RECOMMENDING GREATER ENGAGEMENT WITH AZERBAIJAN

S E C R E T BAKU 000499

NOFORN
SIPDIS

FOR D, P, EUR A/S FRIED, DRL A/S KRAMER

E.O. 12958: DECL: 05/30/2018
TAGS: PREL PGOV ENRG MOPS KDEM PBTS AJ
SUBJECT: RECOMMENDING GREATER ENGAGEMENT WITH AZERBAIJAN

REF: BAKU 447

Classified By: Anne E. Derse, for reasons 1.5 (b,c,d).


1. (S/NF) Summary: Azerbaijan is an increasingly
important partner for the United States. A Muslim
country bordered by Russia and Iran, it is a firmly secular,
pro-American partner in a region beset by radical Islam. Our
security cooperation is excellent and growing, and could take
on still more importance. Azerbaijan is a leader in efforts
to export new Caspian gas reserves to Europe. Azerbaijan is
also an aspiring democracy, but experiences all the
difficulties inherent to democratic reform in the former
Soviet states. Azerbaijan's massive new oil wealth and
rising regional influence make it a stronger partner, but
also more confident, desirous of "respect" and less amenable
to policy prescriptions. Serious, sustained and balanced USG
engagement is increasingly necessary to maintain the strong
relations that currently support important US interests, and
to promote the reform necessary for Azerbaijan's continued
stability and stronger partnership with the US.


2. (C) Summary Continued: Senior Azerbaijani leaders,
however, increasingly believe that Azerbaijan is not fully
embraced by the United States as a serious partner,
particularly as evidenced by our stance on Azerbaijan's top
policy issue, Nagorno-Karabakh, and by what many here see as
"unbalanced, if merited" criticism of Azerbaijan's democratic
record. There are hints of a sharp debate within President
Aliyev's inner circle with respect to Azerbaijan's
Euro-Atlantic orientation in response to what some perceive
as a failure by the United States to reciprocate the degree
of cooperation that Azerbaijan has extended to the U.S.
Greater and more nuanced engagement with Azerbaijan will help
to ease these concerns and ensure continued progress on our
security, energy and reform objectives. End summary.

SECURITY COOPERATION
--------------


3. (S/NF) Azerbaijan is a long-standing partner in the war
on terrorism. It has 150 troops in Iraq and recently
announced plans to increase its military and civilian
presence in Afghanistan, including 90 troops,
PRT contributions, and new training programs for Afghan
security forces. It grants unlimited overflight and
landing rights for Coalition aircraft bound for Iraq and
Afghanistan, and is working to bring its own armed forces
up to NATO standards through its NATO Individual
Partnership Action Plan. Just this month, NATO has completed
a two year process to certify yet another company for NATO
multinational operations. Georgia and Ukraine's desire to
join NATO is prompting Azerbaijan to think seriously about
its own NATO aspirations. While there are many hurdles to
cross before Azerbaijan will be in a position for a serious
NATO bid, President Aliyev and his Foreign and Defense
Ministers have made clear, privately, to us and to other NATO
partners, that this is the goal. Our bilateral intelligence
relationship is excellent and growing, with substantive and
growing cooperation targeted against al-Qa'ida-affiliated and
Iranian-sponsored extremists. Azerbaijan has indicated it is
willing to do still more on Iran. Azerbaijan's continued
cooperation in the war on terror and as a partner on Iran
supports critical U.S. security goals.

