Azerbaijan – The Emerging Caucasus Energy Player

By: Meir Javedanfar

09/02/2009

At this year's WEF meeting in Davos, the economic crisis took over the agenda, for understandable reasons.

However the issue of energy was not ignored. A whole session was dedicated to this important subject. Entitled “Energy Outlook 2009”, the panel was very informative, and original.

The originality of the panel was due to its Azerbaijani participant. When one talks about oil and energy giants, Azerbaijan is not the first country which comes into mind.

However, this small Caspian state has managed to turn itself into a regional hub. Not one which solely relies on energy for economic gains, but also a country which is becoming a regional player.

To start with the Azerbaijanis seem to understand that in the Beyond Oil world, gas, which has bigger resources than oil, will be the stop gap until such times that nuclear solar and bio fuels take over.

Azerbaijan has its own gas and oil resources. However what is interesting is that it has allowed itself to become a major energy transit hub. At least 7 energy pipelines run through it. This has given substantial weight to its position in the energy market.

What has upgraded Baku's importance is that it si the biggest investor in Georgia. This gives it important say in the all important Georgia vs Russia conflict.

What is even more important is that in the face of growing Russian influence, Western countries, especially the US will come to rely more on Azerbaijan as means of checking Russia's influence. This will add more strategic weight to Azerbaijan's standing.

Azerbaijan is not without its problems. Armenia is occupying Ngorno Karabakh, a stretch of land which Azerbaijan lost to Armenia in 1994. no solution is seen on the horizon for this important issue. Furthermore, the upcoming referendum on president Aliyev's ability to maintain his position as president may lead to more political differences, and infighting.

Azerbaijan's future, depends on its leadership. If the current planning for its energy market is to be used as a yardstick, it has the potential and resources to transfer itself into a Beyond Oil economy.

Meir Javedanfar is the co-project manager (with Gordon Wollgam) of the Beyond Oil project (www.beyondoil.net)