BACKGROUND: Turkmen-Azerbaijani peaceful and tension-free relations began to experience difficulties late in the first half of the 1990s when both countries started their exploration of the Caspian Sea for offshore oilfields. In the absence of a legal regime for the division of the world\'s largest lake, the two Caspian littoral states found themselves in conflicting situation regarding the ownership of certain oilfields to which both countries had claims. In particular, the ownership of Azeri, Chirag, and Guneshli, as well as the Serdar (according to the Turkmens) or Kyapaz (according to the Azerbaijanis), has been a source of tension between the two Caspian neighbours since the mid-1990s. The first three operating oilfields have formed Baku\'s largest offshore oilfields providing for the bulk of its annual oil exports. The lack of a legal regime to determine the share of the littoral states of the Caspian Sea prevented the settlement of the Azerbaijan-Turkmenistan territorial disputes. In July 2001, their disputes over the ownership of certain offshore oilfields reached a hostile stage. Thus, they accused each other of illegal exploration, development or operation of the disputed oilfields to some of which another littoral state, Iran, had claims. Iran and Turkmenistan, on the one side, and Azerbaijan, on the other, also accused each other of violating each other\'s territorial waters with military and non-military marine vessels. In such a situation, the sale of two American military boats to Azerbaijan worsened Ashgabad ties with Baku. The former expressed deep concern about the transaction, which it portrayed as a threat to its national security and a provocative action to initiate an arms race. In its reaction to the development, the Turkmen government revealed its purchase of Ukrainian military boats, which in turn provoked a harsh Azerbaijani reaction. The worsening Turkmen-Azerbaijani ties in 2001 led to the closure of Turkmenistan\'s embassy in Baku as Ashgabad withdrew its staff for unspecified technical reasons without officially severing ties. Consequently, Baku\'s embassy in Ashgabad continued its operation.

IMPLICATIONS: On June 21, Quliyev\'s welcoming any future resumption of the Turkmen embassy\'s normal activities in Baku clearly signalled the Azerbaijani government\'s intention to normalize ties with its Caspian neighbour. On the one hand, this development reflects a desire on the part of Azerbaijan to improve ties with their neighbours. Going through a turbulent decade of independence marked with a devastating war with Armenia, Azerbaijan requires peace and political certainty both in its internal and external affairs to address its numerous economic, political and social problems. These are partly inherited from the Soviet era and partly have emerged in the post-independence era as the country has entered a transitional period from a Soviet-style command economy to a type of free enterprise yet to be created. The unresolved conflict with Armenia over Nagorno Karabakh and the occupation of 20 percent of Azerbaijani territory by the Armenians have been the major foreign policy challenge for the Azerbaijani government. Apart from the merits of peaceful ties with neighbours, the resolution of the latter demands Azerbaijan\'s normal relations with its other neighbours to enable Baku to concentrate all its energy on meeting that challenge with its possible negative domestic implications. Baku\'s move in that direction has been reflected in its efforts since last year to improve and expand its ties with its southern neighbour, Iran, a policy reciprocated by Tehran. Such efforts have included Azerbaijani President Haidar Aliyev\'s official visit to Tehran in May 2002 and the conclusion of economic agreements between the two neighbours. Both sides have continued efforts to improve ties. Contrary to its ties with Iran, characterized by normal diplomatic relations and significant economic transactions, Azerbaijan\'s relations with Turkmenistan have been damaged significantly, as seen in the Turkmen embassy\'s closure. Up to last month, the absence of any apparent interest on the part of Ashghabad to improve ties with its eastern (Uzbekistan) and western (Azerbaijan) neighbours seemed to discourage Baku from taking steps towards that end. However, the Turkmen government\'s implicit interest in normalizing relations with Uzbekistan damaged by its alleged involvement in a November 2002 assassination attempt on Turkmen President Saparmurad Niyazov hinted at its possible willingness to normalize relations with another neighbour, Azerbaijan. Thus, in mid-May, less than six months after the Uzbek ambassador in Ashghabad was declared persona non grata and forced to leave for Tashkent for his alleged involvement in the assassination attempt, Niyazov praised Turkmenistan\'s relations with Uzbekistan. As evident in that statement, Ashgabad’s sudden change of attitude towards Tashkent indicated its intention to break its mainly self-imposed isolation. The Azerbaijanis seem to have appreciated the significance of the development, which they want to canalize towards Turkmen-Azerbaijani ties.

CONCLUSIONS: Quliyev\'s June 21 remarks aimed at initiating a normalization process by encouraging the Turkmens to reopen their embassy in Baku. This is a logical move not only as a necessity for conducting negotiations over their disagreements, including the disputed oilfields, but also because the Turkmens have not completely severed ties with Azerbaijan. Currently, both sides seem to be interested in decreasing tensions in their relations with their neighbours as reflected in the mentioned cases. The Azerbaijanis have directly expressed their interest in applying that policy towards the Turkmens, while the Turkmens are yet to spell them out. In his remarks, Quliyev referred to his government\'s informing \"repeatedly\" its Turkmen counterpart about its position on the Turkmen embassy in Baku. Although it is too early to expect the immediate improvement of relations between the two countries and their addressing of all their disputes, the reopening of the Turkmen embassy, a possible development, may prepare grounds for their embarking on a process towards that end.

AUTHOR’S BIO: Dr. Hooman Peimani works as an independent consultant with international organizations in Geneva and does research in International Relations.