C O N F I D E N T I A L SECTION 01 OF 04 BAKU 000201

SIPDIS

DEPT FOR EUR/CARC, INR (PSTRONSKI), DEFENSE FOR OUSDP
(DMELLEBY)

E.O. 12958: DECL: 03/13/2019
TAGS: PREL ENRG SOCI ECON ETRD AJ TU
SUBJECT: AZERBAIJAN-TURKEY: STILL ONE NATION, TWO STATES?

REF: A. BAKU 52

B. BAKU 118

C. 07 BAKU 689

Classified By: AMBASSADOR ANNE E. DERSE, REASONS 1.4 B AND D


1. (C) Summary: Although Azerbaijan is a former Soviet
republic and is still properly considered part of the
ex-Soviet space, it is culturally, linguistically and
economically much more a satellite of Turkey than Russia.
Ties between the two countries are exceptionally strong along
the entire spectrum of policy interests. Although there are
contentious areas to be sure - especially on energy and
religious/cultural issues - for Azerbaijan, Turkey is an
essential part of a foreign policy that seeks to enhance
Azerbaijan's independence by maintaining close relations with
major non-Russian, non-Iranian powers. Turkey's
experimentation with Islamist politics under Erdogan, bitter
disputes over energy transit and especially Turkey's
diplomatic approaches to Armenia all threaten a relationship
that Baku desperately needs to maintain its essential foreign
policy posture. End summary

Social and Economic Links
--------------


2. (SBU) After the fall of the Iron Curtain, Azerbaijanis,
who are a Turkic people, were finally able to travel to
Turkey. A new feeling of brotherhood developed between the
two states, and former President Heydar Aliyev would
frequently refer to Turkey and Azerbaijan as &one nation,
two states.8 Azerbaijanis came to see Turkey as an oasis: a
wealthy European paradise with historic cities and beautiful
beaches, a place where people were always smiling and where
they could communicate with relative ease, given the
closeness of the languages. The people also saw Turkey as a
big brother ready to share his knowledge and to help the
younger brother develop.


3. (SBU) Turkey is Azerbaijan,s most significant bridge to
the outside world. Total trade between Azerbaijan and Turkey
(including energy) was $1.68 billion in 2007, or 14.3% of
Azerbaijan,s total trade. Workers travel in b

oth directions
across the border, and Azerbaijani students can be found
throughout Turkish universities. Turkish goods (alongside
Russian goods) fill the majority of an average Baku
supermarket,s shelf space, and Turkish restaurants and
&doner stands8 (often run by Turkish families) are
ubiquitous in Baku. Turkish Airlines runs more flights into
Baku (21 per week) than any other foreign airline. Official
GOAJ statements may show more deference to Moscow, but social
and economic ties to Istanbul are much stronger.


4. (C) Recently, however, friction has developed.
Azerbaijanis at all levels complain that Turks do not
properly &respect8 them. Local workers lament that 17
years into independence, they are still being passed over for
more skilled Turkish workers. Mid-level Azerbaijani
authorities complain that Turkish companies fail to behave
themselves properly, often suggesting that they are insulted
by Turkish colleagues and rivals. Azerbaijan, observers
note, is a small country with a big sense of self-worth, and
a country that either distrusts or only partially trusts each
of its neighbors, and that feels somewhat insecure. As long
as Turkey does not attach the same importance to Azerbaijan
that Azerbaijan does to itself, they say, the Azerbaijanis
will continue to feel a lack of &respect.8 Turkish
businessmen, speaking privately, suggest that they still see
Azerbaijan as a &tribal state,8 in which a small number of
families control the political and economic levers of power,
and in which these families come to agreements between one
other as to how to divide the country into their own
fiefdoms.

