PRESIDENT MEDVEDEV'S VISIT MEANT TO TELL

C O N F I D E N T I A L BAKU 000675

SIPDIS

E.O. 12958: DECL: 07/11/2018
TAGS: PREL PGOV PBTS ENRG RU AJ
SUBJECT: PRESIDENT MEDVEDEV'S VISIT MEANT TO TELL
AZERBAIJAN "YOU MATTER"

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


1. (C) Summary: According to the Russian Ambassador to Baku
Vasily Istratov, Russian President Dmitry Medvedev's visit to
Baku had one major purpose: to convey the message to the
GOAJ that "Azerbaijan matters" to Russia. Defining the new
relationships as "same book, different page," Istratov
confirmed that there had been no new policy initiatives or
concrete agreements were made on Nagorno-Karabakh or on
Gazprom's offer to buy Shah Deniz Phase Two gas, other than a
decision to discuss the issue further. End summary.

AZERBAIJAN "MATTERS" TO MOSCOW
--------------


2. (C) In a July 8 meeting with the Ambassador, Russian
Ambassador to Baku Vasily Istratov provided a readout on
Russian President Medvedev's July 3-4 Baku visit. Istratov
said there is a general sense within the GOAJ that Russia
simply does not pay attention to Baku and that Russian
policies in the South Caucasus have largely focused on
Georgia and Armenia. He said that the presidential visit was
designed to send the GOAJ the message, for the first time,
that "Azerbaijan matters" to Russia as a partner rather than
to produce major political outcomes. He noted that
Azerbaijan was the third Commonwealth of Independent States
member that Medvedev visited, following Kazakhstan and
Belarus, and that this was intended to be a clear
demonstration of Azerbaijan's significance. Istratov said
the GOR had dealt with the Armenian problem by receiving
Serge Sargsyan the day before the Baku visit - but in Moscow.



3. (C) President Aliyev noted in remarks following the visit
that it represented the "next page" in the relationship, but
Istratov emphasized that this "new page" is in the same book,
meaning that Azerbaijan-Russian relations will continue on
the same trajectory. He believes the relationship began
steadily improving when former President Putin came to power
in 2000, mainly because Putin had positive relationships with
both Heydar and Ilham Aliyev. He thinks the bilateral
relationship will continue to improve slowly and noted that
he heard from Medvedev that he is on "much easier terms" with
President Aliyev than with any of the other CIS leaders, many
of whom Istratov described as "difficult." Istratov
attributed the "personal chemistry" between Medvedev and
Aliyev to their similarity in age and background, as young
educated modernizers in marked contrast to other CIS leaders.
Istratov spoke highly of Aliyev, saying he has impressed
many in Moscow, including Deputy Foreign Minister Kislyak.
Istratov described Aliyev as "articulate in three languages,
smart, and in command of all the details."

SHAH DENIZ PHASE 2 GAS AND NK
--------------


4. (C) According to Istratov, Gazprom's offer to buy Shah
Deniz Phase Two (SD2) gas from Azerbaijan was discussed, but
nothing was decided other than an agreement that Gazprom and
SOCAR would discuss the issue further (COMMENT: SOCAR
Vice-President for Marketing Elshad Nassirov confirmed this
in a July 10 conversation. END COMMENT). The Russian
Ambassador noted the talks could take "days, weeks, months,
or even years." He believes that the decision on SD2 gas
will be based on Azerbaijan's commercial interests, but given
the interest in SD2 gas from a number of different countries
Istratov described Azerbaijan as "a young girl looking at her
suitors." Istratov commented that President Aliyev is
knowledgeable about energy and that the GOAJ will only sell
its gas for "a fair price." Istratov joked that there was
quite a change in tone in Russian-Azerbaijan discussions on
gas from the days when Russia just threatened to "turn it
off."


5. (C) Istratov said that Nagorno-Karabakh was discussed, but
nothing was decided. He pointed out that Russia emphasizes
that it is part of the Minsk Group Co-Chairmanship and not a
country that should serve as a "go-between" in the
negotiations. Istratov said that GOAJ officials do not raise
the possibility of Moscow pressuring Armenia over NK
officially, but they do occasionally joke about this prospect
in more informal settings.


6. (C) Istratov largely dismissed the importance of the
document signed between the two countries, the Declaration of
Friendship and Strategic Partnership. According to the
Russian Ambassador, the language in this document, including
the language on Nagorno-Karabakh, was essentially cobbled
together from previous agreements signed between the two
states. Language that states neither country would allow its
territory to be used for an attack upon the other dated from

the era of problems in Chechnya and was not aimed at NATO,
Istratov said. He noted that the visit was only announced a
month ahead of time, giving the governments little time to
prepare any major agreements.


7. (C) The visit included an official one-on-one meeting
between the two presidents, followed by a meeting of the
delegations. Istratov noted that the large Russian
delegation included several businessmen and "six
billionaires," three of whom were Azerbaijanis, including
Vagit Alekperov, described as the "richest Azerbaijani in the
world" and the head of Lukoil. Istratov noted that two more
agreements, one on cross-border investments and one on
Azerbaijani property in Russia, are more substantial than the
ones signed in Baku and are still being negotiated. These
agreements are necessary for more Russian investment to come
directly to Azerbaijan. Currently most investment comes
through other countries, including Cyprus. Beyond these
commercial links, Istratov noted that Baku has a tight bond
with Moscow. Flights between Baku and Moscow are at the same
level as they were in the 1980s, and 2 million Azerbaijanis
work in Russia. Istratov noted that two years ago there was
concern that Russia would pressure its Azerbaijani population
and stressed that he does not think this was ever seriously
considered. He also noted that he believes migration flows
could be reversing as the Azerbaijani economy improves; he
believes Dagestanis are increasingly coming across the border
to work in Azerbaijan.

COMMENT
--------------

8. (C) Although President Medvedev left Baku without any
significant, concrete agreements, Istratov was confident the
GOAJ received the intended message: Moscow is paying
attention to Azerbaijan as a country now worthy of
partnership. The GOR organized the trip to demonstrate to
the GOAJ that Moscow recognizes that Azerbaijan is
increasingly important in the region. The presence of so
many businessmen in the Russian delegation suggest that
Russia values commercial links to Azerbaijan. We continue to
believe that Russia is unlikely to obtain an agreement to buy
significant quantities of SD2 gas and agree with Istratov's
assessment that this issue will stay open in the near future
as Azerbaijan tries to find the best deal for its commercial
and political interests.
DERSE