EC VISIT TO AZERBAIJAN HEAVY ON NEIGHBORHOOD

1. (C) SUMMARY. During his April 7 visit to Baku, EC RELEX
Deputy Director-General Fotiadis discussed mainly European
Neighborhood Program issues and some energy issues. Sticking
points for adoption of Azerbaijan's draft ENP plan appear to
be language on regional cooperation, lingering Cypriot
resentment over the Azerbaijani flight to north Cyprus last
July, and Azerbaijan's own insistence that the document
reference Azerbaijan's territorial integrity. On energy
issues, the GOAJ tried to interest the EC delegation in
trans-Caspian gas pipelines on political and strategic
grounds but the EC representatives only responded that any
such pipelines have to make commercial sense first. BP
representatives in Baku later voiced their dissatisfaction
with Fotiadis's energy advisor, Fowzy Ben Sarsa. END SUMMARY.



2. (C) On April 11, Baku Europa House coordinator Wolfgang
Sporrer briefed Emboff on the April 7 visit to Azerbaijan of
Fokian Fotiadis, Deputy Director-General of the European
Commission's External Relations unit (RELEX). Mr. Fotiadis
was accompanied by his energy advisor, Fowzy Ben Sarsa. They
met with President Aliyev, Prime Minister Rasi-zade, Deputy
Foreign Ministers Azimov and Mammadguliyev, Energy Minister
Aliyev and Rovnag Abdullayev, president of SOCAR, the state
oil company. Fotiadis and Ben Sarsa discussed both the draft
document for Azerbaijan's participation in the European
Neighborhood Policy (ENP) and energy issues.



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ENP "STICKING POINTS"


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3. (C) Sporrer identified three "sticking points" preventing
finalization of the ENP document that were raised during the
trip. He added that Azerbaijan has also proposed that the EU
assist with the construction of the planned
Baku-Akhalkalaki-Kars railroad, but said the EU has demurred
and the issue will probably not go any further. Sporrer said
that two of the sticking points are somewhat less serious
than the third. One is the ENP's standard call for "regional
cooperation." The GOAJ has informed the EC that there can be
no regional cooperation while Armenia continues to occupy
Nagorno-Karabakh and associated territories. Sporrer said
that this issue can likely be finessed by language --
"everyone knows there will be no cooperation between
Azerbaijan and Armenia."



4. (C) A second sticking point involves Cyprus --
specifically, continuing Cypriot anger over the
privately-chartered flight from Azerbaijan to northern Cyprus
that took place in July 2005. Sporrer said that the Cypriots
are demanding a written apology from Azerbaijan, and that
while the GOAJ has assured Cyprus that there will be no
further flights, it has no intention of issuing an apology.
While Cyprus threatens to block Azerbaijan's ENP process
without a written apology, Sporrer feels that in the end
Cyprus will not want to isolate itself from other EU members
by doing so. The feeling in the EU, Sporrer believes, is
that either all three south Caucasus countries should have
their ENP plans approved together, or none of them should be
approved.



5. (C) The most serious issue blocking finalization of
Azerbaijan's ENP plan, says Sporrer, is the GOAJ's insistence
that the document reference the "territorial integrity of
Azerbaijan." This is causing many difficulties. The EC is
trying to persuade the GOAJ that this document is only a
technical plan and should not get into political issues, but
the GOAJ has not dropped the idea. Many EU members would
likely object to such language, says Sporrer, some on grounds
of being pro-Armenian, some on the grounds of not wanting to
make the work of the Minsk Group more difficult, and some on
grounds of keeping the language of Azerbaijan's ENP document
consistent with the ENP documents of other countries.



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ENERGY ISSUES


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6. (C) Sporrer said that the GOAJ raised the issue of
trans-Caspian gas pipelines with the RELEX delegation. The

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GOAJ made the argument that such pipelines are of political
and strategic importance and that the EU therefore should
assist in their construction. The EC representatives
responded that any such projects must be assessed as
commercially viable before anything else. In other meetings
with RELEX, Statoil representatives rised the issue of how
the EU's anti-monopoly polcy could block the SCP consortium
from selling Shah Deniz gas in Europe. However, the GOAJ did
not raise this issue.



7. (C) In a separate meeting with Emboff, BP officials
conveyed their dissatisfaction with the visit and with Ben
Sarsa in particular. They characterized Fotiadis as genial
but depending entirely on Ben Sarsa for advice on energy.
The BP representatives characterized Ben Sarsa as
ill-informed on Caspian energy issues and prone to make
factually incorrect if not bizarre statements -- at one point
alleging that Azerbaijan is dependent on Iran for natural
gas, and at another point implying with a smile that the BTC
project is funding Azerbaijan's opposition. The BP officials
also allege that Ben Sarsa openly prefers "continental"
companies over "Anglo-American" companies. Whether the above
is an accurate characterization of Ben Sarsa or not, BP does
not appear to see the EC as a serious interlocutor on Caspian
energy issues.
HARNISH