PRESIDENT ALIYEV: ON NAGORNO-KARABAKH,

C O N F I D E N T I A L SECTION 01 OF 03 BAKU 000753

SIPDIS

SIPDIS

FOR EUR DAS BRYZA AND EUR/CARC; FOR EB GAVERERICK;
FOR SCA PDAS MANN

E.O. 12958: DECL: 06/15/2017
TAGS: AJ ENRG ETRD PGOV PREL RS TX
SUBJECT: PRESIDENT ALIYEV: ON NAGORNO-KARABAKH,
"CONTINUATION OF TODAY'S FORMAT IS USELESS"

REF: BAKU 739

Classified By: Ambassador Anne E. Derse, per 1.4 (b,d).


1. (C) Summary: On June 13, a frustrated President Ilham
Aliyev told the Ambassador his view of the unsuccessful
Nagorno-Karabakh discussions on the margins of the St.
Petersburg CIS Summit. He concluded that the Minsk Group
format is "useless," and asked that the United States now
impose a settlement on Armenia and Azerbaijan as, he
believes, it has on the Balkans. Russian FM Lavrov told him
that Russia will "most probably" recognize Abkhazian and
South Ossetian independence should Kosovo gain independence.
Aliyev believes that this will spark violence which could
spread to Nagorno-Karabakh. Separately, President Aliyev was
upbeat about his discussions with Turkmen President
Berdimuhammedov concerning the possibility of transiting
Turkmen gas through Azerbaijan. Aliyev also said he would
take care of the problem of denied access by U.S. monitors to
the corruption trial of former Minister of Economic
Development Farhad Aliyev. Reftel discusses the President's
views on missile defense and the Qabala radar station. End
Summary.

Uncertain About How to Move Forward on NK
--------------


2. (C) President Aliyev initiated a conversation with the
Ambassador about the Nagorno-Karabakh peace process and his
recent meeting in St. Petersburg with the Armenian President.
Aliyev commented that the St. Petersburg meeting
accomplished nothing because the Armenian side walked away
from all of the agreements it had made earlier on the
principles of a settlement. "We were ready, but (Armenian
President) Kocharian would not agree to one thing . . . He
told me that he does not want to undertake the responsibility
for this. 'Why should I do it, let the next president,'"
recalled Aliyev. Aliyev warned that the next period
potentially "moves us toward a dangerous scenario." He said
that Kocharian did promise to consult his Prime Minister and
report back to Minsk Group, but Aliyev thought this was
unlikely to change Armenia's position.


3. (C) Aliyev said that there was now little hope that the
Minsk Group process would produce a result and that "the
continuation of the current format is useless." He asked
that the United States "impose" the principles of a
settlement on the two countries, as he believes it did in the
case of the Balkans. Aliyev warned that the U.S. position on
Kosovo may fuel Armenian reluctance to move forward on the
settlement on Nagorno-Karabakh. "Kocharian is waiting for a
Kosovo resolution . . . Our cease-fire regime is fragile.
I'm sure Russia will recognize Abkhazia . . . (Russian FM)
Lavrov told me that Russia would most probably recognize
Abkhazian and South Ossetian independence if Kosovo becomes
independent," noted Aliyev. He said violence and separatism
in Kosovo and the Caucasus provide for an understandable
analogy. The Ambassador countered that the situation with
respect to Kosovo differed; Yugoslavia had collapsed as a
state and Kosovo had been under a UN mandate. In the
Caucasus, the situation is not comparable. Aliyev repeated
that he strongly opposes Kosovo independence because of its
possible implications for Nagorno-Karabakh.

Turkmen Gas through Azerbaijan
--------------


4. (C) President Aliyev then commented on his first meeting
with the new Turkmen President Berdimuhammedov on June 9 in
St. Petersburg on the margins of the CIS Summit.
"Berdimuhammedov is not different from other Central Asian
leaders in style, appearance or logic. But he was very
friendly," Aliyev remarked. On the question of a
Trans-Caspian Pipeline, he had told Berdimuhammedov that
Azerbaijan already had all of the infrastructure ready if and
when Turkmenistan wanted to link the ACG and Petronas gas
fields, effectively creating a Western export route for some
Turkmen gas.


