Saturday, January 13, 2007

Azerbaijan's Energy Policy

Signs of the energy price hikes in Azerbaijan are showing up on the street, with minibusses stopping service and newspapers increasing prices to compensate. I didn't realize this was actually a 50% increase in cost - couldn't such a measure have been implemented gradually? Such an economic shock could cause street protests, and the government is already trying to suppress dissent by blocking opposition web sites. One reason given for the increase is that decreasing subsidies would free up money for investment in other areas. That had better be rapidly forthcoming.

Meanwhile, the IWPR puts Azerbaijan's row with Gazprom in the context of a general decline in Azeri-Russian relations. Russia still has imperialistic pretensions toward the Caucasus states, which except for Armenia have been resistant at least since Georgia's 2003 Rose Revolution. This alignment between Moscow and Yerevan may be a factor in generally worsening relations, as Baku wants more Russian support for its position on the conflict over Nagorno-Karabakh. Insofar as influence in that part of the world is a zero-sum game, Russia's decline means a rise not only for the United States, but also Iran, which has both energy and influence with its ally, Armenia.

Finally, the Jamestown Foundation looks at possible implications of the death of Saparmurat Niyazov, including a resolution of outstanding issues between Azerbaijan and Turkmenistan that could lead to completion of the TransCaspian oil pipeline and further weaken Gazprom's hand in world energy markets. Whether Niyazov's death played into Baku's calculus in its current Russia policy I couldn't say. By successfully defying Moscow, it could model a different path for the new leaders in Ashgabat, who thus far have indicated a preference for continuing past policies of neutrality which in the economic realm favored in continuation of Russian dominance.


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