PRESIDENT ALIYEV DISCUSSES GEORGIA, ENERGY WITH

C O N F I D E N T I A L SECTION 01 OF 04 BAKU 000813

SIPDIS

EUR FOR MATT BRYZA

E.O. 12958: DECL: 08/26/2018
TAGS: PGOV PINR PREL KDEM PHUM AJ
SUBJECT: PRESIDENT ALIYEV DISCUSSES GEORGIA, ENERGY WITH
SENATOR LUGAR

REF: A. BAKU 797

B. BAKU 790

Classified By: Ambassador Anne E. Derse, Reasons 1.4 b and d


1. (C) Summary: President Aliyev told Senator Lugar August 25
that his visit to Azerbaijan was very important and timely,
coming on the heels of a stopover in Tbilisi. Azerbaijan,
the President said, was first to send
assistance to Georgia and will continue to do so, despite
grave errors and "irresponsible steps" by Saakashvili that
had put Azerbaijan's sovereignty and independence at risk and
"damaged our common energy strategy." Saakashvili, according
to Aliyev, took measures in South Ossetia "despite my
warnings in Kars" and now Azerbaijan's oil and gas transport
"is in the hands of the Russian army." This happened
"despite all we have done for them," e.g. natural gas supply
during winters. Azerbaijan wants a consistent, common USG
statement on territorial integrity for Georgia and
Azerbaijan, regarding South Ossetia, Abkhazia and
Nagorno-Karabakh. GOAJ's main task now is to secure and
develop Azerbaijan, not protect or save Georgia. Oil and gas
transit projects with Russia and/or Iran are now possible.
In addition, President Aliyev is still sensitive to USG's
no-vote on Azerbaijan's NK resolution at UNGA last spring and
Secretary Rice's comments about Azerbaijan in Prague. Still,
despite all of these difficulties, the United States and
Azerbaijan should continue work on the Southern Corridor.
"We should not give up." End Summary


2. (C) Senator Richard Lugar met August 25 with President
Ilham Aliyev in Baku to discuss the ongoing Russia-Georgia
conflict and implications for Azerbaijan. Of particular
interest was regional stability and security cooperation,
including the need to secure energy development and transport
routes through the Caucasus. Ambassador Derse accompanied
Senator Lugar; the Senator's staff members and Embassy
Pol-Econ Chief (notetaker) also attended.

Senator Lugar's Visit Timely
--------------

3. (C) President Aliyev welcomed Senator Lugar back to Baku,
noting that much had changed in the region since the
Senator's last visit in January. Referring to ongoing events
in Georgia as unprecedented in Azerbaijan's history as an
independent country, he highlighted the importance of the
visit at this time. Azerbaijan's chief aim, he said, is "to
continue our independent path," noting that the
Russia-Georgia conflict had "made that more difficult."
Azerbaijan now wants to play the role of stabilizer in the
region, working to ensure that the conflict does not expand.


4. (C) Senator Lugar reported that he had just come from
Tbilisi, where he had discussed military actions, regional
security concerns and humanitarian assistance. Beyond the
immediate security issues, he said, it appears that Georgia's
economy will suffer greatly, with much infrastructure
destroyed or damaged. "There is a great sense of anxiety
there," the Senator said, adding that the U.S. Government has
begun to deliver assistance. Russian actions in the
Caucasus, he said, had renewed a great debate in the United
States, ranging from security in the Caucasus to a NATO
Membership Action Plan for Ukraine to missile defense and
Poland, with great implications for Azerbaijan.

Azerbaijan Will Assist Georgia
--------------

5. (C) President Aliyev said that Azerbaijan was the first
country, following the crisis in South Ossetia, to offer
assistance to Georgia. He also noted that Yerevan,
meanwhile, had allowed Russian aircraft to strike southern
Georgia from bases in Armenia. "You can tell a lot about a
country by its actions during a time of crisis," the
President said. He reported that Russia, Kazakhstan,
Belarus, Uzbekistan and Armenia were providing assistance to
Ossetia, while Azerbaijan was giving aid to Tbilisi.
Azerbaijan will continue to support Georgia: "whatever they
need, we will do, we will try to do what we can to help
them." President Aliyev acknowledged Georgia's impending
economic problems, and said that the crisis next door would
result in major economic and political costs for Azerbaijan,
too. Besides mounting losses related to disrupted oil and
gas exports, Azerbaijan will experience import and export
delays and cancellations along east-west transport routes.
Since Georgia is Azerbaijan's "natural route" to the West,
when it is cut "Azerbaijan is squeezed by North and South."

