Economy, energy and environment
According to indexdotcom, Azerbaijan has become a key country after the inauguration of the Southern Energy Gas Corridor of the European Union in 2008. To consolidate this role contributes, on the one hand, the growing demand for gas coming from E u and, secondly, the increased production of methane guaranteed by the forthcoming entry into production from the field Shah Deniz II and by the pipeline Trans Adriatic Pipeline (Tap). However, the main obstacle to the full affirmation of the Azerbaijani energy strategy is constituted by the lack of agreement with Turkmenistan on the division of the territorial waters of the Caspian, which hinders the preparation of a direct connection between Central Asia and Europe. If the development of the the energy sector has ensured significant growth rates, it has also constituted a brake on the coherent development of the economy. 95% of the country’s exports are in fact represented by crude oil and gas. Therefore the need to diversify the national economy, as well as to ensure a more effective redistribution of energy revenues, are the main challenges facing the Azerbaijani government. The attraction of foreign capital to non-oil sectors is hampered by corruption, poor legislative transparency and excessive state presence in the financial system.
Defense and security
Since achieving independence in 1991, Azerbaijan has shaped its security and defense policies around two goals: the attempt to regain full sovereignty over Nagorno Karabach and the emancipation of Moscow from military guardianship. In this perspective, Baku has pursued collaboration with NATO, through the mechanisms of the Partnership for Peace and the Euro-Atlantic Partnership Council. The details of the cooperation between Baku and NATO were defined in the Individual Partnership Action Plan (IPAP), signed in 2005 and updated in 2008 and 2012. Azerbaijani troops were also deployed in NATO operations in Kosovo and Afghanistan. Firm Russian opposition to the enlargement of the Born in the South Caucasus, however, he contributed to freezing the Azerbaijani goal of joining the Alliance. On the other hand, the indefinite postponement of Georgia’s entry into NATO demonstrates the lack of consensus, among the members of the Alliance themselves, on the prospect of further enlargement to the east. In this context, and in line with the launch of a more balanced foreign policy course, in May 2011 Azerbaijan officially joined the movement of non-aligned countries.
While a military solution to the impasse over the Nagorno Karabach issue appears diplomatically and economically unrealistic, Baku has threatened the use of force as a last resort to reestablish control over the region. The belligerent Azerbaijani rhetoric – an instrument of negotiating pressure and a catalyst for internal consensus – is supported by a steady increase in military spending, which in turn is enabled by revenues from the energy sector. The defense budget approved in 2014 was 4.7% of GDP.
Nagorno Karabach: an always open wound
The conflict in Nagorno Karabach has its roots in the Soviet ‘engineering of nationalities’ which, in the most classical perspective of divide and rule, including the region, mostly inhabited by Armenians, in the Azerbaijan Soviet Socialist Republic. Inter-ethnic tensions, never subsided, exploded starting in 1988, turning into an interstate conflict between Armenia and Azerbaijan in 1991, following the Soviet dissolution. The ceasefire agreement, brokered by Moscow in May 1994, sanctioned the military victory of the Armenian separatist forces – obtained with Russian support – which today control about a quarter of Azerbaijani territory. Since then, the OSCE, through the so-called ‘Minsk Group’ chaired by France, the USA and Russia, has been in charge of mediation for the resolution of the conflict. After a decade of stalemate, in 2004 the Group launched the ‘Prague Process’, aimed at organizing periodic Azerbaijani-Armenian ministerial meetings for the revision of the negotiating principles and the preparation of subsequent rounds of negotiations. The main result of the process was the preparation of the ‘Madrid Principles’: presented in 2007 and updated in 2009, they envisage a gradual approach, determined by the withdrawal of the Armenian forces from the districts outside the Nagorno Karabach region, by the deployment of a peacekeeping force, the return of Azerbaijani refugees and, finally, the decision on the status of the region. On this last point, however, there remains a crucial disagreement between the parties regarding the pre-eminence to be attributed to respect for the principle of self-determination of the population of the region or, rather, to that of the inviolability of the country’s borders, moreover already sanctioned by a resolution of the United Nations General Assembly in March 2008. Although the negotiations continued until 2011 without reaching any definitive agreement, the continuous incidents along the disputed border are causing a race for rearmament and are fueling an increasingly intense and aggressive rhetoric in the two countries. Among the latest incidents, the most serious dates back to July 2014, when gun battles on the border killed at least 15 Azerbaijani and 6 Armenian soldiers.