Global Policy Forum

Azerbaijan's Precarious Balancing Act


By Dr. Michael A. Weinstein

Power and Interest Report
September 22, 2004

The geostrategic nerve center of the Caucasus is Azerbaijan with oil reserves possibly totaling one-hundred billion barrels. The country is coveted as an ally or at least a benevolent neutral by regional and world powers: Iran, Russia, the Franco-German combination and the United States. Each of those powers has its own interests, which creates a complex pattern of convergence and divergence among them.

As the object of active interest by powers that are politically and economically stronger than itself, Azerbaijan is threatened with dependency if it falls into the hands of any one of them, but it also has an opportunity for autonomy if it can successfully play them off against one another and maintain a balance of power. With autonomy as its goal, the government of President Ilham Aliyev has pursued a "balanced" foreign policy, opening up diplomatic channels with all of the interested states and giving each of them the hope of satisfying some of its own aims, while Baku maneuvers to achieve its vital interests.

As the Aliyev regime perceives them, the vital interests of Azerbaijan are to settle jurisdictional issues over rights to Caspian Sea oil, ensure security of the Baku-Ceyhan pipeline that will move the oil west, secure investment from varied sources on the best terms to develop its oil industry and the rest of its economy, avoid economic or military dependence on any foreign power as it pursues development, and resolve the issue of the breakaway region of Nagorno Karabakh by regaining sovereignty over it. From Baku's viewpoint, Azerbaijan's future is that of a rising power that will be able to maintain genuine independence in the long term if it can manage the transition to prosperity by skillfully performing its balancing act.

The Balanced Strategy

Baku has been able to pursue its balanced strategy because none of the powers impinging on it poses a direct military threat to the regime. The Franco-German combine by necessity is restricted to economic and diplomatic influence, and neither Iran, Russia nor the United States is currently interested in making any provocations that would lead the others into a confrontation with it and risk instability in the oil patch. Each of the impinging powers would like to draw Azerbaijan into its orbit, but their room for action is limited by the others, leaving Baku with a measure of freedom to make deals with all of them and also to refuse their proposals.

>From the viewpoint of its vital interests, Baku counts on Washington for help in settling Caspian Sea jurisdiction, since Iran and Russia border Azerbaijan on the Sea and are competing interested parties. Baku also expects Washington to make sure that the Baku-Ceyhan pipeline is secure. In the sphere of economic development, Baku wants investment from all of the interested parties, particularly the Franco-German combination. It also wants help from any of them on the Karabakh problem.

In return for its protection and in pursuit of its perceived vital interests, Washington would like to establish a military presence in Azerbaijan as part of its policy of securing oil supplies by encircling and containing Russia and Iran. In response, Russia and Iran want Azerbaijan to remain free of American bases. This configuration of economic and strategic interests allows for a balance of power in which Baku undertakes limited military cooperation with Washington and Moscow, and maintains friendly relations with Iran, satisfying each of them a little and antagonizing none of them. The wild card is Karabakh, which destabilizes the balancing act.


After achieving independence from the Soviet Union in 1991, Azerbaijan was faced with a rebellion in the Armenian-dominated region of Nagorno-Karabakh, which occupies a significant portion of the country's southwest. Several years of war, ethnic cleansing, pogroms and massacres led to the de facto independence of the breakaway region under the protection of Armenia. In implementing its protective role, Armenia also occupied areas of Azerbaijan bordering Karabakh, carving out a corridor from the region to Armenia. The troubles created bitter hostility between the dominant ethnic group in Azerbaijan -- the Azeris -- and the Armenians, resulting in the unwillingness of either group to compromise.

