Oil fuels more independent Azerbaijan
A railroad deal will soon link the ex-Soviet outpost to European markets.
from the March 6, 2007 edition
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Local officials said they didn't need international aid. Instead, Azerbaijan offered to pick up Georgia's $220 million tab, to be repaid over 25 years at an annual interest rate of 1 percent.
And while the railroad will bring modest gains to Georgia, it is Azerbaijan that stands to benefit most. A link to Turkey will allow it to ship up to 20 million tons of goods each year straight to its prime target: Europe.
"Azerbaijan wants to be as close to Europe as possible," says Khazar Ibrahim, spokesman for Azerbaijan's Ministry of Foreign Affairs. "We think that this railroad will be another step."
Europe wants closer ties to Azerbaijan, as well, at least according to German Chancellor Angela Merkel, whose country holds the EU presidency this year. Following a recent meeting with Azerbaijani President Ilham Aliyev in Germany, she announced a "serious interest in expanding our mutual economic links."
The surest sign of Azerbaijan's growing clout came this December, when Russia announced that it had doubled Georgia's gas prices – an increasingly used pressure point for former Soviet countries on the outs with Russia. Georgian and Russian relations reached an all-time low this past year.
Azerbaijan intervened, promising to supply Georgia with low-priced gas. "Azerbaijan made a very strategic decision to help Georgia out, despite pressures from the Kremlin," says Baku-based political analyst Fariz Ismailzade. "They're securing a stable Georgia and, with it, a stable transit zone for their own exports."
Afterward, Russia announced that gas prices for long-time ally Azerbaijan would be doubled, too, despite previously solid relations and a 2004 deal that promised stable prices until 2009. While some argued that Russia raised prices to meet its own increasing gas demands, Azerbaijani politicians saw the increase as Russia's attempt to stop it from exporting to Georgia.
In a Jan. 19 Wall Street Journal op-ed, Azerbaijani Foreign Minister Elmar Mammadyarov wrote that Russia had given "more than a market message" that it is "unacceptable for Azerbaijan" to help Georgia. President Aliyev told a Moscow radio station that Azerbaijan would not be "subject to commercial blackmail."
Instead, Azerbaijan shut off oil exports to Russia, while debating whether to also pull Russian networks off the air in retaliation.
"If they didn't have the margin for maneuver they now have, they probably wouldn't have taken the chance. They knew they could stand up to Russia and not get hurt," says Mr. Blank of the US Army War College.
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