Iran Strike Could Destabilize Caucasus, Energy Transits

If Israel, unilaterally or with support from the United States, attacks Iran to disrupt its nuclear program, it could have the unintended consequence of destabilizing the Caucasus and emboldening Russia.

Last week, the European Union Monitoring Mission in the area reported a “buildup of Russian Federation armed personnel” along the South Ossetian border with Georgia. The former Georgian province, which has a majority ethnic Russian population, seceded in 1990 and was recognized as an independent state by Moscow after a brief war in 2008.

The increase in Russian troop presence may have to do with the fact, as Robert Bruce Ware writes at Antiwar, that Russia expects a strike against Iran before the end of this year and sees an opportunity to strengthen its position in the region. Read more “Iran Strike Could Destabilize Caucasus, Energy Transits”

Accidental War Waiting to Happen on Europe’s Periphery

A minor incident could cause the frozen Nagorno-Karabakh conflict to turn hot, threatening European oil supplies, the regional balance in the Caucasus and Anatolia as well as increasing the European Union’s dependence on Russia.

The border dispute over Nagorno-Karabakh conflict could flare up again, as recently demonstrated by an alleged ambush of Armenian troops by Azerbaijani forces. The incident, taking in place in Armenia proper, not the contested area of Nagorno-Karabakh, is viewed as an escalation of tensions. Conflict is now more likely due to Azerbaijan’s petrofueled growth of its military capabilities.

A small incident could spiral into a full-blown conflict. While a conflict would threaten European interests — i.e., threaten oil supplies and increase Europe’s dependance on Russian energy — the European Union is expected to do little under such circumstances except condemn Azerbaijan and continue to offer free trade and visas to Armenia. Read more “Accidental War Waiting to Happen on Europe’s Periphery”

Israel Sells Drones, Missile Defense to Azerbaijan

Israel’s Aerospace Industries plans to sell $1.6 billion worth of drone aircraft and missile defense systems to Azerbaijan. The deal is almost the size of the Caucasus nation’s entire 2012 defense budget.

Although tension in the region between Azerbaijan and Israel on the one hand and Iran, which Western nations suspect is developing a nuclear weapons capacity, on the other is rising, EurasiaNet‘s Joshua Kucera argues that the weapons sale has more to do with neighboring Armenia which controls the Azerbaijani breakaway province of Nagorno-Karabakh

Azerbaijan and Israel do both regard Iran’s uranium enrichment program warily as well as its attempts at expanding regional influence. Indeed, Azerbaijan was once considered an excellent target for Islamist propaganda. It’s a 90 percent Muslim Shia nation while sixteen million ethnic Azerbaijanis live across the border in Iran. More than half a century of secular Soviet rule has fractured the religious sentiment in the country however so the ayatollahs’ fanaticism never managed to take root there.

Despite the recent tension and historic divide, Kucera believes it’s highly unlikely that Baku would ever instigate a war. “As much as Azerbaijan has been building up its military,” he writes, “it’s nowhere close to being able to deal with the Iranian military and would be essentially helpless in the face of an Iranian retaliation.”

Israel’s role in the deal has probably less to do with geopolitics than may appear to be the case. The Azerbaijanis simply have little choice but to buy from Israel. American and European legal restrictions prohibit it from buying weapons on the scale that it may like to from Western nations while Russian support for Armenia prevents former Soviet Union suppliers including Belarus and Ukraine from arming the Caspian nation. Kucera concludes, “Israel has no such concerns.”

Azerbaijan, Turkey Sign Gas Pipeline Deal

Azerbaijan and Turkey on Monday agreed to build a pipeline to carry up to ten billion cubic meters of Azerbaijani gas to European markets starting in 2017.

The deal comes as European plans to build a Southern Gas Corridor to transport Azerbaijani, Iraqi and Turkmen gas to the West has struggled to sign up suppliers.

Azerbaijan’s huge gas reserves are crucial to the success of Europe’s plans. A foreign consortium including BP, Norway’s Statoil and Italy’s Eni is developing one trillion cubic meters of gas reserves there. Two pipelines, the Trans Caspian and Nabucco, are supposed to circumvent the South Stream project which is a join venture of Eni and Russia’s Gazprom, to bring gas into Europe.

