AZERBAIJAN: LITTLE PROGRESS ON CASPIAN

C O N F I D E N T I A L SECTION 01 OF 02 BAKU 000880

SIPDIS

E.O. 12958: DECL: 09/17/2018
TAGS: ENRG PREL AJ IR TX
SUBJECT: AZERBAIJAN: LITTLE PROGRESS ON CASPIAN
DELIMITATION; CASPIAN SUMMIT WILL NOT HAPPEN THIS YEAR

REF: BAKU 865

Classified By: DCM Donald Lu, for reasons 1.4 (b,d).


1. (C) Summary: During a September 15 meeting, Deputy
Foreign Minister Khalaf Khalafov related that no progress in
resolving the Caspian delimitation issue resulted from the
latest meeting of the five Caspian state working group held
in Baku on September 4-5. He claimed, however, that
constructive discussions of Caspian environmental, security,
and other agreements occurred. Despite recent Iranian
reports, Khalafov stated that no summit meeting of the five
Caspian presidents is possible in 2008. He cited a lack of
progress and preparation as the reason. Khalafov dismissed
recent Iranian and Turkish Caucasus stability proposals as
hazy, unrealistic, and ultimately unserious. End Summary.

For the 23rd Time, No Progress on Delimitation
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2. (C) The DCM met with GOAJ Deputy Foreign Minister
Khalafov in Baku on Monday, September 15. Khalafov said no
progress on Caspian Sea delimitation was reached during the
recent Baku-hosted meeting of the 5-party Caspian Sea Working
Group -- the twenty-third time this group (consisting of
Deputy Ministers from the governments of Azerbaijan, Russia,
Kazakhstan, Turkmenistan, and Iran) has met. Khalafov said
there was no movement on the part of either Iran or
Turkmenistan toward the delimitation position jointly held by
the other three Caspian states (which signed agreements with
each other in 2003),and that both continued to hold their
traditional positions.

But Potential Progress on Other Caspian Issues
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3. (C) Stressing that these meetings are "not only about
delimiting the Caspian sea bed," Khalafov claimed that useful
discussions had taken place on a variety of other Caspian Sea
issues, including notional joint agreements on environmental
protection, fishing and other "surface access" rights,
security cooperation, and military use/naval issues.
Khalafov indicated that none of these negotiations have
reached a final stage, and called the notional security and
military agreements particularly complicated and challenging,
with "hundreds" of details to be worked out. Nonetheless, he
expressed satisfaction that the five states are studying
these issues together in a healthy, professional atmosphere.

No Caspian State Summit Meeting Before 2009
--------------


4. (C) Khalafov dismissed recent Iranian government
assertions that a Caspian Summit of the five presidents will
be held in Baku this October or November. While agreeing
that it is Azerbaijan,s turn to host such a meeting (the
last was held in 2007 in Teheran),he expressed doubt over
the value of doing so in the absence of any significant
progress in matters of mutual interest. In any event, he
noted, a great many preparatory logistics and other steps
must precede such a high-level meeting, and stated that the
summit could not realistically occur before 2009.

Baku Energy Conference Very Successful
--------------


5. (C) Khalafov called the September 9-10 trans-Caspian
focused Baku energy conference "very successful" (reftel).
He said that the conference was attended by high-level
delegations from Azerbaijan, Turkmenistan, Iran, the U.S. and
other states, as well as representatives of several major
international oil companies, and expressed disappointment
that Russia and Kazakhstan had sent relatively low-level,
"passive" delegations. Khalafov opined that the conference
was potentially very effective in expanding Turkmenistan,s
international energy business sophistication and comfort
level, adding that it also complemented very well
Azerbaijan,s efforts to improve its bilateral relationship
and cooperation with the Turkmen.

Side Talks with Turkmenistan
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6. (C) In this context, Khalafov said that the GOAJ had
several side discussions with Turkmenistan representatives.
The GOAJ felt that progress was made both in strengthening
general cooperation and in movement toward specific bilateral
agreements on telecommunications, ecology, and energy issues.
He expressed hope that the GOT is beginning to realize the
breadth of the GOAJ,s desire for a friendly relationship in
which all mutual problems issues may be discussed in a
constructive atmosphere. He pointedly remarked that the GOT
should realize that "there is no need for international law
courts to resolve our differences," (Note: This is a
reference to the GOT,s ongoing effort to obtain an
international court ruling against Azerbaijan on the issue of
ownership of the Sardar-Kyapaz offshore gas field. End
Note).


7. (C) Khalafov observed that the existence of unresolved
bilateral issues between the two states should not be a bar
to good relations between the two state presidents, nor (as
some have suggested is Turkmenistan,s position) should
progress in resolving these issues be held hostage to the
timing of reciprocal inter-state visits by these presidents.
(Note: President Berdimuhamedov of Turkmenistan visited Baku
in May, 2008; Azerbaijan,s President Aliyev is tentatively
planning to return this visit in early 2009 (see reftel).
End Note).

Iranian Engineering Assistance
--------------


8. (C) Khalafov confirmed a public assertion made on
September 7 by Iranian Deputy Energy Minister Rasul Zargar
that the Government of Iran is assisting Azerbaijan in the
construction of a new hydroelectric plant. Khalafov
explained that this is a 36-megawatt plant located on the
border between Iran and Nakchivan, and intended to provide
needed electricity to the inhabitants of that enclave.
Khalafov described the support as basically technical, and
related to a larger hydro construction project being
undertaken by the Iranians on their side of the border.

Iranian and Turkish Caucasus Proposals Unrealistic
-------------- --------------


9. (C) The DCM asked Khalafov about the previously
unannounced visit of Iranian Foreign Minister Manuchehr
Mottaki to Baku on September 13, during which Mottaki held
separate meetings with President Ilham Aliyev and Foreign
Minister Elmar Mammadyarov. After the meetings Mottaki told
the press that he discussed Caucasus stability, and said that
he had presented some new proposals for resolving issues in
that region. Without providing details, Khalafov laughingly
dismissed the Mottaki,s proposals as lacking in specifics or
substance, on a par with recent Turkish Government
suggestions on this topic, the utility of which he also
dismissed. Khalafov speculated that the GOI is essentially
responding to the Turkish initiative (which does not include
an explicit role for Iran) by coming up with an equally
poorly thought-out one of its own.

10 (C) Khalafov asserted that both of these proposas lack
realism and practicality. For example, h said that Georgia
would not accept participation in a regional group that
includes representatives of Abkhazia and South Ossetia (which
Khalafov said is Russia,s position on the Turkish proposal).
He added that similarly Azerbaijan would not be willing to
accept Armenian participation in such a group in the absence
of any withdrawal of Armenian forces from the occupied
territories.


11. (C) Comment: Khalafov said that he has personally
participated in 20 of the 23 rounds of meetings on Caspian
demarcation. He rolled his eyes at the prospect of any near
term significant progress in this five-party format.
Clearly, the Azeris are working hard on improving relations
with Turkmenistan in the hopes that energy transit and
perhaps longer-term a two-party demarcation agreement might
be possible.
DERSE