Religious Ties and Influence
--------------


5. (C) There is evidence of Turkish religious influence in
Azerbaijan, despite the superficial disparity of cult between

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nominally Shia Azerbaijanis and Sunni Turks. First, Turkey
is a popular destination for Azerbaijani religious scholars,
many of whom return to proselytize. Turkish religious
networks exist in Azerbaijan,s Islamic scene, as well. One
such network, that of Fetullah Gulen, emphasizes the
establishment of quality educational institutions, which has
enabled it to establish a presence in Azerbaijan. "Chag
Oyretim" ("Modern Education") -- a private Turkish company in
Baku -- oversees one university (Khazar University) and at
least twelve high schools in Azerbaijan. The Gulen network
also has developed links to several Azerbaijani media outlets
and a local Turkish business association. Additionally, some
government officials allegedly send their children to Chag
Oyretim schools; Presidential Administration Chief of Staff
Ramiz Mehdiyev's grandchildren are reported to g to a Chag
Oyretim school, along with several oter Presidential
Administration officials' children.


6. (C) While the GOAJ generally is hostile to foreign Islamic
influence, Fetullah Gulen representatives have negotiated a
good relationship with GOAJ insiders that appears grounded in
the broader context of the close bilateral relationship
between Azerbaijan and Turkey and Chag Oyretim's ability to
provide high quality educational opportunities. The GOAJ
keeps a watchful eye on the group's activities, however.


7. (C) Local contacts report that since AKP came to power in
Turkey, some GOAJ insiders increasingly are wary of Fetullah
Gulen's activities and influence. Reportedly, in late 2006,
there was a policy debate within the GOAJ about the pros/cons
of clamping down on the Fetullah Gulen network. Some key
Azerbaijani elites -- including Sheikh Allahshukur Pashazade
and the Ministry of National Security -- favored clamping
down on the Fetullah Gulen movement as part of a broader
anti-Sunni campaign, but Turkish Prime Minister Erdogan
intervened on behalf of Chag Oyretim during a meeting with
President Aliyev. Erdogan was not so successful when he
personally asked President Aliyev to release some members of
a Turkish-inspired religious clique in the Azerbaijani army
that had been holding clandestine meetings.


8. (C) It remains to be seen how changing Azerbaijan-Turkey
relations may impact such networks in Azerbaijan, but recent
signs - including requirements that Turkish programming be
"translated" into Azerbaijani (the languages are mutually
intelligible) to get images of women in headscarves off the
air (Reftel A) - and President Aliyev's well-known discomfort
with the headscarves worn by Gul and Erdogan's wives - are
negative. President Aliyev has also for some time included
Turkey when listing countries that present an Islamist threat
to Azerbaijan, such as Iran, Saudi Arabia and some Gulf
states (Reftel B).


Bilateral Energy Cooperation: Cooperation and Conflict
-------------- --------------


7. (SBU) Turkey serves as the westernmost nexus for
Azerbaijan's two main export pipelines, both of which transit
Turkey: the Baku-Tbilisi-Ceyhan (BTC) oil pipeline, which can
carry up to 1.2 million barrels of Azerbaijani crude per day
to world markets, and the Baku-Tbilisi-Erzurum gas pipeline,
which carries gas that meets approximately one eighth of
Turkey's gas needs, in addition to providing smaller amounts
to Georgia. The construction period for these two projects
was marked by strong cooperation between Turkey and
Azerbaijan. Once oil and gas started flowing however in
2006/07 commercial conflicts slowly emerged, such that the
BTC consortium of companies is now in arbitration with the
Turkish company responsible for running the BTC pipeline
within Turkey. Similarly, the Shah Deniz consortium of
commercial companies that sells natural gas to Turkey,s
Botas is close to invoking arbitration over inability to
agree with Botas over the price of the gas being sold Turkey.