ENERGY COOPERATION
--------------


4. (C) Azerbaijan has been a leader in regional efforts to
diversify energy sources and transportation routes. It is
the most viable, near-term supplier of large gas volumes that
could allow Europe access to alternative sources other than
Gazprom. As both a gas and oil producer and a major transit
country, it is the key to the success of the southern energy
corridor, carrying Caspian resources west. With the
successful launch of the Baku-Tbilisi-Ceyhan and South
Caucasus Pipelines in 2006, Azerbaijan is now poised to
further develop and expand the east-west energy corridor
through the development and transit of new Caspian gas
resources. With full-scale development of the massive Shah
Deniz field, Azerbaijan could become a major gas exporter.
Its gas could potentially contribute to both the Nabucco and
Turkey-Greece-Italy pipelines, but President Aliyev must take
decisions that Russia and Iran will strongly oppose in order
to produce this gas and meet the demands of investors.
Azerbaijan is working with Turkey and European nations to
develop the necessary transit routes and supply agreeemnts,
and at the same time, is working quietly with Kazakhstan and
Turkmenistan to encourage them to turn to the West, rather
than Russia, for the export of their considerable energy
resources. Azerbaijan has consistently supported Georgia in
resisting Russian energy pressure, reinforcing Georgian
independence, and by next year, will be Georgia's major gas
supplier. Azerbaijan's continued cooperation on energy is
essential to advancing the USG's goal of diversified sources
of energy supply in the region and in Europe.


5. (C) Azerbaijan's Western orientation and cooperation with
the U.S. and the West on energy and security attracts
opposition and pressure from both Russia and Iran. This
pressure is growing, and Azerbaijani officials have been
increasingly blunt in noting that in resisting such pressure,
Azerbaijan is "alone. . . not only without an umbrella, but
out in the rain." The GOAJ has made clear that Azerbaijan
seeks a path to a closer relationship with the U.S. which
will provide greater assurance of U.S. support for
Azerbaijan's independence and security, and per President
Aliyev, "is willing to go as far as the US wants to go"
(septel).

POLITICAL AND ECONOMIC REFORM
--------------


6. (C) Azerbaijan, a majority Shi'a Muslim country, is a
firmly secular, pro-American aspiring democracy in a region
beset by radical Islam. Through its membership in the OSCE
and Council of Europe, its partnership with the EU, NATO and
its WTO aspirations, Azerbaijan has pledged to make the
far-reaching, systemic political and economic reforms needed
to ensure its long-term stability and prosperity. Azerbaijan
has the potential to become a model of secular democratic
development in a Muslim country. Azerbaijan, however, is
experiencing all the difficulties in democratic reform
inherent in former Soviet states. Azerbaijan's democratic
and economic reform record remains poor, hamstrung by an
entrenched Soviet-era bureaucracy, endemic corruption and
weak democratic institutions. Developments around elections
in Armenia and Georgia and the example of Russia have
reinforced anti-reform attitudes and provided a handy excuse
for hardliners to slow or try to reverse reform.


7. (S/NF) The government's delay in meeting its many
democratic commitments, including allowing substantive
political debate, fully respecting human rights and more
rapidly developing its institutions, threatens our broader
strategic interests and could lay the groundwork for Islamic
extremism to take root over time. This is an increasingly
contentious issue in an otherwise very good relationship.
Promoting change requires serious and sustained engagement in
the context of a relationship in which the benefits of
implementing difficult reforms, in terms of Azerbaijan's key
national interests, are clear to the GOAJ.

A GROWING UNEASE
--------------


8. (S/NF) Senior Azerbaijani officials - including
President Aliyev - increasingly believe that Azerbaijan is
not fully embraced by the United States as a serious partner.
In the wake of the United States and the other
OSCE Minsk Group Co-Chairs' "no" vote on Azerbaijan's UNGA
resolution on Nagorno-Karabakh and the occupied
territories, we have heard strong messages from senior
leaders questioning our true intentions with respect to
Azerbaijan (reftel). Azerbaijan's position on the UNGA
resolution was an attempt to shift the Nagorno-Karabakh
negotiations in favor of Azerbaijan's position using
sentiment over Kosovo as a lever; President Aliyev also told
us that the UNGA resolution was an attempt to exploit
Russia's hypocritical position of having supported Serbia's
territorial integrity, but now appearing to show less support
for Azerbaijan's. GRPO reporting indicates, however, that
some within President Aliyev's inner circle - including
Presidential Chief of Staff Ramiz Mehdiyev - are actively
promoting the notion that recent USG actions including the
UNGA vote demonstrate that the United States will not help on
Nagorno-Karabakh, does not value Azerbaijan as a regional
partner, and is working to undermine its leadership.