The €20 billion South Stream pipeline is to run under the Black Sea from Russia to Bulgaria, Serbia and Hungary before branching out into Western Europe by 2015. Nabucco plans to transport Caspian Sea gas along a similar route, into Austria. Read more “Azerbaijan, Turkey Sign Gas Pipeline Deal”

European Southern Gas Corridor Shifts Focus

The purpose of Europe’s Southern Gas Corridor was previously clear — to get Azerbaijani, Iraqi and Turkmen gas to Western Europe where demand is soaring and countries want to decrease their dependence on Russian gas imports. But increasingly, the energy security of Southeastern Europe is a factor to be reckoned with.

European energy commissioner Günther Oettinger, addressing a gas forum in Brussels last week, hailed the prospective Trans Adriatic Pipeline which is supposed to deliver gas from the Greek-Turkish border to Italy. “TAP’s plan, in order to work, will however require that someone else proves trustworthy in delivering the Azerbaijani gas to the Greek-Turkish border,” he pointed out.

There are different contenders. The Nabucco pipeline, financed by a consortium of Central European and Turkish energy companies, is perhaps the most viable option for transporting gas from Turkey to Austria, across Bulgaria, Romania and Hungary.

The Trans Caspian Pipeline is supposed to circumvent Iran and Russia in delivering gas from Turkmenistan to Azerbaijan, enabling Europe to buy gas cheaply from the Caspian region where Total, in September, made a huge gas discovery. The state oil company of Azerbaijan reported at the time that the newly discovered field could contain up to 350 billion cubic meters of natural gas and 45 million metric tons of gas condensate.

The Shah Deniz gasfield, still the largest natural gasfield off the coast of Azerbaijan, produces some seven billion cubic meters of natural gas per day and is estimated to contain the equivalent of 3,000 million barrels of oil.

Nabucco would traverse Southeastern Europe but the commission is worried that the region could still be left in the cold. “Without a leader developing new infrastructure in the region, I’m afraid Southeast Europe will not benefit from new gas coming to the region,” said Oettinger. He reminded his listeners of the infamous Russian-Ukrainian gas disputes of 2009. “Diversified gas supplies also will make gas a more attractive source of energy,” added Oettinger, encouraging countries to move away “from old and dirty installations for electricity generation or domestic heating.”

The commissioner promised that Brussels will help energy providers if they agreed to invest in Southeastern European energy security. “We will do this through our continued focus on strict application of EU Internal Energy Market legislation in these countries and generous regulatory support.”

Existing intergovernmental agreements allow Azerbaijani gas to be delivered to Turkey’s borders with the European Union — i.e., Bulgaria and Greece. Azerbaijan now has to decide whether to go for the Nabucco route and focus on the core European market or do business with companies that deliver gas to Southeastern Europe — which seems to be the preference of the European Commission — from whence it could be transported to other European countries through the internal market.

Iran, Russia Obstruct Azerbaijani Gas Exports

Iran and Russia are trying to hamper Azerbaijan’s gas exploitation in the Caspian Sea which would lessen the West’s energy dependence on these authoritarian regimes. Hoping to secure access to Azerbaijani and Turkmen gas, Europe and the United States are tempted to intervene.

EurasiaNet reports that diplomatic cables from the American embassy in Baku, revealed by the whistleblowers’ website WikiLeaks, show that Azerbaijani officials appealed to the United States for support against Russia’s attempts to frustrate the small nation’s energy policy.

A senior Azerbaijani official told American diplomats in 2009 that both Iran and Russia were trying to take advantage “of the current poor state of Azerbaijani-Turkish relations and stalled gas transit discussions to kill the prospects for transit of Azerbaijani and Turkmen gas to international markets.”

The strategic picture that [he] painted was grim: the strategic encirclement of Azerbaijani and Central Asian energy resources by Russia and Iran, assisted, wittingly or unwittingly, by Turkey.

Azerbaijani-Turkish relations, otherwise strong, in part because they share a nemesis in Armenia and an interest in gas exports, were upset in 2009 due to a price dispute that was settled in 2010.

In their communication with the American embassy, the Azerbaijanis pointed out that they had not the ability to mount a significant military response if either Iran or Russia menaced them overtly.

Their impotence in this regard was evident in November 2009 when Iran moved its new Alborz oil rig into waters that are disputed between Azerbaijan and Iran.

Bilateral relations took a turn for the worse in September of this year when Azerbaijani authorities put the leader of an openly pro-Iranian opposition party on trial for suspected anti-government activity. The Iranian army chief subsequently predicted that Azerbaijan’s president, Ilham Aliyev, “will face a grim future” if he continued his supposedly anti-Iranian policy.

