AZERBAIJANI FONMIN AND DEPUTY SECRETARY NEGROPONTE

C O N F I D E N T I A L BAKU 000946 SIPDIS FOR EUR/CARC E.O. 12958: DECL: 10/08/2018 TAGS: PREL PGOV ENRG AJ SUBJECT: AZERBAIJANI FONMIN AND DEPUTY SECRETARY NEGROPONTE REVIEW BILATERAL ISSUES Classified By: Ambassador Anne E. Derse for reasons 1.4 (b) and (d). ¶1. (C) Summary: Azerbaiijani Foreign Minister Elmar Mammadyarov affirmed the importance of deepening bilateral cooperation, especially in the context of Vice President Cheney's recent trip and Azerbaijan's "vulnerable" geopolitical position in the aftermath of Russia's invasion of Georgia. Mammadyarov said there is a "window of opportunity" in resolving the Nagorno-Karabakh conflict, though Russia's intentions remain unclear. Commenting on Azerbaijani-Turkish negotiations over a gas-transit agreement, Mammadyarov said Ankara's insistence that it be allowed to buy large volumes of Azerbaijan's Shah Deniz Phase II gas exports was "like a Gazprom offer." End Summary. ¶2. (C) Foreign Minister Mammadyarov affirmed the importance of deepening bilateral cooperation, especially in the context of Vice President Cheney's recent trip and Azerbaijan's "vulnerable" geopolitical position in the aftermath of Russia's invasion of Georgia. Mammadyarov suggested the two sides further examine this issue "substantively" after the Azerbaijani presidential election. The Deputy Secretary said his visit is a follow-up to Vice President Cheney's trip, with the intent to reaffirm the long-term U.S. commitment to expanding relations with Azerbaijan, particularly in the security sphere. Nagorno-Karabakh -------------- ¶3. (C) Noting his recent discussion with Secretary Rice at UNGA on resolving the Nagorno-Karabakh (NK) conflict, Mammadyarov said there is "a window of opportunity," especially as Armenian President Sargsian knows "he needs to make a move." Mammadyarov said the "easier part" is encouraging flexibility from Yerevan, while winning Moscow over is more difficult. Mammadyarov reiterated the GOAJ's position to build on the basis of the Basic Principles as the way to move forward on resolving NK. He also highlighted Baku's willingness to lure Armenia through "investment opportunities," not excluding possible energy cooperation. The Azerbaijani and Armenian Presidents will meet in Moscow, and Mammadyarov recommended the Minsk Group Co-Chairs come to the region after Azerbaijan's presidential election. In the context of resolving NK, Mammadyarov described Turkey's Caucasus Stability and Cooperation Platform as "broad" and potentially helpful in balancing Russia's regional influence. ¶4. (C) In response to Negroponte's question of how the U.S. can help to the resolve the conflict peacefully, Mammadyarov quipped that the U.S. should not vote against the GOAJ's UNGA resolutions on NK. (Note: this was a reference to the Minsk Group partners' decision in the spring to oppose Azerbaijan's UNGA resolution on NK -- a decision that created much consternation afterwards in Baku. End Note) Returning to a more serious line, Mammadyarov said the conflict should be resolved by the OSCE,s Minsk Group, with Bryza and his fellow French and Russian Co-Chairs helping to negotiate agreement on the Basic Principles. The core of the solution should include: a fixed timetable for withdrawal of Armenian troops from the 7 territories around NK; reopening of Armenia,s lines of communication; restored business ties and investment between Azerbaijanis and Armenians in the territories; and potential energy connections. Mammadyarov added that if Armenia agreed to withdraw its troops, the utility of force would decrease, echoing President Aliyev,s suggestion to DAS Bryza 10 days earlier that Azerbaijan was considering a possible non-use-of-force pledge. Energy Update -------------- ¶5. (C) Commenting on Azerbaijani-Turkish negotiations over a gas-transit agreement, Mammadyarov said Ankara's insistence that it buy large volumes of Azerbaijan's future Shah Deniz Phase II natural gas exports was "like a Gazprom offer." Mammadyarov affirmed the need to continue working with Ankara, while noting the Turks "are stubborn." In response to Negroponte's direct question of whether the Foreign Minister conducts negotiations with Ankara, Mammadyarov vaguely said "we" conduct the talks. (Note: At this point, the primary negotiations are commercial, between Turkey's Botas on the one side and Azerbaijan's SOCAR and the Shah Deniz Consortium on the other. End Note) ¶6. (C) Mammadyarov observed that the Turkmen had submitted a "very interesting" UNGA proposal dedicated to pipeline security. The GOAJ sought to include language in the proposal supporting the sovereignty of states. Mammadyarov commented as an aside that Azerbaijan's negotiations with Gazprom on gas sales had "failed" as the Russians' idea of what constitutes market price ("they have their own formula") differed from that of the Azerbaijanis. ¶7. (C) Mammadyarov gave brief updates on the timing of several upcoming energy conferences. President Aliyev "probably" will go the January Budapest conference. The GOAJ also is aware of a ministerial-level conference on the horizon in Brussels. President Aliyev will host an energy summit in mid-November (to follow up previous meetings in Krakow, Vilnius, and Kyiv),which will focus primarily on oil and deepening cooperation with Ukraine, Poland, and the Baltic countries. The GOAJ is not confirming its participation in the preceding events until the Presidential election has been held and a new government has been confirmed. (NOTE: According to Azerbaijani law, the results of the election need to be certified by the Central Election Commission and the Constitutional Court, then the ministers will resign and President Aliyev will appoint a new government. The election is October 15. Expectations are that the inauguration will be at the end of the month. End Note) Coalition Contributions -------------- ¶8. (C) Mammadyarov said the GOAJ understands the need to redeploy Azerbaijani troops from Iraq, while questioning whether the Iraqis are ready to provide for their own security. On Afghanistan, Mammadyarov observed that the Azerbaijani Parliament has approved a doubling of Azerbaijani peacekeepers deployed to Afghanistan to 90, alongside several proposed Azerbaijani civilian and business contributions in northern Afghanistan. The Deputy Secretary shared Secretary Rice's vision of reinforcing a north-south corridor among India, Pakistan, Afghanistan, and the Central Asian states to weaken these states' reliance on Russia. New Embassy Compound -------------- ¶9. (C) Concerning the new Embassy compound, Mammadyarov acknowledged the GOAJ's need to clarify when and how the U.S. can take possession of the new property in a timely manner. Comment -------------- ¶10. (C) Mammadyarov appeared tired, as he had just arrived in Baku from UNGA. Mammadyarov's reference to the U.S. vote against Azerbaijan's failed UNGA resolution was a partial jest and partial reflection of genuine frustration. The GOAJ certainly is enthusiastic about several recent senior level U.S. visitors. Mammadyarov's remark suggests, however, the GOAJ's broader, lingering questions about the U.S. willingness to support Azerbaijan in concrete terms, especially regarding security cooperation and Baku's position on NK, remain. While aggravated by our adherence to the Basic Principles (and resistance to Baku,s attempt to distort those principles through its UNGA resolution),the Foreign Minister, like President Aliyev, sees an opportunity in coming weeks to make progress or reach agreement on a framework to resolve the Nagorno-Karabakh conflict as defined by the Basic Principles. The GOAJ will not likely make progress on an agenda for the November 11-14 energy summit until after the October 15 election; an agenda for this summit must be well thought out and expanded beyond discussion of Ukraine's Odessa-Brody pipeline in order for the summit to be a success. ¶11. (SBU) DepSec staff has cleared this cable. DERSE