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Armenia, meanwhile, will likely suffer from a fuel
(gasoline/diesel) supply crisis.

Saakaskhvili, Georgia Made a Great Mistake
--------------

6. (C) President Aliyev offered sharp words of criticism for
Georgian President Saakashvili and Georgia's role in
initiating or escalating the conflict with Russia.
"Georgia's mis-actions" have undermined regional cooperation
that has taken place for over a decade, the President said.
Saakashvili, he said, had given Russia a pretext for striking
against Georgia. Now these "irresponsible steps" had damaged
the east-west corridor and "threatened the sovereignty and
independence" of Azerbaijan. "I warned Saakashvili recently
in Kars (Turkey) that now is not the time," President Aliyev
said, but Georgia "moved ahead" regardless. This was done
without consultations, Aliyev said, "despite all that we have
done for them." (Note: Azerbaijan has guaranteed supply of
natural gas to Georgia during recent winters.) As a result,
Georgia finds itself with refugees, significant economic
problems and a lack of confidence among international
investors. Worst of all, South Ossetia and Abkhazia "are
lost."


7. (C) Turning to ramifications for Azerbaijan, President
Aliyev lamented that the "Georgian corridor" is under threat.
The Russia-Georgia conflict "has done big damage to our
common energy strategy. Azerbaijan's oil and gas transport
options are now in the hands of the Russian army." This was
Russia's aim, he suggested -- to control energy transport.
Saakashvili gave Moscow the opportunity to do so by force.
Previously, BTC and other routes to market had been secure.
Now, it appears, "anything could happen" along those lines.
"We cannot fight with the Russians," Aliyev said. The "wrong
steps of the Georgians" have made things much more difficult.
Given instability in the region, the President said with
frustration, "I don't know how we can talk about new
projects." However, he continued, Azerbaijan's strategic
vision to export oil and gas to the West still stands, he
said. "We cannot give up on efforts to realize what we
planned, as I discussed with Basescu and Erdogan (who
recently visited Baku)...the EU, Turkey, all who are involved
should continue...we'll see a reaction in the eastern Caspian
if not. We'll continue with them, too," he said. "

Azerbaijan Wants Consistent USG Approach to Territorial
Integrity
-------------- --

8. (C) President Aliyev maintained that the conflicts in
South Ossetia and Abkhazia differ from Nagorno-Karabakh.
Before the current crisis, the President explained, ethnic
Georgians were living in South Ossetia and Abkhazia. In NK,
however, Armenians had long ago expelled Azerbaijanis.
Moreover, he said, although four UN resolutions on
Azerbaijan's territorial integrity had passed in New York,
they have not been implemented. President Aliyev noted that
the USG's language on territorial integrity differed quite
sharply between the separate conflict zones. In Georgia, the
USG is promoting "no compromise" on territorial integrity,
while in NK the USG "is pushing Azerbaijan" to make
concessions. Azerbaijan, therefore, wants the USG to promote
a consistent policy on territorial integrity, i.e., the same
approach and language on South Ossetia, Abkhazia and
Nagorno-Karabakh. "It is good to hear the strong statements
on territorial integrity and the need to resolve the conflict
on that basis" with respect to Georgia, he said. "We'd like
to hear the same for us."


