The meeting of the Azerbaijani, Iranian and Russian presidents in Baku on Aug 8, 2016, and the subsequent meetings of the Russian president with his colleagues from Turkey and Armenia have pointed to Russia’s firm intention to stabilize relations in the western part of the Caspian Sea region.
The Baku meeting of Ilham Aliyev, Hassan Rouhani and Vladimir Putin may give a start to a new cooperation format in that region. This triangle has two components: Russian-Iranian relations and Azerbaijan’s relations with Iran and Russia. Now that Iran is free from western sanctions, Russia is seeking to involve it into its Eurasian integration project. Particularly, Putin has suggested creating a free trade area between the Eurasian Economic Union and Iran. This will turn Azerbaijan into a transit territory. In the past two decades, Azerbaijan has acted as a buffer zone between Russia and Iran and has thereby reduced the Iranians’ historical distrust in the Russians. Now too it is trying to act as a bridge between the two nations.
The last meeting of the Russian and Kazakh presidents in Sochi on Aug 16, 2016, has shown that there is a strong Turkish factor in Russia’s wish to expand its economic ties in the South Caucasus.
Russia’s goal here is to create a strong gas cartel with Iran and Azerbaijan. If established, the cartel will act in both eastern, Indian, and western, European, directions. The western direction will be a chance for Turkey to become a gas transit country for gas from Russia, Azerbaijan, Turkmenistan, Iran and Qatar.
So, Russia’s objective during the Baku summit was to become the core of a pro-Russian Caspian union contrary to the American-European plan to create an anti-Russian energy alliance.
Since the fall of the Soviet Union, the Caspian Sea has been the key source of energy for Europe. The Baku summit may create similar chances for gas producers in Iran, Qatar and Turkmenistan.
In Baku, the Azerbaijani, Iranian and Russian energy ministers discussed a project to organize swap gas supplies. This may become a basis for a gas cartel. For the Russians, this would mean higher gas prices in exchange for access to the European market. This would fit well into the EU’s diversification policy as swap supplies might act as a good cover for Russian gas monopoly in Europe.
If supported by Turkmenistan and Qatar, the cartel would have as much as 70% of all gas in the world. For involving Qatar, the sides need to stop the war in Syria and to put an end to ISIL, for Turkmenistan to be in, they need to demarcate the Caspian Sea shelf. This problem is still unresolved and continues to be a big obstacle to the Trans-Caspian project, a pipeline that is supposed to pump gas from Turkmenistan to Azerbaijan via the Caspian Sea. The Caspian nations are still debating if the Caspian Sea is a sea or a lake. If it is a lake, it can have no sea shelf. Until this problem is resolved, the cartel project will have dim prospects.
The Baku summit has shown that Azerbaijan is playing the key role here. And this is not a coincidence considering Turkey’s commitment to review its foreign strategy and to revive the Turkish Stream and South Stream projects. After the Baku summit, energy experts from concerned countries have rushed to forecast most incredible configurations, while before the summit, most of them advocated formats bypassing the region’s key gas supplier, Russia.
To what an extent can the region be reformatted, what a role can Russia play in this process and what consequences may this have?
The most important thing here is that there are serious doubts that the Russian-Iranian-Azerbaijani gas cartel is possible. Iran alone or together with Azerbaijan might well replace Russia as the key gas supplier to Europe as Iran has the world’s second biggest gas reserves (34 trillion cubic meters) and is the second biggest gas supplier to Turkey. In 2016, the Iranians have increased their gas exports to Turkey by 8.8% and the Turks would all but mind to reduce Russia’s influence on their energy market.
Now that Iran is free from sanctions, it may enlarge its gas exports to Europe to as much as 20 billion cubic meters. If Europe continues pursuing its policy to diversify its energy imports, the Iranians may just get a larger foothold on that market but if the EU imposes an oil and gas embargo on Russia, they may hope to replace Gazprom as the key supplier. But this requires certain prerequisites: stable supplies, substantial investments in Iran’s oil and gas sector and more sea gas terminals in Europe.
Already now the Iranians are ready to offer Europe a stable source of gas. More specifically, they might pump gas via TANAP, the pipeline pumping gas to Europe from the Azerbaijani Shah Deniz field via Turkey. The Europeans have already made it clear to the Iranians that this may be a good alternative to Russian monopoly. Even if Iran and Azerbaijan fail to fully replace Russia in Europe, there are also Qatar (who is already supplying LNG to Europe) and the United States (who is going to do it).
So, the gas cartel project may have quite an opposite effect for Russia. If Russia’s conflict with the West continues, it may serve as a basis for deeper anti-Russian sanctions and even an oil and gas embargo.
So, the future of this cartel depends on how sincere Russia, Iran and Azerbaijan are in their wish to cooperate. The Russian-Iranian contacts on Syria have not to date grown into any military alliance. The key reason here might be that Iran cannot forget the fact that Russia backed up the UN Security Council’s anti-Iranian sanctions and does not trust the Russians.
The Americans may use this fact to set the sides against each other.
