"The Role of Caspian Oil in Maintaining  Stability in the Caucasus Region: In the Case of Mountainous  Karabakh Conflict"

This dissertation is broken up into 5 chapters on Virtual Azerbaijan (VAR):


Chapter I

Chapter II

Chapter III


Chapter Three

Impact of the "Oil Factor" to the Nagorno - Karabakh Case

"Are you sure that the oil rich man fights better?  For the Azerbaijanian army, Karabakh will be just a memory.  Who will be more willing to give their lives?".

                                                                    -Armenian President R. Kocharian, September 1998.

A "Peace Pipeline"

            Since 1994, the cease - fire between Azerbaijan and Armenia, has held to the present day.  This gave both sides the opportunity to improve their economies and strength, besides their independence.  After the "Contract of the Century", Azerbaijan became more confident in future talks with the Armenian side, considering the fact that Baku became the commercial capital of the Caucasus.  However, there is no doubt that Azerbaijan cannot highly develop its economy, without having a good relationship with Armenia.  Conversely, Armenian's have achieved only one goal, and although the Karabakh Armenian's have survived, Armenia's economy is largely inoperative and the population nearing starvation.  Moreover, the "Nagorno - Karabakh Republic", is still far from being recognised by the outside world and Armenia itself.  Therefore, it is also believed that future Armenian - Azerbaiajan economical co - operation is inevitable for both sides, and this will undoubtedly help to solve the Nagorno - Karabakh problem. 

            As was previously mentioned, there are several options for long - term pipeline routes, none of them very attractive, due to instability throughout the Caucasus region.  Unfortunately for both sides, Azerbaijan and Armenia lost the possibility of building an oil pipeline across Armenia and Nakhchivan, to the cost of the Turkish Mediterranean. [1]  It was a unique opportunity for ending the conflict over Karabakh on acceptable terms.  Even now, no other possible route can offer such benefits to both Azerbaijan and Armenia, so it would truly be a "Peace Pipeline".  In my view, it is the shortest route, and it would bring the two countries together economically so that they not only have a state of peace, but good neighbourly relations.

            In 1993, Elchibey Government and Western companies favoured the "Peace Pipeline" project.  They were hoping in this way, to regulate the Karabakh conflict and free Armenia from Russia's influence.  However, Yerevan told Elchibey that neither Azerbaijan nor Turkey would be allowed to run a pipeline through Armenian territory.  Meanwhile, Azeri opposition, criticised the West's particular version of the route through Armenia. [2]   Alternatively, the "Peace Pipeline" project had absolutely the worst outcome for Russia.  If such a pipeline were built, Moscow would have much less leeway in manipulating the two countries against each other.  Also, it could be that another pipeline may be operating in case the Baku - Novorosiisk route does not work very appropriately.  Therefore, having anti - Russian and anti - Iranian policy and the "Peace Pipeline" project, these factors cost Elchibey the Presidency.

            Soon, after signing oil contracts, Azerbaijan's new President H. Aliyev and Western  companies, started to bring the "Peace Pipeline" project to the negotiation table with the Armenian's.  As Michael Orchs describes, Azerbaijan's policy toward the "Peace Pipeline", has been held out as a carrot that does not have any chance of been eaten unless, there is a settlement in Karabakh. [3]  The West has also made it clear, that Armenia can receive the pipeline, if it concedes on the Karabakh issue.

            In actual fact, Azerbaijan's position was unclear over the "Peace Pipeline".  In other words, the Azeri leadership favoured the route through Armenia, because this would enable them to provide for the energy needs of the Azeri's Nakhichevan enclave, which is currently dependent upon Iran and Turkey. [4]  On the other hand, Azeri leadership repudiated the route via Karabakh, Armenia and Nakhichevan to Turkey, considering that this would make the republic strongly dependent on the position of Armenia, which is unacceptable for Haydar Aliyev.  Furthermore, it became obvious that Armenia does not intend to give its consent to the "Peace Pipeline".  According to Gerard Libaridian, Senior advisor to President Levon Ter - Petrossian, "the question of the pipeline construction does not affect the position of Armenia over the Nagorno - Karabakh". [5] Since 1995, the "Peace Pipeline" project has been frozen, due to the two republics who could not negotiate over the Karabakh issue.