8. (C) Azerbaijan's Shah Deniz offshore gas mega-field
provides all the gas currently being exported from the
Caspian region to Turkey. The Baku-based Shah Deniz

BAKU 00000201 003 OF 004


Consortium of energy companies that owns this field's
production is seeking to proceed with the next phase of the
field's development, which would make available approximately
16-17 billion cubic meters annually, enough to sanction on
its own at least one pipeline project to carry Caspian gas
through Turkey to Europe. However, due to its own energy
supply security concerns Turkey is seeking such high volumes
of this SD Phase Two (SD2) gas that there would not be
sufficient additional volumes to sanction a European
pipeline. Turkey reportedly is unwilling to grant transit
for Azerbaijani gas to European markets until and unless its
own gas supply needs are met. Given the Shah Deniz
Consortium's inability to pursue commercial contracts with
European consumers due to lack of transit through Turkey, the
Shah Deniz Consortium has stopped almost all funding for the
development of Shah Deniz Phase Two for 2009. At the
political level, failure to resolve the gas transit issue has
become a major source of frustration for President Aliyev and
other senior leaders of Azerbaijan.


Security Cooperation
--------------


9. (C) In the security sphere, Turkey has been Azerbaijan's
primary political-military ally since independence, but
Turkey's incipient reconciliation with Armenia puts the
future of these relations in serious jeopardy. The most
obvious manifestation of the alliance has been Turkey's
closure of its border with Armenia. This has made Turkey
Azerbaijan's primary international supporter on the
Nagorno-Karabakh issue. The Turkish military has long
maintained close ties to counterparts in Azerbaijan. When
deployed to PKOs in Kosovo and Afghanistan, Azerbaijani
troops have done so by integrating into larger Turkish
contingents. Over the years numerous Azerbaijani officers
and soldiers have undergone training at Turkish facilities
and Turkey has long been the official go-between between
Azerbaijan and the NATO alliance, a role it only recently
yielded, the last development occurring after Azerbaijan,
Romania and Poland collaborated in Brussels to name Romania
as the new NATO contact point embassy.


10. (C) Turkey also regards Azerbaijan as a market for arms
sales. Recent examples include a publicly announced
agreement for final assembly in Azerbaijan of rocket
artillery systems designed by the Turkish firm Reketsan. A
Turkish diplomat told us that a similar deal was under
consideration to produce the "Firtina" 155mm self-propelled
gun. In these cases, an Azerbaijani entity receives the
partially-assembled components and completes the item
domestically. (Note: Embassy contacts suspect this type of
arrangement mostly exists to provide opportunities for
kickbacks in Azerbaijan. End Note.) Azerbaijan has also
reportedly negotiated with Turkish Aselsan for upgrades,
including installation of the fire control system from the
German "Leopard" tank on its fleet of T-72s.


11. (C) While the military-to-military contacts are
important, Azerbaijan views Turkey as key to its security
primarily because of its support on Karabakh. Without the
Turkish border closure, Baku assesses that it has no
effective lever to force Armenian concessions. This is
probably correct, observers note. The "nine-tenths of the
law" represented by Armenia's occupation of Karabakh becomes
a 100 percent victory if the Turks normalize political and
commercial ties without demanding any concessions on N-K.
The Azerbaijanis pessimistically and accurately surmise that,
given the historical issues in play, there is no way back
once Turkey reconciles with Armenia, and Turkish diplomatic
pressure on Armenia to resolve N-K after recognition would be
ineffective. In all likelihood, the Turkey-Armenia
reconciliation -- if it goes forward without huge concessions
by Armenia to Azerbaijan -- will come close to destroying
this security relationship.

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


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12. (C) From an objective standpoint, Baku's relationship
with Turkey is one that it should tend to assiduously, even
if it means compromising and enduring what Azerbaijan thinks
of as a lack of respect. The dynamic between a small country
and its larger patron simply works this way much of the time.
Taking a long view, Baku will simply have to accept that
Erdogan is neither Ciller nor Ecevit - the secular, modernist
Turkish leaders Azerbaijanis were comfortable with, and plan
for better days to come. For its part, Turkey may be
underestimating the resentment building in Baku, especially
on the key issues of Armenia, energy and Islamism.
Azerbaijan's response to these disquieting issues has to date
been passive-aggressive and careful not to close off any
paths to restoring strong relations. A Turkish
reconciliation with Armenia that is not preceded by hard
concessions on N-K will severely test Baku's restraint.
DERSE