Ever since the secession of Karabakh, Baku has been preoccupied with regaining sovereignty over the region. Karabakh is an open wound for the Azeri public and any regime in Baku has to reckon with deeply irredentist and often revanchist public opinion that severely restricts the ability to negotiate a solution. To surrender Azerbaijanian sovereignty over Karabakh definitively would amount to a political death sentence. As a result of intensely nationalistic public opinion and the regime's geostrategic interest in Azerbaijan's territorial integrity, the Karabakh problem shadows and warps every move that Baku makes in its relations with impinging powers. Trade deals, military cooperation and attempts to attract investment always have the added motive of securing aid in wresting Karabakh from Armenian protection. Were it not for Karabakh, Baku would be in a much stronger position to pursue its balancing strategy successfully, because it would not be constrained to seek help from the impinging powers.

Despite its economic potential and strategic importance relative to Armenia, Azerbaijan has not received significant support for its aims in Karabakh from interested powers. None of those powers wants any of the others to have a dominant sphere of influence in Azerbaijan, but they are also not interested in seeing the country become an independent regional power in its own right. The United States, with a large Armenian diaspora and comprehensive geostrategic interests in the Caucasus, cannot support Baku wholeheartedly. Russia has a long standing security relationship with Armenia that it is reluctant to sever. France and Germany have no military influence and find it difficult to support a turnover of Karabakh to Azerbaijan in light of their rejection of Serbian claims to Kosovo. Iran, which has a vital interest in limiting American presence in the Caspian region, recently declared for the first time its support for restoration of Azerbaijan's sovereignty over Karabakh, marking a minor breakthrough for Baku.

Up until the present, the impinging powers have supported mediation efforts by the Organization of Security and Cooperation in Europe (O.S.C.E.), carefully avoiding taking either side, which has solidified the status quo to the advantage of Armenia and the Karabakh mini-state. Another round of talks scheduled for mid-September in Astana, Kazakhstan will bring together the presidents of Armenia and Azerbaijan with Russian and American facilitation.

There is no indication that the two sides are willing to compromise. Baku insists that Armenia withdraw from all areas of Azerbaijan outside Karabakh before it will negotiate on any other questions. It also insists that it regain sovereignty over Karabakh in any final agreement, though it is probably willing to concede a large degree of autonomy to the region. Finally, Baku demands that Azeri refugees be permitted to return to the homes that they fled in the troubles. Yerevan refuses to withdraw from occupied areas of Azerbaijan before negotiations on the status of Karabakh and the refugees proceed, and is unwilling to concede Baku's sovereignty over the region.

Baku's response to the deadlock has been a mixture of frustration and hope. Although it has had very limited success in moving interested powers to its side, Baku expects that in the long run its growing wealth will change the balance of power in the region, to the point that it will be able to overmatch Armenia militarily and solve the Karabakh problem to its satisfaction by force if necessary. In the run-up to the Astana talks, Aliyev has stressed that if its aims are not met by diplomatic means, Baku will eventually opt for a military solution. There are reports that Azerbaijan is pursuing arms deals with Ukraine and Pakistan.

Since it is not currently ready to take military action, Baku has recently shifted its foreign policy to tilt toward Russia. In August, the Aliyev regime put into effect a law on national security that bans foreign military bases in the country. At the same time, it has allowed Russia to have a radar station in Azerbaijan. Baku also did not apply for N.A.T.O. membership at the Istanbul summit and has dragged its feet on refreshing its troop commitment to the American-led coalition in Iraq. Finally, Azerbaijan's foreign minister, Eldar Mamedjarov, expressed favorable opinions on Russia's design of a Single Economic Space within the Commonwealth of Independent States (C.I.S.), of which Azerbaijan is a member.

Baku's diplomatic offensive, which includes frequent discussions with Germany and France, as well as with Russia and Iran, is aimed at getting movement on the Karabakh problem in the face of American inaction. Some analysts believe that Baku is trying to trade a promise to curtail American military presence in Azerbaijan for Russian cooperation on Karabakh.

The tilt toward Russia and Iran by the Aliyev regime has occasioned an American reaction, signaled by an unscheduled visit by U.S. Defense Secretary Donald Rumsfeld to Baku in August. Washington is particularly concerned about the increasing cordiality of relations between Baku and Tehran, and growing military cooperation between Baku and Moscow. During the Rumsfeld visit, Baku reportedly asked for help on the Caspian Sea jurisdiction issue and did not yield to American pressure to distance itself from Iran and Russia.