            However, the Armenian Deputy Power Engineering Minister Karen Galustyan, made a statement that laying the export pipeline through Armenia, would be $500 million cheaper, than through Georgia. [6] This statement again attracted business circles in Baku, considering the economical benefits of the pipeline.  Nevertheless, Azerbaijanian State Foreign Policy Counsellor, Vafa Guluzade, made it clear that economic co-operation with Armenia is possible, but not before the Karabakh conflict is settled, and we not swap Georgia for Armenia. [7] Despite the Azeri Senior Official's statement, the prospects for the “Peace Pipeline” depend on future Azerbaijanian and Armenian presidents summit over the Karabakh issue.

The Echo of Kosovo Crisis in the Caucasus

            It would have been impossible several years ago to imagine the NATO alliance calling the shots in the former Soviet Republics.  Bombing the Serbian positions in Yugoslavia and deployment of peace - keeping forces in Kosovo, has become one of the actively discussed subjects on Azerbaijan and Georgia's political agenda.  It is obvious that the distance separating the Balkans from South Caucasus is great enough, but the analogy of the problems in both regions, takes an intense discussion of NATO military intervention in the political circles of both Azerbaijan and Georgia.

            Nevertheless, before examining some of the parallels between the Kosovo and Nagorno - Karabakh cases, and NATO's future involvement in the South Caucasus conflicts as a counter balance to Russia, I would briefly like to summarise the Karabakh mediation process, since the establishment of a cease - fire between Armenia and Azerbaijan in 1994.

            Efforts to achieve a resolution have been in progress, long before the 1994 cease - fire, even though, the Karabakh mediation process began essentially in September 1991 with the failed Russian - Kazakhstan peace plan by supervising Presidents B.Yeltsin and N.Nazarbayev. [8] Currently, there are two main mediators in this issue, Russia and Organisation for Security and Co-operation in Europe (OSCE).

            Despite the fact that Russia was eventually brokered, the cease-fire and Moscow had maintained an active diplomacy with both Armenia and Azerbaijan and Russia proved unable to dictate peace in Nagorno - Karabakh.  To put it simply, Russia has been too deeply involved in the conflict from its onset, to act as an impartial broker.  Azerbaijan remains suspicious of Russian motives and long term Eusasian strategy in the Caucasus, thus, has rejected proposals for exclusively Russian Peace - keeping forces in its territory.

            On the other hand, the OSCE began its mediation efforts in 1992.  The OSCE's efforts have been supported by the United Nations (UN) and the international community.  In 1992, the OSCE initiated the Minsk Conference to find a peaceful resolution of the Armenian - Azerbaijan conflict.  The name of the process originated from the capital of Belarus, where the final Peace Conference would be held..  The working body of the OCSE Minsk Conference, is the Minsk Group which includes the USA, France, Poland, Finland, Denmark, Norway, Italy and Belarus. [9]  However, as Edmund Herzig points out, the OCSE's effectiveness during 1992 - 1995, has been hampered by internal differences, by the low priority accorded to Karabakh by some members of the Minsk Group and, also by the reluctance of Western states to commit themselves to peace - keeping operations in the remote Caucasus. [10]

            In December 1996, on Azerbaijan's prompting, the OSCE summit in Lisbon, sought the inclusion of a statement of principles for the resolution of the conflict.  The Principles of the Lisbon Declaration regarding a settlement for Nagorno - Karabakh,  included in the chairman's statement recorded at the Lisbon OSCE summit are:

(1)  Territorial integrity of the Republic of Armenia and the Azerbaijan Republic;

(2)  Legal status of Nagorno - Karabakh based on self - determination, which confers on Nagorno - Karabakh the highest degree of self rule within Azerbaijan;

(3)  Guaranteed security for Nagorno - Karabakh and its whole population, including mutual obligations to ensure compliance by all parties with the provisions of the settlement. [11]

            The Armenian delegation, was the only OSCE member out of 54, to refrain from signing the Summit declaration.  The Lisbon Summit, hailed as a diplomatic victory for Azerbaijan, revealed the extent of Armenia's international isolation, but was far from injecting a new spirit of realism into their position on the issue.  In 1997, the Minsk Group gained greater international weight, when the USA and France, joined Russia as co - chairs, then developed a two- stage proposal:

(1)  Withdrawal of Armenian forces from all regions of Azerbaijan except Nagorno - Karabakh.

