How Azerbaijan Is Coping With Crisis

Azerbaijan is trying to weather two separate but interrelated crises. The large-scale drop in global oil prices and the standoff between Russia and the West over Ukraine are defining the country's energy industry and broader strategic position. Baku is trying to take advantage of its increasing attractiveness as an alternative energy source to the Europeans, putting it in a better position than most other regional energy producers. However, Baku will still come under financial and political constraints in its decision-making on the energy projects it pursues and the diplomatic maneuvering this will entail.

Azerbaijan's economy is highly dependent on the country's energy industry, with the hydrocarbons sector accounting for roughly 40 percent of GDP and more than 90 percent of exports. The dramatic fall in global oil prices, as well as a slight decrease in the country's oil production because of maintenance works on the Azeri-Chirag-Guneshli oil field, contributed to a significant slowdown in 2014. Azerbaijan's GDP grew by only 2.8 percent compared to 5.8 percent in 2013. 

Borderlands: The View from Azerbaijan

I arrive in Azerbaijan as the country celebrates Victory Day, the day successor states of the former Soviet Union celebrate the defeat of Germany in World War II. No one knows how many Soviet citizens died in that war -- perhaps 22 million. The number is staggering and represents both the incompetence and magnificence of Russia, which led the Soviets in war. Any understanding of Russia that speaks of one without the other is flawed.

As I write, fireworks are going off over the Caspian Sea. The pyrotechnics are long and elaborate, sounding like an artillery barrage. They are a reminder that Baku was perhaps the most important place in the Nazi-Soviet war. It produced almost all of the Soviet Union's petroleum. The Germans were desperate for it and wanted to deny it to Moscow. Germany's strategy after 1942, including the infamous battle of Stalingrad, turned on Baku's oil. In the end, the Germans threw an army against the high Caucasus guarding Baku. In response, an army raised in the Caucasus fought and defeated them. The Soviets won the war. They wouldn't have if the Germans had reached Baku. It is symbolic, at least to me, that these celebrations blend into the anniversary of the birth of Heydar Aliyev, the late president of Azerbaijan who endured the war and later forged the post-Soviet identity of his country. He would have been 91 on May 10.

The South Caucasus Countries and Their Security Dimension

 
 

Oil Pump in Baku

Tensions over Nagorno-Karabakh and the breakaway republics of Abkhazia and South Ossetia continue to give the South Caucasus region a bad name. That won’t change any time soon, warns Eugene Kogan, unless Russia alters its ‘status quo’ policies towards this volatile area.

By Eugene Kogan for Center for International and European Studies (CIES)

The two unresolved conflicts in the South Caucasus hang over Armenia, Azerbaijan and Georgia like the Sword of Damocles. As seen from every view point, Russia’s influence, levers and policy toward conflicts resolution remain the key issues. As long as Moscow maintains a status quo policy and keeps the outside actors at arm’s length from the region, the unresolved conflicts will continue to fester. The potential for a third conflict should not be underestimated, since all the necessary ingredients for an explosive situation are in place. The aloofness of President Barack Obama coupled with a politically divided and militarily impotent European Union makes conflicts resolution very remote, if it is at all possible. The continuing ambiguous position of NATO member states concerning the membership of Georgia in NATO makes things worse for Georgia and leaves it vulnerable to intimidation by Russia. Turkey’s ambitions are well-known, but Turkey alone is no match for Russia in the South Caucasus. So, what can be done to change the situation?