Nobody Would Defend Azerbaijan
--------------

9. (C) "We must now think about our own security," the
President told Senator Lugar. Azerbaijan, Aliyev said, "is
not here to defend and protect Georgia. We must develop our
own country." If Russia's actions go "unpunished," Moscow
"will continue." There is a precedent in the Caucasus, set
in the 1920s, when the Bolsheviks invaded after the collapse
of the Russian Empire. Georgia, in recent years, has been
"the closest U.S. ally" in the former Soviet Union. "If this
is what happens to Georgia, then what would happen to us?"
the President wondered. Azerbaijan, he said, could well be a
future target for Moscow, as it is well known that the
country has major reserves of oil and gas. Baku, he
suggested, would not suppose that NATO or the West would come
to its rescue if Russia or Iran attacked. "Who would defend
Azerbaijan?" the President asked rhetorically. "Nobody!"

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For this reason, Azerbaijan must further develop its military
and purchase more weapons. In previous years, Azerbaijan had
turned to suppliers in the former Soviet Union -- Russia,
Ukraine, Belarus -- for weapons procurement. These
relationships could be expanded, the President suggested, but
acknowledged that these scenarios "come with a price."


10. (C) Aliyev said he hoped Azerbaijan "would not be
forgotten" in the steps the US and the West were planning to
address the Georgian crisis. "We want to be more in the
picture, enjoying the practical benefits, including
security." Aliyev told Lugar that he has raised several times
Azerbaijan's interest in purchasing arms from the United
States. Azerbaijan's ability to build its defenses are
limited because it has no access to US systems. "This should
be reconsidered to allow us access to US products as a
friend, as a stabilizing force, as a country that may be
under threat." Azerbaijan needs "something we can use" to
defend against attacks, given the recent evidence that
disputes can be resolved by force in the region. The NK
conflict is no reason not to sell, Aliyev argued. Saudi
Arabia can purchase arms from the US, and Azerbaijan is
"closer" to the US than Saudi Arabia. He asked that Lugar
take this message to Washington.

Russia, Iran Only Energy Transport Options
--------------

11. (C) Without Georgia, Azerbaijan has no choice but to look
north and south for oil and gas export options. Russia, the
President reported, has already made alternative oil
transport proposals, offering incentives to induce Azerbaijan
to continue to send oil through the Baku-Novorossiysk
pipeline. Initially, an additional 5 million tons (100,000
barrels per day) of Azerbaijan's oil could move to the
Russian Black Sea coast. To sweeten the deal, the Russians
were offering batching and storage options, which would allow
Azerbaijan to avoid mixing its crude oil with lower quality
Urals blend. Azerbaijan is also aware of GazProm's interest
in purchasing Shah Deniz phase II natural gas. Otherwise,
Azerbaijan is considering crude oil "swap" arrangements with
Iran, which would effectively allow Baku to export its oil
through the Persian Gulf. While not committing specifically
to any of these options, the President noted that "we cannot
live without exports."

Turkmenistan Still Very Strange
--------------

12. (C) President Aliyev noted that he had suggested to
Turkey's President and Prime Minister that Ankara should make
good on a 1996 contract to purchase natural gas from
Turkmenistan. He was hopeful that PM Erdogan would travel to
Ashgabat to promote the deal. Azerbaijan's relations with
Turkmenistan are developing, the President said, but
difficult. Ashgabat continues to send diplomatic notes to
Baku, demanding rights to the ACG oil fields and the disputed
Kyapaz-Serdar field. The Turkmen, in fact, "are planning to
sue us in the International Court of Justice." A recent
incident involving the Azerbaijani Coast Guard and a Russian
research vessel, under hire by a foreign firm doing business
in Turkmenistan, caused minor problems in the relationship
just about the time that President Berdymuhamedov visited
Baku. "This is very strange behavior," President Aliyev
said, especially when preparations for the joint
Azerbaijan-Turkmenistan energy conference in early September
were going well. He wondered aloud whether "someone had
gotten to" the Turkmen President.

U.S. Should Reconsider Relationship
--------------

13. (C) President Aliyev does not expect the Russia-Georgia
conflict to be resolved quickly. The Russians will take the
same approach there as they took in Nagorno-Karabakh, he
said. That means multiple rounds of delays, based on visits,
consultations, requests for documents, etc. In the meantime,
it would be useful for the United States "to reconsider" its
security relationship with Azerbaijan. "It is time now for
more understanding of the important role of Azerbaijan" as a
US partner and regional stabilizer "in normal times and times
of crisis." ("We need to elaborate a mutually agreed and
predictable format of relations," he added later.) Aliyev
pressed for greater stability in the region, and a
predictable environment for investors. Senator Lugar agreed,
noting that we need a "broader circle of people in
Washington, DC, who understand Azerbaijan and recognize the
United States' national security concerns here."


