Azerbaijan's Foreign policy and Challenges for Energy Security

Abstract

This article examines Azerbaijan's foreign policy by demonstrating the interplay between the oil-led development process and early post-independence regional that enforced a Western orientation in the country's foreign policy. It is argued that geopolitics continue to prevail in the strategic goals of Azerbaijan. However, the new challenges in the emerging framework of energy security, which extends beyond the revitalized geopolitical rivalries and preeminent concern over securing energy supplies, put Azerbaijan's foreign policy at a crossroads and require a new trans-Atlantic partnership to promote human security and to manage the risk entailed in the unpredictable policy environments of the Caspian region. Azerbaijan is of crucial importance to the world energy market. The proven and potential reserves in the Azerbaijani sector of the Caspian Sea are expected to diversify, secure, and stabilize world energy supplies, as North Sea resources did in the past. However, the land-locked energy resources in the Caspian region pose additional challenges to the transport of oil and gas resources, particularly to the European energy markets. Today, long-distance transnational pipelines have grown increasingly central in efforts to ensure energy security, in large part because they provide an alternative to a number of vulnerable maritime chokepoints.1 Thus, a broadened understanding of energy security is imperative not only to understand the new challenges of Azerbaijan's foreign policy but also to cope with any potential instability or geopolitical rivalries in the Caspian region. This article examines Azerbaijan's foreign policy using the oil-led development process and the country's relations with multinational oil companies as a framework for analysis and addresses the challenges for energy security in the Caspian. The recent war between Russia and Ggeorgia and the ongoing Karabakh conflict between Azerbaijan and Armenia not only renewed awareness of geopolitical rivalries, but also further multiplied the nodes of vulnerability along the energy infrastructure and cross-border pipelines in the world energy market. Although there was no immediate attack on, or threat to, the oil and gas pipelines bypassing Russia through the Caucasus region and reaching the Mediterranean in Turkey (the Baku-Tbilisi-Ceyhan pipeline), Russia clearly expressed itself as a regional power by not allowing any changes in the status quo of the region or any individual attempts to solve frozen conflicts in the Caucasus. The first section of this article demonstrates how the oil-led development process and Azerbaijan's relations with multinational oil companies have enforced the country's Western-oriented foreign policy. The second section examines the linkages between Azerbaijan's foreign policy and the challenges for energy security in the Caspian region. In the third section, it is concluded that geopolitics has prevailed in Azerbaijan's foreign policy; however, a new trans-Atlantic partnership is required to meet the new challenges of energy security in the Caspian region. THE ROLE OF OIL IN A AZERBAIJAN'S WESTERN-ORIENTED FOREIGN POLICY Security threats in the early years of Azerbaijan's independence were critical in setting the course of the country's foreign policy, which has been largely driven by the economic and political preferences toward Azerbaijan's prioritizing relations with multinational oil companies and utilizing an oil-led development process. Azerbaijan's economy was in severe crisis after the collapse of the central economic system of the former Soviet Union. Foreign direct investment in the oil and gas sectors was crucial to boost the country's economic recovery. As part of the collapsed Soviet system, Azerbaijan's economic activities had been focused on the extraction and production of raw materials. The experience of Azerbaijan, however, was somewhat different from those of other former Soviet republics due to its geographic location and cultural context. …