(2)  Negotiations on the final status of the Nagorno - Karabakh within Azerbaijan. [12]

            This proposal was accepted by Azerbaiajan and by Armenia.  The Armenian ex - President Ter-Petrosian, announced that Nagorno-Karabakh should not hope either for independence from Azerbaijan, nor for annexation to Armenia.  This compromised position, which held well for a prompt settlement of the conflict between two nations, and which found expression in the acceptance by Armenia of the latest version of the peace plan of the OSCE, cost Ter-Petrosian, the Presidency, as he was forced by Karabakhi opposition, to resign. [13]  His successor, Robert Kocharian, Karabakhi Armenian who was a citizen of Azerbaijan, and avoided Ter - Petrosian's error in placing himself in a position where, he could be accused of betraying Karabakh.  Armenia's new President claimed that they will still support any settlement acceptable to Karabakh, and that Baku should enter into direct talks with Stepanakert.  He also demanded a larger role for the Karabakh Armenian's in the negotiations.  Alternatively, Azerbaiajan has always resisted direct negotiations with Stapanakert, arguing that they would lend legitimacy to the Karabakh leadership, and that if Karabakh Armenian's are represented, Karabakh Areri's should also be, and that in any case Karabakh is really Armenia's instrument, rather then an independent party. [14]

            However, in March 1999, the Minsk Group seemed to change tactics, and proposed the creation of a "common state" composed of two equal entities - Azerbaijan and Karabakh.  The tables had turned again.  Whilst this solution was an acceptable beginning to negotiations for the authorities in Karabakh,  it was immediately denounced by Baku. [15]

            While Baku and Yerevan were struggling over the status of Karabakh in another part of the world, in Kosovo, recent NATO bombing and deployment of NATO peace keeping troops in the conflict zone, it will open new pages in future developments of the Armenian - Azerabaijan conflict.  The success of the NATO’s air campaign against Yugoslavia, and the subsequent deployment of an International peacekeeping force in Kosovo, have prompted Presidents of Georgia and Azerbaijan to suggest that NATO, should intervene to help resolve the deadlocked Abkhaz and Karabakh conflicts, particularly, to reverse the aftermath of what both Georgia and Azerbaijan claims, was ethnic cleansing and to enable persons to return to their homes.  While the indictment for war Crimes of Yugoslav President Slobodan Milosevic, has encouraged the Georgian leadership to launch an  intensive lobbying campaign, to bring  Abkhaz President Vladislav Ardzimba before the International court in the Hague on charges of genocide, Azeri Presidential advisor, Vafa Guluzade has put forth a proposal, that NATO participate, in settling the Armenian - Azerbaiajan conflict over Nagorno - Karabakh.

            According to V. Guluzade, the indigenous population of Kosovo and Karabakh (Albanians and Azeri's respectively), are victims of ethnic purges.  Like Kosovo Albanians, almost a million Azeri's have been driven from their homes and have ended up in refugee camps.  Besides which, 20% of the internationally recognised territory of Azerbaijan, is occupied by the Armenian army.

            Despite resolutions of the UN Security Council (822, 853, 874 and 884 in 1993) which are demanding, the unconditional withdrawal of the Armenian Armed Forces from, occupied territories, the Armenian Government does not seem to care. [16]

            Azeri Senior Official goes far, claiming that if the Kosovo variant were played out in this region, NATO would offer a method of settlement to both, warning parties like it offered a plan to Milosevic in France.  This would boil down to granting a high level of self - rule to Nagorno -Karabakh on the condition of preservation of the territorial integrity of Azerbaijan and the immediate return of all Azerbaijanian refugees to Karabakh, and the remaining seven districts of the country, which are currently occupied by Armenian forces. [17]  He suggests that, in the case of Russia, as an ally of Armenia which has military bases on the territory as an ally, and participate in the peace - keeping operations as it is now doing in Kosovo. [18]

            In spite of the fact that some opposition leaders in Azerbaiajan, such as former President A.Elchibey supports the NATO campaign against Yugoslavia and NATO's future involvement in South Caucasia, anothet opposition leader such as chairman of the "Musavat" party, Isa Gambar, considers  inadmissible bombing  of Yugoslavia by NATO.  In Isa Gambar's opinion, bombing Serbian positions by NATO can also form dangerous precedent for Azerbaiajan.  He tries to confirm his position with that of Kosovo Albanian's, as Karabakh Armenian's attempt to break the territorial integrity of an independent state, so if Azerbaiajan begins the struggle for its territorial integrity, it can meet with the pressures of NATO. [19]

            While Georgia has recently begun to sound much keener to join NATO, and Azerbaijan is sending a contingent of troops to join the Turkish battalion in Kosovo, Armenia is right behind Russia.  Armenia, which is likely to have an equally nationalistic government, following a general election on 31st May in 1999, was one of only three countries that voted against expelling a pan-European organisation for sharing television satellites.