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Harmful Rhetoric and Actions
--------------

14. (C) The President complained, though, of harmful rhetoric
from Washington, unhelpful actions and a lack of balance in
reports on countries of the region. The United States, he
said, "should be more attentive to countries like ours."
Senator Lugar said that he was aware of recent difficulties
in the relationship, stemming in part from the Minsk Group
Co-Chairs' decision to vote against Azerbaijan's UNGA
resolution on Nagorno-Karabakh. Aliyev suggested that a
better path would have been for the United States to abstain,
rather than vote no. "This is a part of the history of our
relationship," the President said, adding that "it will not
go away."


15. (C) The President further complained that "minor events"
in Azerbaijan regarding human rights and democracy
development are escalated in Washington, without regional
perspective. Similar events in other Caucasus countries draw
little attention . In recent months, he said, rhetoric from
high-ranking officials had become so heated that it suggested
"a change in policy" vis-a-vis Azerbaijan. Further, in the
run-up to Azerbaijan's October 15 presidential elections,
comments from the United States have been harsh, suggesting
that Azerbaijan's "level of democracy" is lower than that of
its neighbors. Aliyev noted that in Yerevan in March the
Armenia government sent in troops, "killed people," shutdown
the media, arrested opposition leaders and implemented
martial law. Similar events had taken place in Georgia.
Still, "Azerbaijan always winds up on the bottom of the list"
on democratic development.


16. (C) "These statements come from the Congress and the
media, and that is understandable," Aliyev said, noting that
the Armenian diaspora in the United States "spreads bad news"
about Azerbaijan and damages the country's reputation. Such
critical statements from the Administration, however, are not
only hard to understand, the President said, they also
provide an opportunity for "those who do not support our
close relationship to advocate their position," he said. He
urged that the USG not only "be more attentive to countries
like ours," but also, treat the three South Caucasus
countries similarly. "There are problems here, as
elsewhere," he acknowledged. "But we are no worse than our
neighbors...have a unified approach to us and others."


17. (C) Senator Lugar noted that, after his last visit,
Azerbaijan had released several prominent journalists from
prison. Observers in Washington had taken notice. Moreover,
in Congress, the Senator and others were promoting
educational exchange programs. President Aliyev said that he
supported these efforts, and noted that Azerbaijan was
funding its own program to send student overseas for
education. President Aliyev, however, expressed concern that
Secretary Rice in Prague had referred to Azerbaijan as an
"18th century nation," and suggested that "the purpose of
student exchange programs is regime change." These types of
statements, Aliyev said, are not helpful. "We are
cooperating on security and anti-terrorism and we are
cooperating on energy," the President said. Despite the
rhetoric from Washington, he said, the United States and
Azerbaijan should look for ways to broaden the dialogue.

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

18. (C) President Aliyev made clear that he considers events
in Georgia to be very serious, with potentially major
implications for Azerbaijan's independence and security, the
NK conflict, and strategic energy projects. He also
underscored Azerbaijan's intention to stick to its
independent path and broad energy vision, while seeking to
assist Georgia and help stabilize the regional situation. He
renewed his plea, with increased urgency, for more, and more
balanced, USG attention to and support for Azerbaijan,
including on NK and territorial integrity. The President
emphasized repeatedly the importance of Senator Lugar's visit
at this important time, as Azerbaijan -grapples with regional
events and implications for its key national security
interests. Azerbaijan's continued strong support on realizing
the Southern Corridor, providing assistance to Georgia and
helping to calm the regional situation, and remaining a
strong US security partner advances crucial US interests. A
strong USG effort to demonstrate support for Azerbaijan now,
as we grapple with momentous regional events, will pay off.
DERSE