Energy was not the only topic discussed in Baku. The other topics were transport, commerce, economy, security. Here Azerbaijan has the key role. One of the key projects here is the North-South route, a potential rival to the Suez Canal, a system of modern railroads for cargos moving from Europe to as far as India and Indochina. Being a replica of the road connecting Europe with India in the 17th century, this project may well be attractive to companies in European Russia, the Caspian Sea region and Eastern and Central Europe. In the 17th century, the key factor that kept the road alive was a long-lasting conflict between Ottoman Turkey and Safavid Iran. Today, the factor may be the continuing instability in Iraq, Syria and Kurdish-populated areas.
Azerbaijan has the key role in this project as a transit country. Now that the Azerbaijanis are beginning to earn less from fuel they are searching for compensations and transit is one of the options. But this project may cause a cut in Azerbaijan agricultural exports to Russia as it may open the Russian market for Iranian goods.
Security was also discussed in Baku. Until now, Azerbaijan has shown no wish to cooperate with Russia and Iran in this sphere. But in Baku, security was among the key topics. Particularly, the Azerbaijani and Russian presidents discussed ways to settle the Nagorno-Karabakh conflict. In April, the Russian and Iranian foreign ministers promised their Azerbaijani colleague to consider solutions. Nevertheless, the Nagorno-Karabakh problem remains one of the key obstacles to closer Russian-Azerbaijani partnership as the Russians see no solution that can satisfy both the Azerbaijani and Armenian sides.
Despite this fact, geopolitics and security were among the key motives for Azerbaijan to organize the summit. In early April 2016, the Iranian, Russian and Azerbaijani foreign ministers agreed that even the widest possible cooperation would not imply interference in each other’s internal affairs. It was a certain gesture towards Washington and its criticism of the internal policies in Russia, Iran and Azerbaijan. The Americans and the Europeans keep criticizing Aliyev’s regime, which is not good for its stability. In Baku, the sides also adopted a declaration against terrorism and extremism. Here Azerbaijan may see Russia and Iran as allies against ISIL. The problem is that Azerbaijan has a Sunni minority living in the northern provinces bordering on Russia.
The Americans believe that secular, mostly Shia Azerbaijan can confront Sunni ISIL on its own with no support from Russia or Iran. If Aliyev still opts for Russia and Iran, he may become a persona non grata for the West. He has grounds to doubt the West’s reliability as western NGOs are openly sponsoring anti-Aliyev oppositionists. In this light, Azerbaijan remains a potential target for a pro-Western color revolution.
The logic and the economic benefits of a potential free trade area among Iran, Azerbaijan and Russia are obvious. But here we can see also the geopolitical interests of the former regional empires – Turkey, Iran and Russia. Despite its historical bonds with Iran, post-Soviet Azerbaijan is now much closer to secular nationalist Turkey. For the Americans, Azerbaijan, just like Ukraine, is one of the key geopolitical targets in the post-Soviet area as they believe that regained control over those two nations would give the Russians a chance to restore their empire. So, the Americans’ goal is to prevent this. Energy-fueled prosperity has made Azerbaijan the core of their plans to organize channels that would pump energy from the Caspian Sea to the EU bypassing Russia. Zbigniew Brzezinski has described Azerbaijan as a cork to the bottle containing the riches of the Caspian Sea and Central Asia. According to this thesis, the independence of the post-Soviet Central Asian nations will become senseless if the Kremlin regains control over Azerbaijan.
On the other hand, the Azerbaijani authorities are aware of Russia’s wish to keep things unchanged in the South Caucasus and are all but willing to turn into the Kremlin’s enemy, like Georgia did in 2008. A political alliance among Russia, Azerbaijan and Iran would make Georgia even more isolated as the only ally of the United States and the EU in the South Caucasus and would shatter the positions of the US-EU tandem in the region.
The trilateral formula suggested in Baku is good for all sides, especially Azerbaijan as it will neutralize the ambitions Iran, Russia and Turkey have always had with respect to the region and will cause balance in this post-imperial historical triangle. Russia’s benefit here is a chance to push Azerbaijan away from the United States and the European Union, Iran’s benefit is the guarantee that there will be no U.S. attacks from the Azerbaijani territory.
Throughout the post-Soviet period, Turkey and Iran have both been actively engaged in restoring their historical positions in the Caspian-Central Asian region. Azerbaijan gave Turkey a new foothold in the region. Now that Russia and Iran are getting closer, the Turks are looking forward to turning their country into an energy hub. As regards the Americans, despite their hostility towards Iran, they have always regarded that country as a barrier against Russia’s expansion into the region.
Whether the steps Russia, Iran and Azerbaijan are taking towards each other today will give them political benefits or not depends on a number of factors, this including stability in those countries, first of all, in Azerbaijan. Continuing economic and political stability in Azerbaijan may well revive the idea of “Greater Azerbaijan” among Iranian Azerbaijanis to the detriment of the Iran regime and to the benefit of Turkish nationalists. On the other hand, any change in the post-imperial triangle in the South Caucasus will have an effect on the wavering policy of Azerbaijan. And any instability in Azerbaijan may have serious consequences for the whole region.