow, Azerbaijan would no longer be politically or economically dependent upon the West but rather the other way around: Europe would become seriously dependent upon the uninterrupted deliveries of Azerbaijani oil. Two assessments underpin this relaxed attitude in Moscow. The first one relates to the time factor: Azerbaijan does not have that much oil in its sector of the Caspian Sea. The currently developed Azeri-Chirag-Guneshli (ACG) oilfield at the maximum level of production could fill the pipeline for 7-8 years, if that. That is enough to bring a hefty profit to the consortium of international ‘majors’ led by the BP as well as a huge increase in Azerbaijan’s state income, but by the end of this decade serious negotiations about pumping either Russian or Kazakh oil from the fields in the Northern Caspian would need to start. That, obviously, would be a very different ball game for Ilham Aliyev’s second presidential term. The second consideration is more immediate: Putin generally cares much less about oil than about natural gas in his claim for the status of ‘great energy power’. The world oil prices are certainly of huge importance since the prices on gas are derived from them, but the launch of the BTC is hardly going to make much of an impact on these prices. Azerbaijan is richer in gas than it is in oil and the South Caucasus gas pipeline (Baku-Tbilisi-Erserum) is currently under construction; it could bring gas from the Shah Deniz field to the Turkish market already by the end of next year. Russia has its own plans for this market and is not discouraged by the poor results of the first two years of exploitation of the ‘Blue Stream’ pipeline. Since early 2005, Putin has been actively courting Ankara seeking to sell Gazprom’s plan for constructing the second line of the ‘Blue Stream’ aimed at export to South-Eastern Europe and Italy. Together with the South Caucasus pipeline, that would make Turkey a major gas hub for the EU market where, very much against the Commission’s plans, consolidation currently advances far faster than liberalization. What Putin wants from Aliyev is a binding agreement on dividing shares and sectors in this market that would prevent any ‘unhealthy’ competition. This agreement would complement the deals with Turkmenistan and Uzbekistan who agreed to sell all their gas to Russia for further re-export; Kazakhstan, focused on oil rather than gas, may follow suit. Moscow now prefers not to call this arrangement a ‘gas OPEC’ (particularly since the political relevance of the oil cartel has declined) but the intention to control the supply and thus dictate the prices is unmistakable.

CONCLUSIONS:It is unclear what kind of incentives Putin offered to Aliyev in order to secure this energy rapprochement; his secretiveness is indeed legendary. Quite possibly, Nagorno Karabakh was mentioned even if Moscow is in no position to deliver the Armenians and could hardly assemble a credible force for a peacekeeping operation. Putin has to walk on a tightrope here, while Russian diplomacy has of recent shown few skills of this kind making plenty of awkward steps, like inviting Hamas to visit Moscow. What helps Putin’s hand is the escalation of crisis around Iran. There is no need to convince Baku how dangerous this situation is: Azerbaijan, with 600 km of vulnerable southern border and twice as many Azeris living in Iran as in the country, is perfectly aware of the risks. The card Putin could play is provided by the U.S. pressure for joining the prospective anti-Iranian coalition. If Azerbaijan wisely stays out, fears could be exploited that Washington might lose interest in this strategic ally and increase its demands for democratic reforms or even develop some plans for a ‘colored’ regime change. That places Ilham Aliyev in a very tight corner. Putin offers a seemingly easy way out but Russian ‘friendship’ would inevitably open doors for Gazprom, which is a far less attractive partner than BP or Statoil. Azerbaijan is about to become seriously rich with the long-expected inflow of ‘petro-dollars’ but this prosperity, contrary to what models of economic transition postulate, could bring a decline in stability as stakes in many overlapping conflicts multiply and the dispossessed turn desperate. Russia shows few doubts in exploiting and manipulating these conflicts, assuming that its role as ‘energy security’ provider would not suffer. Putin, however, has shown more talent for tactical maneuvering than for strategic positioning – and very little stomach for crisis management. Quite possibly, he will not even be around when the results of his current maneuvering mature, but the heritage of distrust tends to live very long in the Caucasus.

AUTHOR’S BIO:Dr. Pavel K. Baev is a Research Professor at the International Peace Research Institute, Oslo (PRIO); visit www.prio.no or respond to This email address is being protected from spambots. You need JavaScript enabled to view it. .