            On the other hand, to answer Azerbaijan's Foreign Policy adviser, Vafa Guluzade's statement which was mentioned above, Armenian Foreign Minister Vardan Oskanyan in his speech at Washington's Centre for Strategic Studies, stated that "if NATO is to get involved (in Nagorno - Karabakh), it must first bomb Baku." [20] The Armenian Foreign Minister also claimed that "our military formations in 1993, were significantly stronger than the Kosovo (Albanian) forces today.  We did the job of NATO.  What NATO has just done in Kosovo, Armenia did earlier: we stopped Azerbaijanian Aggression." [21]

            One factor that is driving Azerbaijan to collaborate more keenly with NATO, is what it sees as a dangerous new flow of arms to Armenia.  Azerbaijan claims that Russia helped Armenia win the war against them for the disputed Karabakh territory.  Whether proactive or reactive, Azerbaijan has appealed for closer relations with NATO to counter balance Russian relations with Armenia.  While Russia it is said, is supplying arms directly to Armenia, since arming combatants is illegal Commonwealth of Independent States(CIS) feud is forbidden, it has deployed advanced S-300 air-defence missiles and MIG-29 fighters to Russian units in Armenia.  Speaking in Armenia on 13th April, Russian air force commander Colonel General Anatoly Kormukov, announced that Armenia's air defence system and Russia's air force are "ready to embark on joint combat duty." [22]

            China also, very recently suplied Armenia with eight missile complexes "Typhoon" and sent instructors to train Armenian officers in using them.  What makes Azerbaijan worried is that "Typhoons" , are used the launch missiles and are capable of reaching the Baku - Supsa, as well as the Baku - Ceyhan Main Export Pipeline. [23]

            Armenian Foreign Minister, described Armenia's arms race as "We will do everything possible to ensure our security.  If Russia gives us arms, we will take them; if the USA gives us arms we will possibly take them too.  While there is the Nagorno - Karabakh conflict, while Azerbaijan rejects talks, and threats are heard from Azerbaijan's defence ministry to resolves the problem by military means sooner or later, we have grounds for concern." [24]

            While parallels between the Karabakh and Kosovo conflict exist, calls to apply the "Kosovo model" in the South Caucasus, as Liz Fuller points out, there is no urgent and compelling need for international military intervention in this region to save our lives. [25] In other words, the NATO air strikes against Yugoslavia, were a direct response to the systematic ethnic cleansing of Kosovo launched by Yugoslav troops in February 1998, under the code name "Operation Horseshoe."  In contrast to this, fighting in Karabakh ended by the signing of formal cease - fire agreements in 1994, despite the fact that this agreement has not prevented sporadic changes of fire, particularly between 14 - 22 June in 1999.

            Alternatively, NATO Secretary-General Javier Solano, made it clear after meeting with Armenian President R. Kocharian in Brussels, that "the alliance was not thinking of deploying and troops in the region." [26]  Despite the fact that at present, USA and the West do not see any role for NATO in the settlement of the Karabakh or Abkhaz conflict, as was previously mentioned, it was even impossible one year ago to think about this.

            As Azeri Senior Official Vafa Guluzade said, "I know that today a NATO troop deployment is not real.  I know that tomorrow it is not real.  But to say that it will never happen would be stupid.  We should be speaking not of beliefs, but of principles." [27]

[1] Maresca T.T. "A Peace Pipeline to end the Nagorno - Karabakh Conflict" Caspian Crossroads Magazine.  (http://ourworld.compuserve.com/homepage/usazerb/6.html).

[2] Stephan Blank "Russia's Real Drive to the South" Orbis - A Journal of World Affairs  39(3). Summer 1995, 72 - 73.