Baku doesn’t necessarily worry that Iran will make good on its threats but they are reflective of frustration in Tehran which is increasingly isolated in the region because of its nuclear weapons program and attempts at exporting the Iranian Revolution.

Azerbaijan, in fact, was once deemed the perfect target for Islamist propaganda but many decades of secular Soviet rule had undermined the religious sentiment in the country and the ayatollahs’ fanaticism never managed to take root there.

Azerbaijan is a largely homogenous nation with a 90 percent Muslim Shia population. Across the southern border in Iran live nearly sixteen million Azerbaijanis who comprise 24 percent of the population there, the largest minority in the Islamic Republic.

An historic Azerbaijani ambition has been to unite the peoples of what it regards as “northern” and “southern Azerbaijan.” Iran is extremely wary of these hopes which could challenge Persian hegemony in the multiethnic theocracy.

After the United States invaded two of Iran’s neighbors in the last decade and declared it a member of an “axis of evil,” Syria, the country’s only ally in the Middle East, now faces a popular uprising that could well topple the Ba’athist regime there to leave Iran without any friends. Azerbaijan fears that Iran could lash out against it in an effort to dissuade Western intervention its own backyard.

Russian meddling has less to do with geostrategy and far more with direct energy interests. A main supplier of oil and natural gas to Europe, Azerbaijan’s independent export ambitions are a potential threat to Moscow.

The Russians tried to prevent the construction of the Baku-Tbilisi-Ceyhan pipeline which became operational in May 2006 and can transport up to fifty million tons of crude oil from the Caspian to Turkey per year.

The South Caucasus Pipeline, which also stretches through the territory of Azerbaijan, Georgia and Turkey, delivers gas from the Shah Deniz field to Europe. A foreign consortium including BP, Norway’s Statoil and Eni is developing one trillion cubic meters of gas reserves off Azerbaijan’s Caspian coast.

The Trans Caspian and Nabucco gas pipelines will both be additional competitors to Russia’s South Stream which is supposed to traverse the Black Sea. If Europe can come together heated by Azerbaijani and Turkmen gas, it will diminish the Kremlin’s ability to play divide and conquer in Central and Eastern Europe where transit countries fear a Russian resurgence and wonder whether Germany won’t put its own energy security before the common European interest.

Europe Seeks to Counter Russian Influence in Caspian

European countries empowered the European Commission to negotiate energy policy with Azerbaijan and Turkmenistan this week in an attempt to diminish Moscow’s influence in the Caspian Sea area and eventually reduce their dependence on the import of Russian natural gas.

European energy commissioner Günther Oettinger’s office hailed the decision on Monday as a “milestone in the realization of the southern corridor” which will link Central Asia with Europe through the Trans Caspian and Nabucco pipelines. Both circumvent the South Stream project which is a join venture of the Italian Eni company and Russia’s Gazprom.

Europe currently receives 25 percent of its gas from Russia. The Nabucco pipeline, which was planned in the aftermath of a series of natural gas disputes in Eastern Europe between Russia and transit countries like the Ukraine, has received political support but remains in the planning stages because there isn’t yet enough gas committed to make it feasible. An increased Turkmen supply could give Nabucco the green light.

Meanwhile, Total, Europe’s third largest energy company, announced on Friday that it had made a huge gas discovery in the Caspian off the Absheron peninsula. According to the state oil company of Azerbaijan, the newly discovered field could hold up to 350 billion cubic meters of natural gas and 45 million metric tons of gas condensate.

Azerbaijan exports small amounts of gas to Georgia, Greece and Turkey from the Shah Deniz field. A foreign consortium including BP, Norway’s Statoil and Eni is developing one trillion cubic meters of gas reserves there.

A joint European energy approach in the region could herald a “zero problems” policy in Eurasia that aims to simultaneously secure Europe’s energy needs and balance against unwelcome Russian posturing in its former sphere of influence.

Germany, which will rely heavily on Russian gas after it has shut its nuclear power plants after 2022, may dissent from a European energy policy. It is invested in the construction of the Nord Stream pipeline which will deliver Russian gas to Europe through the Baltic Sea — bypassing Belarus, Poland and Ukraine.

Different gas routes could enhance Europe’s energy independence from Russia even if Germany refused to submit to an anti-Russian stance. The rest of the union could still come together heated by Azerbaijani and Turkmen gas. An uncoordinated policy, however, would leave Russia in a position to divide and conquer among European nations, selectively playing with gas supplies through the Black Sea, the North Sea and the Ukraine.