9. (S/NF) In the conspiracy-minded Caucasus, a series of
U.S. public statements - rightfully critical of Azerbaijan's
poor human rights record - appear to have strengthened the
hand of Mehdiyev and others who advocate distancing from
Azerbaijan's Euro-Atlantic orientation (reftel). They argue
that pressure for change and criticism from the U.S. on
democracy and human rights is not balanced by appreciation
for Azerbaijan's contributions in advancing shared security
and energy objectives, by a correct understanding of the
progress Azerbaijan has made on reform despite serious
obstacles, or by support for Azerbaijan's red lines in the
negotiations on Nagorno-Karabakh.

GROWING HUBRIS
--------------


10. (C) Buoyed by burgeoning oil revenues and sky-high
growth rates in the past few years, the GOAJ also has become
more confident and activist in its foreign policy, reflected
in a high volume of foreign visits, the large
number of new Azerbaijani diplomatic missions opening
abroad, increasing GOAJ activism in attracting international
events in Baku, and in public and private statements by GOAJ
officials underscoring Azerbaijan's growing regional
influence.


11. (C) Reflecting this trend, senior officials, including
the President, now regularly relay to international
interlocutors their expectation that Azerbaijan will be
treated with greater "respect" and as "an equal," reflecting
its greater economic and political clout. The GOAJ is also
increasingly resistant to Western policy prescriptions, and
has hardened it attitudes with respect to the
Nagorno-Karabakh conflict, reflecting the GOAJ's belief that
it can use its new clout to achieve its goals.

RECOMMENDATIONS
--------------


12. (S/NF) Given the breadth and importance of our
interests in Azerbaijan, we believe, as we recommended after
the March 14 UNGA vote, that high-level USG outreach to the
GOAJ is needed now to ease immediate tensions before they
harden further, ensure continued progress on our broader
interests and help re-establish a climate in which we have
influence to elicit progress on democracy and human rights in
a sensitive election year. In particular, we need to
reassure President Aliyev of our continued interest in making
progress in all aspects of our relations. In the
personality-driven Caucasus, and especially Azerbaijan, where
senior leaders from Russia and Iran regularly visit and
telephone to extend their influence, personal contacts are
key. We believe that the Secretary's May 28 call to
President Aliyev will go far in reassuring Aliyev of USG
intentions with respect to our relationship.


13. (C) More sustained and serious engagement with
Azerbaijan going forward is also key, however, given growing
pressure from Russia and Iran, Azerbaijan's heightened
potential as a partner in advancing key U.S. interests and
the growing need to provide incentives as well as pressure
for reform.


14. (S/NF) We again urge Washington to conduct as soon as
possible a high-level review of our overall relations with
Azerbaijan in light of developments in the region and
Azerbaijan's rapid transformation to a more influential
regional actor. We need to determine what other steps we can
take now, before elections in both countries this fall, to
underscore the value we attach to Azerbaijan's continued
cooperation on energy, security and counterterrorism in the
face of strong Iranian and Russian pressure and to illustrate
how real progress on reform will benefit Azerbaijan in terms
of U.S. support on its key interests, security and
Nagorno-Karabakh.


15. (S/NF) We also hope that the Secretary, P and Assistant
Secretary Fried will consider visits to Azerbaijan in
conjunction with any travel to the region (the GUAM Summit is
one possibility),and that the Deputy Secretary will
reschedule the visit planned earlier this spring. The visit
of Assistant Secretary for Democracy, Human Rights and Labor
David Kramer is key to giving new momentum to our dialogue on
democracy and human rights,a nd we urge that it take place as
soon as possisble.
DERSE