[3] Michael Ochs " Azerbaijan: Oil, Domestic Stability and Geopolitics in the Caucasus" Caucasian Regional Studies, Issue 1, ( http://www.ksg.harvard.edu/csia/sdi/ochs.html 4 March, 1996).

[4] Robert M.Cutler, "Towards Co-Operative Energy Security in the South Caucasus" Caucasian Regional Studies, Issue 1, ( http://poli.vub.ac.be/publi/crs/eng/0101 - 05.html, 1996).

[5] Vladislav  Shorokhov, "Energy Resources of Azerbaijan: Political Stability and Regional Relations".  Caucasian Regional Studies, Issue 1,  ( http://www.vub.ac.be/POLI/publi/crs/0101 - 04. html, 1996).

[6] Azerbaijan News Distribution List "Habarlar-L" Interfax Russian News, No way for Armenia to lay oil Pipeline -  Azerbaijani Official. 7 August  1999.

[7] Interfax Russian News "No way for Armenia to lay oil pipeline" Azerbaijani Official. August 7, 1999.

[8]Fred Hiatt , "Armenia, Azerbaijan Agree to Cease - Fire" Washington Post , 25 September 1991 , A20.

[9] Vafa Guluzade, "Armenia - Azerbaijan Conflict: Peace Process Still up in the Air" (http://azembassy.com/confl/conf1.html)

[10] Edmund Herzig, "The New Caucasus: Armenia, Azerbaijan and Georgia", (London: Royal Institute of International Affairs, 1999), 68 – 69.

[11] Timothy Heritage, "Nagorno - Karabakh  Row Almost Wrecks Lisbon Summit", Reuters 3 December, 1996

[12] Vafa Guluzade, "Armenia - Azerbaijan Conflict: Peace Process Still up in the Air."

[13] Elizabeth Teague, Vladimir Socer and Stephen Foye, "Karabakh Signals New Flexibility On its Future Political Status", Jamestown Foundation Monitor 3 (186) 7 October 1997.

[14] Edmund Herzig, The New Caucasus:Armenia, Azerbaijan and Georgia, 70.

[15] UN and CSCE policies in the Caucasus and particularly Nagorno - Karabakh, is far from the aim of this dissertation, because this in itself is another research area.  See for details:  Olivier Page and Eric Remacle and Michael Mihalka "A marriage of convenience: The OSCE and Russia in Nagorno - Karabakh and Chechnya..  Helsinki Monitor, Volume 7(2)   (http://www.fsk.ethz.cyh/osce/H-MONIT/hel96-2/mihalka.html ,1996).

[16] Azerbaijan News Distribution List "Habarlar-L" Turan: Guluzade comes up with another harebrained scheme  9 July 1999.

[17] Guluzade comes up with another harebrained scheme,  9 July  1999.

[18] Noyan Tapan/ Turan: US Said to Have Urged Kocharian, Aliyev Meeting , 15 July 1999.

[19] Farhad Mammadov, "The Echo of Yugoslavia Crisis in Azerbaijan", Azerbaijan News Distribution List Habarlar-L, 30 July 1999.

[20] Azerbaijan News Distribution List "Habarlar-L" Turan: Azeri agency says Armenian foreign  minister wants Baku bombed", 30 June, 1999.

[21] Turan: Azeri agency says Armenian Foreign Minister wants Baku Bombed, 30 June, 1999.

[22] Phil D. Massey, "NATO presses Russia On Another Front"  (http://www.fivedoves.com/letters/apr95/philm415.html).

[23]Azernews, Chinese Typhoons Jeopardise Azeri Pipelines.   21(1),  May 26 -1 June, 1999.  (http://www.bakupages.com/wwwroot.azernews/an19990526eng1-14asp).

[24] Turan: Azeri agency says Armenian foreign minister wants Baku bombed. 30 June, 1999.

[25] Liz Fuller, "Comparison between Kosovo and Transcaucasus" RFEIRL Caucasus Report, 1 July, 2(26),1999.

[26] David Stern, "Caucasus trio ask for NATO intervention" AGENCE FRANCE - PRESS, 10  July, 1999.

[27] David Stern, "Caucasus trio ask for NATO intervention" AGENCE FRANCE - PRESS, 10  July, 1999.

Copyright © 1999-2001 by Dadash Alishov. All rights reserved.

Web presentation with exclusive permission from the author.

Copyright © 2001 by Virtual Azerbaijan (VAR).