Azerbaijan’s oil diplomacy or strategy of success in asymmetric negotiations

September the 20th was commemorated as the 18th anniversary of signing of the "Contract of the Century" initiated by Azerbaijan.

Essentially, the quest for massive energy and infrastructure projects has always been on the agenda. Bearing various titles, countries large and small, had proposed large scale projects, thus maintaining the system of international affairs engaged. Ultimately, however there were no viable projects other than Baku-Tbilisi-Ceyhan oil pipeline, Baku-Tbilisi-Erzurum gas pipeline and Baku-Tbilisi-Kars railroad line. The TANAP project, co-sponsored by Azerbaijan was signed this year, becoming a reality.

Like it or not while reviewing the aforementioned projects I thought to look back at the time of the signing of the "Contract of the Century" the initial and the most arduous one for Azerbaijan: was is it really that at the time Azerbaijan’s political, economic, geopolitical and technological position emerged stronger than that of the present capabilities some regional and global powers possess, that Azerbaijan singlehandedly managed to realize such an enormous project?

Should we take a more comprehensive overview of the state of affairs of the time we can clearly see that situation was completely different.

Geologically, there was a prevailing uncertainty over the volumes of hydrocarbons in the Caspian region; due to lack of knowledge of the reserves of energy resources of the region the viability of significant investment was questioned.

Technologically, a newlyindependent state was almost deprived of necessary means of extraction of existing energy reserves.

Geographically, without a direct access to international markets Azerbaijan had limited options of delivering energy products to global consumers. Ongoing conflicts along the route of the future pipeline highlighted security concerns; Armenia-Azerbaijan conflict, terrorism issues in Turkey, Abkhazia and South Osetiya conflicts in Georgia, Chechen conflict in Russia and also broader concerns of Taliban threat in Afghanistan and possible US sanctions against Iran.

Economically, Azerbaijan’s triple digit inflation, mere couple of millions of dollars state budget, looming external debt, halts of production, food shortages and other macroeconomic problems kept investors away.

Politically, threat of a civil war, feeble administrative and political leadership, lack of political trust and civil unrest comprised core problems country had to face.

Diplomatically, heightened tensions with some neighboring countries and growing Armenian propaganda were detrimental to country’s image abroad.

Geopolitically, clashing interest of foreign powers in the Caspian Sea region had further deteriorated the situation.

Finally, militarily, Armenian military aggression against Azerbaijan, resulting in occupation of some 20% of country’s territory and in 1 million refugees and internally displaced persons, had placed the country in the grave risk zone.

Ultimately, underlying risk analysis of foreign investment made the 60 billion dollar venture look nearly inconceivable.

Regardless of challenges of the time, Azerbaijan had negotiated the deals with the giant oil companies of the superpowers and succeeded. The "Contract of the Century" was signed.

There were two fundamental reasons to that. Firstly, it was Heydar Aliyev, genius, who stood at the helm of Azerbaijan. At various times, serving as a member of the Political Bureau of the Soviet Communist Party, holding position of the First Deputy Chairman of the Council of Ministers of USSR and finally being a general of the Soviet State Security Committee, he had truly benefitted from vast experience on the global scale, enabling him to predict the trajectory of the events and take necessary steps. Secondly, Azerbaijan was genuine about its position, standing ready to deliver on the promises made. Foreign policy not aimed against any country, building the environment of strong cooperation, rather than competition, it was a balanced policy. Genuine were also the intentions in the domestic politics, perceived to enhance the wellbeing of every citizen, it had best served the interests of the state and the people.

Owing to proper foreign and domestic policy, today country enjoys unprecedented growth and development. Internal stability is in place and country’s international significance has dramatically grown.

Regarding the matters superficially, some try to attribute these achievements to oil. Essentially, this is obviously a false conclusion. Because today, there are number of countries in the world blessed with far greater reserves of oil, gas and other natural assets. Few can boast of the achievements made by Azerbaijan. There is a distinctive feature to Azerbaijan, and that is a solid choice of foreign and domestic policy. Revenues from oil are sourced to the development of non-oil sectors of the economy and the building of human capital. Sustainable development has been secured and positive momentum is widespread throughout the other areas of the economy.

Choice of proper policy had paved the way for another significant feature, and that is the unity between the leader and the people.

In some countries, political leaders, totally ignoring the interests of the people, rely solely on external factors, while aiming to preserve the power. However, based on international experience, this policy is proven to be doomed for failure. Futile are the games played at the expense of the interest of the people, under the pretext of politics. Events, evolving in the much wealthier that Azerbaijan Arab countries, and also in our vicinity testify to the fact.

Leader who strives for his country, for his people, for the state and the nation can never fail. Feelings are always reciprocal. Leader who loves the nation is cherished and supported by its people. In that case there is no need for the foreign patrons and similar to any other game there is a golden rule of politics: no substitutes for the winning team.

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