5. (C) Berdimuhammedov responded that this was "interesting"
and that he would be considering this option. Aliyev said
that he thought this deal would happen, but that it would not

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be called the Trans-Caspian Pipeline -- instead perhaps just
the Caspian Pipeline. Berdimuhammedov also told Aliyev that
Turkmenistan has resolved all of its transport problems.
Aliyev took this to mean that the Turkmen and Russians have
worked out their differences concerning use of Russian gas
pipelines. Asked what the U.S. could do to support this
process, Aliyev said that Berdimuhammedov told him about U.S.
and European support for this export route and this clearly
had influenced his thinking. Aliyev urged that the U.S. and
the West continue to exhibit strong support for this option
with Ashgabat.


6. (C) The two presidents also agreed to form a joint
intergovernmental commission to discuss a range of bilateral
issues, excluding Caspian demarcation. Turkmenistan agreed
to reopen its embassy in Baku. President Aliyev told his
Turkmen counterpart that he was ready to resolve the issue of
an old Azerbaijani debt to Turkmenistan from the early 1990's
that had been a sore point in the relationship. Finally, the
two presidents agreed to solve other easier issues first
before attempting to resolve Caspian demarcation. Aliyev
told the Ambassador that he was working on a proposal to
present to the Turkmen involving the resolution of the
northern and southern parts of the disputed area of the
Caspian Sea. The central area contains significant oil and
gas deposits and therefore will be the hardest to settle.
Aliyev reasoned that if the southern area could be resolved
that this would effectively isolate Iran as the other
littoral states would have agreed on demarcation of waters
adjacent to Iranian waters and Iran would have to accept it.

Gas Supply to Greece
--------------


7. (C) The Ambassador briefed Aliyev on recent discussions
in Athens with Ambassador Ries, U/S Burns and Greek energy
officials (septel). Aliyev responded that Azerbaijan will
deliver gas to Greece from the Turkish quota and may even
have additional gas production to ship to Greece. He
estimated that Azerbaijan will produce 16 billion cubic
meters (bcm) (with 8 bcm from non-Shah Deniz production) next
year, which would represent a doubling of production from
2006-levels. He said that Azerbaijan may be able to supply
Greece with domestic production that does not originate from
the Shah Deniz field. He said that with the dramatic
increase in non-Shah Deniz output, Azerbaijan has been able
to provide for 70-75 percent of Georgia's gas demands this
year. The Ambassador noted the great interest by Greece in
importing Azeri gas and stressed the importance that Minister
of Economic Development Heydar Babayev be equipped to respond
to this interest when he travels to Greece for economic talks
in July. Aliyev agreed.

Access to Farhad Aliyev Trial
--------------


8. (C) The Ambassador briefed the President on the
difficulties the U.S. Embassy has had in gaining access to
the corruption trial of the former Minister for Economic
Development Farhad Aliyev. Aliyev reacted with a defensive
question about why the U.S. was so interested in this case
and not in the trial of former Minister of Health Ali
Insanov. The Ambassador told him that the U.S. Embassy had
monitored the Insanov trial, as well, and had initially been
denied access to the trial as well, but the access issue had
been resolved. Aliyev said he did not realize that the U.S.
had sought to monitor both trials. He promised to check on
this issue, then followed up by saying, "I will tell them."

Comment
--------------


9. (C) Aliyev was direct and animated in his frustration
over the failed St. Peterburg talks and the futility, in his
view, of the current process. He clearly felt that both
sides had earlier agreed to basic principles and now
Kocharian is backing away, emboldened by the prospect of
Kosovo independence and Russian recognition of Abkhazian and
South Ossetian independence. Aliyev repeatedly said that the
U.S. was fueling this negative trend by its position on
Kosovo independence. He recalled his judgment of months ago
that Kocharian would not move before the Armenian elections.

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Aliyev's comments on gas production and transit confirm other
statements by senior officials. The President's commitment
to "tell them" about U.S. access to the Farhad Aliyev trial
is encouraging. Embassy monitors continue to seek access
daily.


10. (C) Comment Continued: In a separate June 14 meeting
with the Ambassador and representatives of foreign embassies
and international organizations on media freedom (septel),
Presidential Chief of Staff Ramiz Mehdiyev underscored
strongly and at length the GOAJ's frustration with the Minsk
Group process and stressed to all Aliyev's appeal that a
solution must be imposed.
DERSE