Azerbaijan has come a long way since its first days of independence in 1991. After the break-up of the former Soviet Union, Azerbaijan was an unknown country in an unknown part of the world, left in tatters following the collapse of its economy and social structures, and the bloody war it fought with its neighbor Armenia over the Azerbaijani region of Nagorno-Karabakh left almost 1 million Azerbaijanis homeless. While Armenia received support and sympathy from around the world -- thanks to its highly effective diaspora community -- Azerbaijan was painted as the aggressor and left to struggle. The US, for example, placed sanctions on Azerbaijan under Section 907a of the Freedom Support Act (which cites Azerbaijan as the aggressor in the Karabakh conflict) and prohibited any kind of direct US government assistance to the Azerbaijani government. Although successive US presidents have denounced it, none have been able to get Congress to repeal it, although it was finally waived on a year-by-year basis after the Sept. 11, 2001 terrorist attacks.However, over the last two decades, Azerbaijan has picked itself up from its knees under the strong (although autocratic) leadership of Heidar Aliyev and now his son. Although in recent times Aliyev junior has made moves to improve democracy, it is clearly going to be a slow process. Azerbaijan seems to be adopting the Russian model of "managed democracy" as an alternative to a more demanding Western model of liberal democracy, and Vladimir Putin in particular has served as a role model for Azerbaijan as well as other neighboring post-Soviet leaders.
Today Azerbaijan finds itself in an increasingly important geostrategic position at Eurasia’s crossroads, with its oil and gas resources very much in demand from its neighbors and partners. The construction of the Baku-Tbilisi-Ceyhan oil pipeline and the Baku-Tbilisi-Erzurum gas pipeline were significant achievements as they enabled Azerbaijan to diversify its energy transport routes. These natural resources have given Azerbaijan the luxury of being able to maintain rapid economic development, which has allowed for investment in education, health care, IT, etc., and brought poverty rates down from 49 percent to 13 percent. The World Bank’s 2008 “Doing Business” report cites Azerbaijan as the top reformer in the business world, and even in the current economic crisis, Azerbaijan managed 4.1 percent gross domestic product (GDP) growth in the first quarter of 2009. This energy wealth has also given Baku more choices in its foreign policy relationships with neighbors and partners -- unlike Armenia and Georgia, which struggle to carry out truly independent foreign policies. Azerbaijan manages to maintain quite a healthy balance between the West and big bear Russia. Nowadays, both want Azerbaijan’s new gas reserves, but it still remains unclear who is going to get what yet.
During his visit to Brussels, President Aliyev was repeatedly questioned on Baku’s position vis-à-vis the Nabucco natural gas pipeline given that the EU views Azerbaijan’s Shah Deniz II field as a possible first source of gas for the project (although it is not enough to fill the pipeline in the first place). Azerbaijan is still skeptical about the project, given that many issues remain to be resolved including transit agreements, gas sources and financing, and the president was quick to say that Azerbaijan has other options on the table, so they won’t be waiting forever for the EU to make up its mind. Clearly the Southern Corridor Summit, which is due to take place in Prague later this week, will be an important indicator as to the commitment of those concerned in this project. With Russia continuing to do all it can to undermine it and Turkey, the foreseen transit state, nothing should be taken for granted.
But no matter how wealthy Azerbaijan becomes, the country will continue to suffer and feel humiliated due to the ongoing occupation of Nagorno-Karabakh and the seven surrounding territories by Armenia (20 percent of Azerbaijani territory). The UN resolutions remain on paper and international law is seemingly ignored. The Organization for Security and Cooperation in Europe (OSCE) peace talks go nowhere, the international community turns a blind eye to the actions of Armenia and both nations continue to increase defense spending. The EU has never taken this occupation into account in its relationship with Armenia, and with the launch of the new Eastern Partnership, Armenia’s ties with the EU are set to become even closer. This is again a win for the diaspora community, which has done an excellent job in Brussels. On the other hand, there is virtually no Azerbaijani diaspora, and to a certain degree, because President Aliyev is always painted as a dictator with an iron grip, this taints the way the international community looks at the realities of the conflict. Whether the new initiatives currently taking place in the region will change the status quo remains to be seen. However, the fact is the conflict remains extremely volatile and renewed fighting could break out at any time, which would be a disaster for the whole region.