Washington is also concerned about Aliyev's attempt to fill his government with a new generation of officials who are loyal to him and will replace the holdovers from his father's regime. The direction of the changeover is toward figures who have a pro-Russian bias. For example, pro-American National Security Minister Namik Abbasov was recently replaced by Elman Gambarov who is in favor of closer security ties to Russia. Although there are internal political tensions within the regime that motivate the new tilt, it is also conditioned by the quest for help in Karabakh. In tilting toward Russia and Iran, Baku is running against the familiar pattern of resorting to an extra-regional power -- here the United States -- to balance strong regional neighbors. The Aliyev regime has made this move because it has become clear that Washington will not go beyond its policy of supporting the O.S.C.E. process on Karabakh. Whether Russia, which is the major third party in the negotiations, will exert pressure on Armenia remains to be seen.

America's Slippage in Azerbaijan The Aliyev regime is not trying to marginalize the United States in Azerbaijan or more broadly in the Caucasus region, but is simply attempting to restructure the regional balance of power in its favor. After the August announcement of American troop redeployment from Europe to forward staging areas, Azerbaijan was prominently mentioned as one of the prime sites for new bases. That possibility now seems to be a dead issue after the announcement by U.S. Ambassador to Azerbaijan Rino Harnish on September 11 that basing is not currently under discussion. Instead, Baku and Washington will pursue more restricted forms of military cooperation that do not jeopardize Azerbaijan's relations with its neighbors.

American slippage in Azerbaijan is part of an overall diminution of Washington's influence in the world after the failures of Operation Iraqi Freedom. Even if Karabakh were not an issue, Baku would be constrained to improve relations with its powerful neighbors, because it cannot count on the United States to be a reliable protector beyond providing security for the pipeline. With the addition of Karabakh, the American position is weakened even further.

In a setback to Washington, N.A.T.O. exercises that had been scheduled to be held in Azerbaijan in late September were abruptly canceled after the Aliyev regime, bowing to popular pressure, refused to allow Armenian officers who were supposed to participate in the exercises to enter the country. Hosting the exercises was a part of Baku's balanced strategy, offsetting its cooperation with Russia and the C.I.S. by ties with the West. Karabakh got in the way.


In light of its strategic situation as a relatively weak power in a sensitive region that is impinged upon by greater powers, and its prospects of increasing strength, Baku's balanced strategy of playing all sides -- sometimes against one another -- is rational in terms of serving perceived vital interests in autonomy and prosperity. In the absence of the Karabakh issue, that strategy would have good chances for success. The struggle over the breakaway region places stresses on the delicate balancing act, threatening to push Baku too far in the direction of Russia or the United States, both of which are eager to establish a sphere of influence in Azerbaijan.

If either one of the two most important impinging powers threw its support to Baku, the regime would be tempted to fall into its camp, altering the balance of power in the region and impairing Azerbaijan's autonomy. At present, Baku is tilting toward Moscow, which has common interests with Tehran in minimizing American influence. The tilt does not signal a decisive shift from the balanced strategy, but reflects the quest for support on the Karabakh issue. If Baku's current initiatives do not bear fruit, a tilt back to the United States is possible.

Since none of the impinging powers seems ready to support Baku, competition for influence by all parties is likely to continue within the constraints of a common interest in avoiding significant confrontation. As Azerbaijan's sore point, Karabakh will intrude as a factor in Baku's decisions that will prevent it from taking full advantage of the balanced strategy, which remains in its interest to pursue. The impinging powers will continue to court Baku, but they will feel no urgency to support its claims unless one of them disturbs the consensus on avoiding provocation, setting off confrontation and realignment. An Azerbaijan incapable of taking full advantage of its position is currently in every impinging power's interest.

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